Capitation Agreement In Medical Billing

Traditionally, paying agencies have reimbursed healthcare providers for the costs related to the services provided or the volume of services provided. However, new types of health plans are shifting from paying for volume to value — including costs, consumer health outcomes, and consumer experience — with performance-based capitation rates at the most “advanced” end of the scale. Payment varies depending on the capitation convention, but is usually based on characteristics such as the age of the person included in the plan. Modifying the plan, based on the specific characteristics of patient groups, is a way to compensate expected medical care providers for similar complaints within a group. Physicians and other health care providers lack the actuarial, actuarial, accounting and financial skills to manage insurance risks, but their most serious problem is the greater variation in their estimates of the average cost of patients, which penalizes them financially compared to insurers whose estimates are much more accurate. [4] [6] Since their risks are a portfolio size function, providers can only reduce their risk by increasing the number of patients they have on their rosters, but their inefficiency compared to insurers is much greater than these increases can mitigate. To manage risk as effectively as an insurer, a provider would have to take over 100% of the insurer`s portfolio. HMOs and insurers are better able to manage their costs as experienced healthcare providers and cannot make risk-adjusted capitation payments without undermining profitability. Companies that pass on risks will only enter into such agreements if they are able to maintain the level of profit they make by retaining risks. [4] [6] Get the best practice management software and telehealth solution for your medical practices and bring efficiency to your healthcare systems.

For more tips on capitation fees, sign up for our EHR newsletter and stay informed about the latest news from Prognocis The term of capita payment is defined as the payment agreed in a chapter agreement of a health care provider`s health insurance fund. The payment is a fixed amount in U.S. dollars that the healthcare provider receives each month for each patient enrolled in health insurance. The monthly payment is calculated in advance and remains unchanged for this year, regardless of how often the patient travels to the healthcare provider for services. Capitation has become a form of future health care thanks to the Health Plan for Health Care. For an HMO group of 1,000 patients, the PCP would receive $500,000 per year and in return provide all authorized medical services for the 1,000 patients for this year.