Healthcare Economics Engine

Bundled Payment Modeling

Design and value bundled payment contracts, model risk-sharing structures, and optimize episode definitions with actuarial precision

The Fee-For-Service Trap

Provider quotes $14,500 for a "bundled" knee replacement. But the bundle excludes pre-op imaging, post-acute care, readmissions, and complications. You discover this after a $9,200 surprise bill. True bundled payments transfer risk—if you can model them correctly.

Hidden Costs

35-60%

of 'bundled' claims

True Bundle Savings

15-25%

vs. fee-for-service

Episode Duration

30-90d

optimal window

✗ What Fails Without This Engine

•Provider defines "bundle" to exclude high-cost services
•No historical baseline to value the proposed bundle price
•Can't model downside risk: what if complications spike?
•CFO won't approve without actuarial stop-loss analysis

Actuarial Bundle Design

Our Bundled Payment Engine models complete episodes of care from your claims history, defines optimal inclusion criteria, prices bundles actuarially, and models risk-sharing structures. You negotiate with provider-specific cost data and downside protection.

Bundle Valuation Model
// Episode definition from claims
FOR each index_procedure:
  episode_services = IDENTIFY_all_claims(
    timeframe: trigger_date ± episode_window,
    related_services: pre_op + procedure + post_acute + readmissions,
    exclusions: unrelated_conditions
  )
  
  baseline_episode_cost = SUM(episode_services.allowed_amount)
  
  // Risk adjustment
  expected_cost = baseline_episode_cost × ADJUST_FOR(
    patient_age, comorbidity_score, procedure_complexity
  )
  
// Bundle pricing strategy
fair_bundle_price = PERCENTILE(expected_cost, 40)  // 40th %ile
provider_quote = proposed_bundle_amount

IF provider_quote > fair_bundle_price:
  savings_at_risk = provider_quote - fair_bundle_price
  NEGOTIATE_down OR FLAG "Overpriced"

// Risk-sharing structure
shared_savings_threshold = fair_bundle_price × 0.95
downside_cap = fair_bundle_price × 1.15

IF actual_cost < shared_savings_threshold:
  payer_keeps = (fair_bundle_price - actual_cost) × 0.7
  provider_shares = (fair_bundle_price - actual_cost) × 0.3
ELSE IF actual_cost > downside_cap:
  payer_pays = downside_cap  // Stop-loss protection

Engineering Architecture

Core Components

Episode Constructor: Claims-based episode definition with inclusion/exclusion logic
Baseline Cost Calculator: Historical episode costs with risk adjustment
Risk-Sharing Designer: Shared savings, downside caps, quality incentives
Variance Simulator: Monte Carlo modeling of actual vs. expected costs

Bundle Outputs

Fair Value Price

$$,$$$ ±5%

Episode Window

30-90d

Downside Cap

110-120%

Shared Savings

70/30 split

Real-World Applications

Maternity Care Bundle

•Provider proposes $8,500 global maternity bundle
•Engine analyzes 247 deliveries over 24 months
•Baseline episode cost: $9,200 (prenatal through 6 weeks postpartum)
•Fair value: $7,800-$8,200 with NICU/C-section exclusions
•Negotiated $7,950 with 80/20 shared savings below $7,500

Cardiac Surgery Bundle

•Hospital quotes $42,000 CABG bundle (surgery + 30-day episode)
•Engine shows historical cost: $48,300 with wide variance
•Models 90-day episode including readmissions: $52,100
•CFO structures: $44,000 base + shared savings below $42,000
•Year 1: 14 cases, $117K savings, 1 readmission (within cap)

Design True Bundled Payments

Stop accepting provider-defined "bundles" that shift risk back to you. Build actuarially sound episode definitions with downside protection before you sign the contract.

Request Engine Demo→