Enhancing Payment Integrity in U.S. Healthcare Through Value-Based Care: The Role of Bundled Episodes and Alternative Payment Models

Improper payments, unnecessary utilization, and administrative inefficiencies represent persistent structural challenges within the United States healthcare system. This places significant pressure on healthcare spending. Value-based care (VBC), particularly through bundled episode payments and alternative payment models (APMs), has emerged not only as a potential cost containment strategy but also as a potential framework for strengthening payment integrity and promoting appropriate resource use. This article examines how value-based care models, particularly bundled payments and APMs, strengthen payment integrity by addressing structural drivers of improper payments through improved transparency, accountability, and stewardship of healthcare resources across the care continuum. Bundled episode payments establish a single, prospectively defined payment for all services associated with a discrete episode of care, supporting greater predictability of spending and improved coordination across settings, while reducing fragmentation within the care continuum. By shifting reimbursement away from volume-based incentives toward outcome-oriented accountability, VBC facilitates clearer evaluation of utilization patterns and enables earlier identification of unexplained variation through routine monitoring and analytics. These design features complement traditional oversight and utilization management efforts by addressing the underlying payment and delivery-system drivers of fee-for-service (FFS) reimbursement. This technical report synthesizes existing evidence and policy analysis to examine how value-based care models address a critical policy gap by embedding payment integrity and utilization oversight within payment design, rather than relying solely on retrospective enforcement.