Case Rate/Bundled Payment + P4P
Case rates and bundled payments are two terms for the same Accountable Payment Model.
Case Rates: a predetermined amount paid to a provider organization to cover the cost of all of the services required for a given episode of care.
Case Rate/Bundled Payment Definition: Case Rates are a form of bundled payment that covers the cost of a “case.” Let’s make this definition a bit longer: A Case Rate represents a predetermined amount of money paid to a provider organization to cover the average costs of all services needed to achieve a successful outcome for a given defined episode of care for an individual over an agreed upon time period.
Example: We will pay you $3,500 for providing six months of community-based, recovery-oriented services for an adult mental health consumer who requires LOCUS Level 3 services. Your part of the bargain is to work with the consumer to develop a recovery-oriented professional care plan and self-care plan, identify at least one clinical goal and one personal goal, use a validated measurement tool to track progress on the clinical goal, work toward the agreed upon outcomes, change the care plan as needed, and get high marks on your customer satisfaction survey. Simple, right?
Case Rates are Important for Two Main Reasons
- Case Rates provide much greater flexibility to the provider and consumer regarding who provides services, what can be provided, and where services can be provided – the consumer and provider decide and can be more agile about what’s needed.
- Case Rates have a two-part value equation built into the process. First, if a care team selects a package of services for a consumer that is more cost-effective than other alternatives for achieving the desired outcome, the episode's actual cost may be lower than the case rate payment, allowing the provider to earn what some describe as a 'value bonus'. The second 'value lever' is to remove waste (excess cost) through lean process improvement activities, achieving a lower unit cost than what was built into the case rate.
Note that Case Rates can also result in a reduction in administrative costs, when compared to fee for service. Although payors will require the submission of encounters under a Case Rate system, providers do not have to manage the intricacies of primary and secondary billing cycles for services provided to enrollees of a payor that pays Case Rates.
What Case Rates are NOT
Case Rates are NOT a fixed budget for an individual consumer. Case Rates are an AVERAGE payment for all of the consumers to be served at a given level of care. By definition, some individuals will require MORE care at a given Case Rate Level and some will require LESS care in order to achieve the intended outcomes. Case Rates are meant to provide flexibility to the provider and consumer, not lock them into a rigid box.
Case Rate/Bundled Payment + P4P Definition: A predetermined amount of money paid to a provider organization to cover the average costs of all services needed to achieve a successful outcome for a given defined episode of care for an individual over an agreed upon time period. . This model also includes a Pay for Performance bonus layer to incentivize better care, better health, and better cost. P4P is discussed in detail in the P4P section.