A new policy analysis funded by the National Institute for Health Care Reform examines the appeal of episode-based payments as an alternative to the current fee-for-service model. The method bundles payment for some or all services for a specific health condition or event over a certain period of time. Success depends upon defining what constitutes an episode of care; establishing episode-based payment rates and identifying providers to receive these payments; ensuring compatibility with other proposed payment reforms; and implementing pilot projects using a narrow set of health conditions, patients, and providers.