Define Capitation Agreement

Suppliers cannot afford reinsurance that will continue to deplete their insufficient premiums, as the expected loss, expenses, profits and risk charges for the reinsurer must be paid by the suppliers. The purpose of reinsurance is to hedge risks and reward the reinsurer in exchange for more stable operating results, but the supplier`s extra costs make this inseeveloping. Reinsurance assumes that insurance risk transfer companies do not create inefficiencies when they transfer insurance risks to suppliers. The guarantee is a payment agreement for health care providers. If you have a head-to-head agreement with us, we will pay you a certain amount for each member assigned to you per period. We pay you to find out if that person is seeking care or not. In most cases, a supplier with a head is a medical group or an association of independent practitioners (IPA). Sometimes the wholesale provider is an aid provider or hospital. Under a contract, the health care provider receives a fixed amount in dollars per month to see patients, regardless of the number of treatments or the frequency with which the physician or clinic sees the patient.

The agreement provides that the supplier receives a lump sum payment in advance per month. Whether or not the patient needs benefits in a given month, the provider will continue to collect the same fees. The more treatment a patient needs, the less money a health care provider earns per treatment. The last widespread use of capitation in the United States did not meet the last two criteria. In the late 1980s and into the 1990s, public and private payers sought ways to reduce inflation in the health sector. The primary mechanism they turned to were health care organizations (HMOs), which were generally owned and managed by insurance companies. While employers generally paid HMOs on a per capita basis, most HMOs continued to pay for care groups with service-by-case pricing methods. It is not uncommon for large groups or physicians involved in distribution network models to also receive an additional per capita package for diagnostic and sub-specialized treatments. The family doctor will use this additional money to pay for these transfers. This appears to be a greater financial risk for the primary service provider when the total cost of transfers exceeds the premium payment, but the potential financial benefits are also greater when diagnostic transfers and sub-specialization services are controlled. Alternatively, some plans pay for test and sub-specialization recommendations through service-based pricing agreements, but are generally paid through contractual pricing plans, which are reduced from 10% to 30% compared to the usual local fees.

Posted in Uncategorized