In 1984, physicians at the Texas Heart Institute developed CardioVascular Care Providers, Inc., the 1st packaged pricing plan for cardiovascular surgery. Under this arrangement, all services (including physician and hospital charges) are covered by a global payment package (bundled service). The resulting flat fee is lower than the sum of the individual charges. Since November 1984, the plan has been offered to the non-Medicare (< 65-year-old) population through contracts with self-insured corporations, prepaid health plans, union trusts, and foreign governments. In 1993, it was extended to Medicare patients who require coronary artery bypass grafting. Our experience has shown that the plan lowers costs, increases patient access, allows payers to forecast their expenses, and streamlines the billing process, while maintaining a high quality of care and enabling patients to choose their own providers. Our success with this approach is attributed not only to the plan's simplicity but also to the fact that it is physician-directed and organ-specific, involving many related specialties. Equally important keys to success include our hospital's large patient population and extensive database. Similar packaged pricing plans have been adopted by several other cardiovascular centers. The approach is now being evaluated by Medicare in 6 other hospitals nationwide. With time, this approach is likely to become an increasingly popular reimbursement option.