How do episodic payments differ from per-member-per-month payments?

• A. Episodic payments are monthly per member payments.
• B. Episodic (bundled) payments cover a defined care episode, encouraging efficient care within that episode; PMPM payments provide a fixed monthly amount for ongoing care management.
• C. PMPM payments are per-visit charges.
• D. Episodic payments are charged per patient per month.

Answer: (B)

Bundled (episodic) payments cover all services needed for a defined care episode, such as a knee replacement, within one total payment. This setup encourages the care team to deliver only what’s necessary and to coordinate efficiently so the episode stays within budget and quality targets. Per-member-per-month payments, by contrast, are a fixed monthly amount paid for each enrolled patient to cover ongoing care management and coordination over time, regardless of how many visits or procedures occur in a given month. The difference hinges on scope and timing: episodic payments target a specific episode with a finite cost, while PMPM provides a steady, ongoing funding stream for continuous care management. The other descriptions don’t fit because episodic payments aren’t simply monthly per member, PMPM isn’t per-visit charges, and episodic payments aren’t charged per patient per month.