Capitation payments are used by managed care organisations to control health care costs. Capitation payments control use of health care resources by putting the physician at financial risk for services provided to patients. At the same time, in order to ensure that patients do not receive sub optimal care through under-utilisation of health care services, managed care organisations measure rates of resource utilisation in physician practices.
Types of Capitation:
- Primary capitation is a relationship between a managed care organization (MCO) and primary care physician (PCP), in which the PCP is paid directly by the MCO for those enrolled members who have selected the physician as their provider.
- Secondary capitation is a relationship arranged by the MCO between a PCP and a secondary or specialist provider, such as an X-ray facility or ancillary facility such as a durable medical equipment supplier whose secondary provider is also paid capitation based on that PCP’s enrolled membership.
- Global capitation is a relationship based on a provider who provides services and is reimbursed per-member per-month (PMPM) for the entire network population.
When the primary care provider signs a capitation agreement, a list of specific services that must be provided to patients is included in the contract. The amount of the capitation will be determined in part by the number of services provided and will vary from health plan to health plan, but most capitation payment plans for primary care services include the following:
- Preventive, diagnostic, and treatment services
- Outpatient laboratory tests done either in the office or at a designated laboratory
- Routine vision and hearing screening
- Health education and counseling services performed in the office
- Injections, immunizations, and medications administered in the office
Benefits of a Capitation System:
The benefits to capitation for a doctor or insurer are mostly the decreased costs of bookkeeping. In other words, doctors do not have to pay huge staffs of billing people, nor do they have to wait to be reimbursed for any specific services. Their actual cost to care for their patients may decrease.
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