While capitation aims to reduce costs and improve outcomes, it has its own drawbacks. A capitulated contract is a health plan that allows the payment of a lump sum for each patient it covers. Under a capitulated contract, an HMO or managed care organization pays a fixed amount of money to the health care provider for its members. Capitation contracts are also referred to as capitation contracts, capitation contracts, and managed care capitation contracts. It is not uncommon for large groups or physicians involved in primary care network models to also receive additional payment for diagnostic test referrals and subspecialty care. The GP will use this extra money to pay for these referrals. Obviously, this exposes the GP to a higher financial risk if the total cost of referrals exceeds capitation payment, but the potential financial rewards are also greater when diagnostic referrals and sub-special services are controlled. Alternatively, some plans pay for test and subspecialty recommendations through fee agreements, but are usually paid through contractual fee plans, which are reduced by 10% to 30% compared to usual and usual local fees. Some of the above drawbacks can potentially lead to a vicious cycle that ends up causing suppliers to lose money when they participate in a capitation payment model.

This could lead them back to the FFS model with the challenges and gaps associated with it. Under a capitulated contract, the health care provider receives a fixed amount per month to see patients, regardless of the number of treatments or how often the doctor or clinic sees the patient. The agreement stipulates that the supplier receives a lump sum and pre-agreed advance payment per month. Regardless of whether the patient needs services in a given month or not, the provider always receives the same fee. The more treatment a patient needs, the less money a health care provider earns per treatment. Some payers have also set up what is called a „risk pool”. This is a percentage of the total payment that is kept until the end of the year. If health care providers performed well in the previous year (i.e., they do not consume more than the total amount of capital), payers can release the additional amount to physicians at the end of the year. However, if the services provided cost much more than the sum of the agreed amount, the payer may withhold the money in the „risk pool” to compensate for the loss.) The main advantage for a doctor is the reduced cost of accounting. A physician hired by an API does not need to maintain a larger billing staff, and the practice does not have to wait for their services to be reimbursed.

Mitigating these costs and issues can allow a practice to treat more patients at a lower total cost of ownership. On the other hand, a PBS article defines Global Capitation as an agreement „in which entire networks of hospitals and physicians come together to receive individual fixed monthly payments for members enrolled in a health plan; As part of Global Capitation, providers sign a one-time contract with a health plan to cover the care of groups of members, and then must establish a method to split the abandoned cheque between them. „With respect to the capped contract, the issuance of payments by the insurer to the health care provider is the same for each patient. The amount to be paid is independent of the amount of health care each patient receives. In other words, the health care provider receives a fixed monthly allowance to care for a patient regardless of how often they have to care for that patient. The agreement states that a physician receives the same fees for each patient, regardless of how often they have to care for the patient. Insurance companies have always covered the cost of the services that health care providers provide to patients. However, insurance companies are establishing new health plans that pay for value rather than volume.

Current plans take into account factors such as consumer health outcomes, costs and consumer experience. The development of the capped contract is expected to improve cost control, efficiency incentives and the provision of medical services. The theory motivates service providers to focus on health testing without considering the health care costs of registered members. However, with the capitation contract, it is possible that the majority of people will not enroll in a health plan, which means that they will never use the services. The capitation regime should be able to naturally balance members who use the health regime frequently with those who use it little or not every month. In the capitation model, providers are paid for each registered patient or per member per month (PMPM). This is called a capitation rate or capitation premium, which is sometimes called a „cap.” Health insurance companies use capitation payments to control health care costs. Capitation payments control the use of health care resources by exposing the physician to a financial risk to patient services. If the family doctor signs a capitulation agreement, a list of specific services that must be provided to patients is included in the contract. The amount of capitation is determined in part by the number of services provided and varies from one health plan to another, but most capitation payment plans for primary care services include the following: An example of a capitation model would be an API that negotiates a fee of $500 per year per patient with an approved PCP. For an HMO group of 1,000 patients, the PCP would receive $500,000 per year and in return expects to provide all authorized medical services to the 1,000 patients for this year.

In general, there are three types of capitation agreements, depending on the relationship between the paying agent and the payee of the payment: the amount of capitation is determined in part by the number of services provided and varies from one health care plan to another. Most capitation payment plans for primary care cover the core areas of health care. A capitulated contract is health insurance that pays care providers a fixed fee for each patient on the plan. Traditionally, payers reimburse health care providers for the cost of services provided or the volume of services provided. However, new types of healthcare plans are shifting from volume payment to value payment – including costs, consumer health outcomes and consumer experience – with performance-based capitation rates at the most „advanced” end of the scale. As part of a capitation agreement, patients must receive a list of specific inclusive services in the contract. Consider a capitulated contract issued by ABC Company, which could pay a doctor $100 a month for each patient it covers in XYZtown. If ABC company has 200 patients with a doctor, his office receives $20,000 a month. It doesn`t matter if patients go to the doctor or not. On the other hand, the doctor only receives $100 per month per patient, no matter how many times a particular patient decides to see the doctor.


What Is a Capitation Contract