What do payer contracts specify, and what is bundled payment?

• A. Payer contracts specify agreed rates and terms; bundled payment pays a single price for an episode of care across multiple providers.
• B. Payer contracts outline patient eligibility; bundled payment is per service with detailed itemization.
• C. Payer contracts determine hospital location; bundled payment is a per diem rate.
• D. Payer contracts set hospital budgets; bundled payment is a capitation model.

Answer: (A)

Payer contracts specify agreed rates and terms between payers and providers, outlining how much will be paid for services, network participation, and the rules for claims and payment. Bundled payment is a single price that covers all the care for an entire episode of care, often across multiple providers, within a defined period. So instead of billing each service separately, the providers are paid one bundled amount intended to cover the whole episode. For example, a hip replacement bundle would include pre-operative care, the surgery, post-operative care, and related services within the bundle. Other concepts like per-service itemization, per diem rates, capitation, or focusing on hospital location describe different payment arrangements or criteria and are not what bundling entails.