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Concept
Capitation (healthcare)
Summary
Capitation is a payment arrangement for health care service providers. It pays a set amount for each enrolled person assigned to them, per period of time, whether or not that person seeks care. The amount of remuneration is based on the average expected health care utilization of that patient, with payment for patients generally varying by age and health status.
There are differing arrangements in different healthcare systems.
Primary capitation is a relationship between a managed care organization and primary care physician, in which the physician is paid directly by the organization for those who have selected the physician as their provider. Secondary capitation is a relationship arranged by a managed care organization between a physician and a secondary or specialist provider, such as an X-ray facility or ancillary facility such as a durable medical equipment supplier whose secondary provider is also paid capitation based on that PCP's enrolled membership. Global capitation is a relationship based on a provider who provides services and is reimbursed per-member per-month for the entire network population.
Between 1948 and 1968, NHS financial allocations were essentially based on sequential inflation uplifts. The Resource Allocation Working Party devised a formula which operated from 1977 to 1989, based on population adjusted for age and sex, weighted for morbidity by standardized mortality ratio.
Under capitation there is an incentive to consider the cost of treatment. Pure capitation pays a set fee per patient, regardless of their degree of infirmity, giving physicians an incentive to avoid the most costly patients.
Providers who work under such plans focus on preventive health care, as there is a greater financial reward in the prevention of illness than in the treatment of the ill. Such plans divert providers from the use of expensive treatment options.
The financial risks providers accept in capitation are traditional insurance risks. Provider revenues are fixed, and each enrolled patient makes a claim against the full resources of the provider.
Official source
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