Bundled Payments (BPCI)
Bundled payments pay a single target price for an entire episode of care, such as a joint replacement plus everything that follows for 30 to 90 days, rather than paying each provider separately. Medicare tested this through the Bundled Payments for Care Improvement (BPCI) initiative and BPCI Advanced. Because post-acute care is where episode spending varies most, home health agencies that deliver good outcomes at lower cost than facility care are natural winners under bundles.
How bundled payments work
A bundle starts with a trigger event, typically an inpatient admission or a qualifying procedure, and covers most related spending for a defined window afterward. CMS sets a target price for the episode based on historical spending. After the episode ends, actual Medicare spending is reconciled against the target: come in under the target with quality standards met and the accountable participant keeps savings; run over and the participant owes money back. The accountable party, usually a hospital or physician group, therefore cares intensely about every downstream dollar, and post-acute choices, especially whether a patient goes to a skilled nursing facility or straight home with home health, are the biggest levers.
From BPCI to BPCI Advanced to TEAM
The original BPCI initiative launched in 2013 and tested several bundle designs, including models where post-acute providers such as home health agencies could initiate episodes. BPCI Advanced followed in 2018 as a voluntary model with 90-day episodes initiated by hospitals and physician group practices, and it concluded at the end of 2025. CMS then shifted from voluntary to mandatory with the Transforming Episode Accountability Model (TEAM), which began in January 2026 and requires selected hospitals to take episode accountability for a set of surgical episodes, including procedures like joint replacement and CABG, over 30-day windows. The direction of travel is clear: more hospitals accountable for post-discharge spending, whether they volunteered or not.
Why home health wins in bundles
Post-acute spending is the largest source of variation within an episode, and the priciest common pathway is a skilled nursing facility (SNF) stay. When a patient can recover safely at home, home health delivers the episode's care at a fraction of facility cost, which is exactly the arbitrage bundle participants are hunting for. Joint replacement bundles proved the pattern: participants pushed SNF utilization down, sent more patients directly home with home health and therapy, and captured the savings. For agencies, bundles reframe the sales conversation from referral volume to episode economics, where your cost and outcome profile is the product.
How to become a bundler's preferred partner
Bundle participants choose post-acute partners on evidence and reliability:
- Know your numbers: cost per episode, 30-day hospitalization rates, and functional outcomes by condition
- Build standardized clinical pathways for common bundled episodes such as joint replacement
- Commit to fast starts, since a delayed SOC after a direct-to-home discharge is a readmission risk the bundler owns
- Report utilization and outcomes back to the partner in their format, on their cadence
- Support SNF diversion with strong therapy staffing and home safety evaluation capability
Agencies that treat bundlers like demanding customers rather than referral sources tend to keep the contracts.
Frequently asked questions
Can home health agencies hold bundled payment risk themselves?
Under the original BPCI, one model allowed post-acute providers including home health agencies to initiate episodes and hold risk. BPCI Advanced limited episode initiation to hospitals and physician group practices, and under TEAM the accountable party is the hospital. Today agencies typically participate as contracted partners rather than risk holders.
What happened to BPCI Advanced?
BPCI Advanced was a voluntary CMS model that ran from 2018 through the end of 2025. CMS succeeded it with TEAM, a mandatory episode-based model for selected hospitals that began in January 2026, signaling a shift from voluntary bundles to required episode accountability.
What do bundle participants want from a home health partner?
Predictability and proof. They want fast, reliable starts of care, standardized pathways for their episode types, low readmission rates, the ability to support patients going directly home instead of to a SNF, and clean data reporting. Price matters, but an agency that prevents one readmission is worth more than one that shaves a few dollars per visit.