This is a type of payment method where the provider is paid a fixed monthly sum per enrollee:
How Do Health Plans Pay Physicians?There are seven basic terms you need to know to understand how health plans pay physicians. Four payment methods (fee-for-service, discounted fee-for-service, capitation, and salary) and three payment adjustments (withholds, bonuses, and retrospective utilization targets) are the basis for nearly all contracts between health plans and your physicians, and they are described below. These payment methods and adjustments for primary care physicians are particularly important, because physicians act as gatekeepers by managing patient access to specialist referrals and hospital care. The four payment methods are designed to affect treatment patterns, while the payment adjustments are designed to affect both treatment and referral patterns. Since most physicians practice medicine in groups or clinics, they share the financial responsibility for their patients with all physicians in their group or clinic. All words in italics are defined in a glossary at the end of this document. Show Four Payment MethodsThe four payment methods that health plans use to pay physicians are:
Capitation: Physicians paid by capitation have incentives to contain costs and financial risk because of the fixed budget that the health plan gives these physicians to allocate for the care of 200 enrollees. If no health plan enrollees seek care, physicians under capitation face no financial risk. They simply receive the monthly payment for each enrollee. If all health plan enrollees seek care and their actual costs are greater than the monthly payments (which are based on estimated costs), then the physician must cover the cost of care that exceeds the monthly payment. Physicians cannot ask the health plan for extra payments to cover the additional costs of care, and face financial risk in this situation. Many physicians reduce their financial risk by purchasing insurance policies that will cover significant expenses if they occur in a group of patients. In reality, some enrollees never seek care, some seek basic care, and other enrollees need extensive care and access to specialists. To ensure that health plan payments cover their expenses, physicians under capitation have an incentive to
manage and provide appropriate care to their patients. They have an incentive to provide more preventive care that catches illnesses early (e.g., mammograms). Preventive and primary care intends to keep patients healthy so they need fewer tests and procedures when they do see the physician. Physicians under capitation also have an incentive to contain costs by providing more preventive care that limits the number of additional office visits that patients need. Discounted Fee-for-Service: Discounted FFS works in a similar way to FFS except that physicians are reimbursed a specific dollar amount or percentage of their total charge. Under discounted fee-for-service, physicians are only at risk if the cost of their care is greater than the payment the health plan will give them. There is little chance that physicians will receive payments that are consistently lower than the cost, but physicians may be slightly more conservative in treating patients. Discounted fee-for-service provides a slight incentive for physicians to balance the effectiveness of treatment with its cost, instead of treating patients without consideration of cost. They also have no incentive to change their referral patterns to specialists, unless their payment has withholds, bonuses, or retrospective utilization targets (see page 7). All Minnesota health plans have moved away from FFS to discounted FFS and capitation to contain costs and to encourage physicians to practice cost-effective medicine. Salary: Salaried physicians have no financial incentive to change their treatment patterns, either in terms of what is done during each visit or the number of visits. Physicians paid by salary face no financial risk, unlike physicians under capitation, unless their contracts include withholds, bonuses, or retrospective utilization targets or performance goals linked to future salary increases. The overall impacts of each these four payment methods on patient care and referrals are illustrated in the table below. Impacts of Payment Methods on Patient Care and Referrals
Payment AdjustmentsThe three adjustments that health plans can make to the three basic methods of paying physicians discussed above are:
Withholds: Withholds are generally used by health plans to give financial risk to primary care physicians who are paid by fee-for-service, discounted fee-for-service, or capitation. Many times, withholds will also be included in contracts with specialists. Health plans withhold a certain percentage (e.g., 20%) of every physician payment to cover a deficit if health plan premiums from enrollees are lower than health plan payments to physicians. If primary care physicians' referrals to specialists and hospitals use up the withhold funds, then they receive no bonus. If these physicians restrain utilization in general, and referrals and hospitalization in particular, then unspent withhold funds are shared with the physicians in the form of bonuses. The use of withholds and bonuses create incentives for primary care physicians to restrict access to specialists and hospital services, because more service use decreases the chance that the health plan will give bonuses. Since withholds are commonly applied to all services, withholds support the incentives that already exist in capitation or discounted fee-for-service for physicians to be conservative in treating patients. Retrospective utilization targets: Retrospective utilization targets are the financial benchmark used by a health plan to determine physician bonuses. If a physician meets the predetermined baseline or target of medical service use, the physician receives a bonus. These targets are incentives to manage a patient's care cost-effectively. Utilization targets for specialty care and hospital care are important benchmarks that health plans work with physicians to achieve. Many times, health plans base a utilization target on the experience of a group of physicians (or risk pool), not just one physician. By being in a risk pool, a specific physician is less constrained to provide fewer tests and procedures for a specific patient than if a utilization target was based on him/her alone. Utilization targets create incentives for physicians to treat patients appropriately and cost-effectively, particularly for specialty and hospital care. Individuals with chronic conditions or need for specialty care may have to work with their primary care physicians to ensure that they can access preferred physicians and/or services. Bonuses: Bonuses are provided from unspent withhold funds if and when the utilization of medical services by a physician's patients is lower than an estimated utilization target. A physician's bonus may also be based on measures of patient satisfaction, access, and outcomes of care. A bonus rewards physicians for providing more primary and preventive care, and also for doing fewer tests and procedures. Primary care physicians may also receive bonuses tied to managing access to specialists and hospitals. In some bonus arrangements, individual physicians or groups of physicians who greatly exceed the utilization target may have to make payments to the health plan at the end of the year. This constraint puts primary care physicians at even greater financial risk than arrangements with only simple bonuses, because physicians with simple bonuses don't have to worry about returning payments to the health plans. Physicians who may have to return funds to the health plan have an even greater incentive to manage access through referrals to specialists and hospitals. A provider's bonus may also be based on measures of patient satisfaction, access, and outcomes of care. When a fixed monthly fee per enrollee is paid to a provider it is called quizlet?provider is paid a fixed monthly sum per enrollee, often called a per member per month (PMPM) payment. The provider receives the capitated fee per enrollee regardless of whether the enrollee uses health services and regardless of quantity of services used. You just studied 20 terms!
What is a capitation payment?Capitation is a payment arrangement for health care services in which an entity (e.g., a physician or group of physicians) receives a risk adjusted amount of money for each person attributed to them, per period of time, regardless of the volume of services that person seeks.
What is a capitation agreement?Capitation Agreements. In capitation agreements, the physician agrees to assume part or all of the cost of caring for a defined pool of patients. The risk arises because the cash flow through an MCO for the total cost of caring for a patient is much larger than the costs of physician services alone.
How do I post a capitation payment?Post the Payment. Change the date to be the date you deposited the check.. Enter “Capitation Check Payment” as the payment type.. Type in the amount, check number, and select a provider.. Link the Payment to the Capitation Check Fee. Press F4 to link the payment. Select the number to the left of Capitation Fee and press enter.. |