What you should know about capitation reimbursement models?

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What you should know about capitation
reimbursement models?
Capitation reimbursement models are widely
adopted by managed care organizations due to the
rapid transition of the US healthcare system from
fee-for-service models to value-based care. The
main purpose behind the use of capitation
reimbursement models is to ensure the quality of
care and manage cost hence lets understand about
this model in more detail. What
are capitation reimbursement models?   As you
know about legacy fee-for-service models for
reimbursement where physicians are getting paid
for the volume of services provided. While in
capitation models for reimbursement physicians
are getting paid a fixed amount per patient, per
unit of time, whether or not the individual seeks
care. Here one more important thing to note is
that capitation payments are paid prior to care
delivery and are determined by the range of
services provided, as well as average utilization
of those services and local cost of care.
Capitation rates vary from one region of the
country to another as these rates are developed
using local costs and average utilization of
services.
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What you should know about capitation
reimbursement models?
In many plans, a risk pool is established as a
percentage of the capitation payment. Physicians
withhold money in this risk pool until the end of
the fiscal year and if the health plan does well
financially, the money is paid to
the physician and if it does poorly, the money is
kept to pay the deficit expenses.   Now, you have
a more precise understanding about capitation
reimbursement models also you should be aware
about three main kinds of capitation models
primary care, secondary care, and global
capitation. We will discuss them in the following
brief. Different types of capitation
models Primary care capitation This capitation
reimbursement model completely refers to primary
care clinical services where a primary care
provider (PCP) agrees to provide a predetermined
set of services. While the number and kind of
services vary from plan to plan.
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What you should know about capitation
reimbursement models?

• Most capitation models for primary care services
  include
•     Routine screenings for vision and hearing
•     In-office health education and counseling
  services
•     Preventative, diagnostic, and treatment
  services
•     Injections, immunizations, and medications
  administered in-office
•     Outpatient laboratory tests conducted
  in-office
•  
• It is usual for large groups or physicians
  involved in primary care network models to
  receive an additional capitation payment for
  diagnostic test referrals and subspecialty care.
  The PCP will use this additional money to pay for
  these referrals.
• Due to this if the overall cost of referrals
  exceeds the capitation payment then PCP at
  greater financial risk but the potential
  financial rewards are also greater if diagnostic
  referrals and subspecialty services are
  controlled.

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What you should know about capitation
reimbursement models?

• Secondary care capitation
• Under this capitation reimbursement model,
  capitated payments are given by secondary
  providers based on the PCPs enrolled membership.
• Services that make up secondary care include
•     Radiology,
•     Diagnostic imaging,
•     Physical therapy
•     Other services that are not provided by a PCP
• Global capitation
• This model is specially used for areas that lack
  primary care access as reimbursement under this
  model covers all services for a patient
  population.
• Now we are reaching the concluding part where we
  need to understand how capitation is being used,
  lets understand in more detail.

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What you should know about capitation
reimbursement models?
Understand how capitation is being used? You can
observe that capitation models are implemented
into healthcare systems by various payers and
states. In this case, a predetermined annual
budget is paid by the state to all hospitals that
cover inpatient and outpatient services provided
to residents, regardless of their insurance
plan. For example- Marylands all-payer global
capitation model reduced Medicare hospital costs
by 429 million. Maryland hospitals also reduced
potentially preventable complications by 48
percent and improved the all-cause readmission
rate by 57 percent after implementing the payment
model.   Moreover, this model is helpful for both
rural communities and providers due to the unique
care landscape. For example- In August of 2020,
CMS announced the CHART Model of reimbursement
which offers rural providers new funding
opportunities to improve value-based care through
capitated payments.   Now you can feel more
comfortable in capitation reimbursement models as
well as their usage. If you find this complicated
and want to save your time and efforts, you can
definitely rely on us as we are a leading medical
billing and coding company across the US.