The Capitation Model Medical Billing
The Capitation model medical billing is a payment system of the healthcare model in which physicians and other healthcare providers like clinics and hospitals receive pre-settled, fixed amounts for each of the patients within a definite deadline. The payment is the same for each patient during that period, regardless of whether they seek medical facilities and healing or not.
In the capitation model billing, the providers are paid for each enrolled patient based on per member per month. This is called the capitation premium, which is often referred to as the “cap”.
The components of capitation billing:
- The advance payment of a flat fee
- For the delivery of a specific set of services in a given period
- For an agreed-upon number of enrolled members
- Whether or not patients seek care during that period
The amount of Capitation model medical billing payment per person is based on various factors, including average expected healthcare utilization of the members as well as the local costs of medical services.
Some payers also establish something called a “risk pool”. This is a proportion of the overall payment “taken as a whole” and withheld until the last part of the year. If it is shown that healthcare providers’ performance was very good in the last year that is they could succeed to keep the capitation amount less than the needed amount. The payers may discharge the additional amount to physicians towards the end of the year.
However, in case the services provided wind up estimating much more than the entire agreed amount, the payer may hold back the money in the “risk pool” to even out the loss.
The Capitation model medical billing contracts are entered into by the healthcare provider and the payer to set up rates and other contact details. These agreements also incorporate a list of services that are provided by the health plan to the patient, such as preventive services, medications and immunizations, lab tests, schedule screenings, and other investigative and healing services.
Generally speaking, there are three types of capitation agreements, depending on the relationship of the paying entity and the receiver of the payment: Primary, Secondary and global.
The Capitation model medical billing covers following services:
- Preventive, diagnostic, together with treatment services
- Injections, immunizations, and medication services
- Health counselling and awareness services
- Regular vision and hearing screening services