This RAND Corp. analysis measured the effects of bundled payments—encompassing all services related to a specific treatment or condition—on: spending, waste, patient experience, coverage, operational feasibility, consumer financial risk, reliability, health, and capacity. RAND found that bundled payments have the potential to reduce spending and incentivize provider cost reduction; however, such results are dependent on the condition and performance of the health system providing the care.

From the report:

The evidence is limited regarding bundled payment for an episode of care surrounding a hospitalization. Most of the literature on bundled payment comes from the Health Care Financing Administration's (HCFA) Medicare Participating Heart Bypass Center Demonstration, which ran from 1991 to 1996. Four hospitals were chosen for the demonstration, and each was paid a single fee for all inpatient and physician services for heart bypass patients (for coronary artery bypass graft [CABG] surgeries). Note that many providers opposed the demonstration. They raised concerns about the government designating some providers as "high quality," with an associated increase in payment. Despite this concern, a large number of hospitals applied to participate (MedPAC, 2008).