Capitation Payment In Healthcare

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• Capitation Payment In Healthcare

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Capitation Payment In Healthcare
According to capitated contract payments agreed
by a health insurance company and a medical
provider is called Capitation payment in
healthcare. This payment is fixed, pre-arranged
monthly payments received by a physician, clinic
or hospital per patient enrolled in a health
plan, or per capita. The United States of America
currently ranks highest among developed nations
in per-capita healthcare spending. This
concerning information came out of a 2019 paper
in Health Affairs by a team from the Johns
Hopkins Bloomberg School of Public Health
Research. According to the studys lead author,
Gerard F. Anderson, PhD, the U.S. remains the
most expensive because of the prices the U.S pays
for health services. The Capitation Payment is
the same for each patient during that period,
regardless whether they seek medical services and
treatment or not. In the capitation model,
providers are paid for each enrolled patient, or
per member per month (PMPM). This is called the
capitated rate or capitation premium, which is
sometimes referred to as the cap.
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Capitation Payment In Healthcare

• The components of capitation are
• The advance payment of a flat fee
• For the delivery of a specific set of services in
  a given period
• For an agreed-upon number of enrolled members
• Whether or not patients seek care during that
  period
• Capitation Agreement
• Capitation agreements or contracts are entered
  into by the healthcare provider and the payer to
  establish rates and other details. These
  agreements may also include a list of services
  that will be provided by the health plan to the
  patient, such as preventive services, medications
  and immunizations, lab tests, routine screenings,
  and other diagnostic and treatment services.
• Types of Capitation Agreements
• Primary
• This type of agreement happens when a managed
  care organization such as an HMO pays a physician
  (or physician group) directly for care to be
  provided to the HMOs members.

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Capitation Payment In Healthcare
Secondary This type is created when an HMO
arranges a contract involving primary care
physicians and a secondary healthcare service
provider such as a diagnostic or imaging service
provider or a specialist, among
others. Global This type can be taken to mean a
couple of different arrangements. It can mean a
fixed payment made to health care professionals
or organizations for the care their patients may
require during a contract period regardless of
how many services are provided to patients and
that can be adjusted to account for severity of
illness. This is how it is defined by the
American Academy of Family Physicians (AAFP).
This definition is similar to the basic
definition of capitation.
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Capitation Payment In Healthcare

• Benefits of Capitation
• Capitation offers several benefits to payers,
  physicians and patients.
• In the capitation system, healthcare providers
  are usually paid in advance they do not have to
  wait for the billing cycle to be completed before
  they are paid. This means that from the outset
  they have an idea of the cash flow coming in and
  can plan accordingly.
• Healthcare providers wont need to spend as much
  money and time on billing and accounting staff.
• Payers benefit because the costs of medical
  services can be kept under control.
• Patients may see an improvement in their overall
  health in situations where providers offer
  preventative care and wellness programs as part
  of their services. Prevention and wellness
  initiatives are seen as a means for providers to
  control costs because they can potentially
  decrease the volume of services needed by
  patients.
• Patients can avoid the inconvenience and cost of
  medically unnecessary procedures since providers
  are encouraged to be conscientious about
  providing appropriate services and treatment
  rather than increasing the number of these
  services and treatments as a means to increase
  fees

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Capitation Payment In Healthcare
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