M5-Week 5 Discussion – Capitation
(M5-Week 5 Discussion – Capitation)
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M5-Week 5 Discussion-Capitation
Capitation
Capitation is a payment method for healthcare services where entities, including physicians or physician groups, get risk adjustment amounts of money for every individual assigned to them per period per time, regardless of the service volume the individual needed (Tummalapalli et al., 2022). Capitation is viewed as an alternative payment approach to the fee-for-service (FFS), which remains the primary reimbursement mechanism for outpatient visits. (M5-Week 5 Discussion – Capitation)
The Impact of a Capitated Managed Care Contract on a Small, General Medicine Physician Group
Capitation is a contemporary reimbursement approach for healthcare providers that aligns with the current trend of paying for value rather than volume because capitation contracts are based on performance. Capitation ensures that providers get better incentives for preventive care, cost control, and efficiency. It is expected to balance out high-frequency users with plan members using little or no healthcare over time (Tummalapalli et al., 2022). Capitation is common in managed care organizations to ensure cost effectiveness by controlling healthcare utilization by ensuring the physician is at financial risk for services offered to patients (Alguire, 2022). Understandably, a physician would get better incentives for services well-provided, quality services, and cost-effectiveness and risk losing reimbursements or costs exceeding those reimbursed for poor quality services or cost-ineffectiveness. Rates of resource utilization in physician care are used to ensure patients do not get suboptimal care through healthcare services underutilization (Alguire, 2022). Typically, the general medicine physician group is always at a financial risk after signing the capitated contract if they do not control the overall cost of healthcare service utilization, including referrals. (M5-Week 5 Discussion – Capitation)
Why the Contract is Desirable
This contract can be desirable for the physician group because of better incentives, and the money is paid in advance to the physician group for the healthcare services delivered. Therefore, the physician group would enjoy greater financial certainty (Alguire, 2022). The group can offer a range of services and ensure cost-effectiveness while providing the best treatment. This contract ensures that the physician group has better incentives to promote preventative care. (M5-Week 5 Discussion – Capitation)
References
Alguire, P. C. (2022). Understanding capitation. American College of Physicians. https://www.acponline.org/about-acp/about-internal-medicine/career-paths/residency-career-counseling/resident-career-counseling-guidance-and-tips/understanding-capitation
Tummalapalli, S. L., Estrella, M. M., Jannat-Khah, D. P., Keyhani, S., & Ibrahim, S. (2022). Capitated versus fee-for-service reimbursement and quality of care for chronic disease: a US cross-sectional analysis. BMC health services research, 22(1), 19. https://doi.org/10.1186/s12913-021-07313-3
