Capitation

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Capitation

Capitation (/kæpɪˈteɪʃən/) is a payment model in healthcare where providers are paid a set amount for each enrolled person assigned to them, per period of time, whether or not that person seeks care.

Etymology

The term 'capitation' originates from the Latin word 'caput', meaning 'head'. This refers to the per head payment system that the term represents.

Definition

Capitation is a type of a health care payment system in which a doctor or hospital is paid a fixed amount per patient for a prescribed period of time by an insurer or physician association. It is an alternative to fee-for-service payment models where services are paid for individually. In capitation, the number of services provided is not a factor in the payment amount, allowing for greater predictability in healthcare costs.

Related Terms

  • Fee-for-service: A payment model where services are unbundled and paid for separately. In health care, it gives an incentive for physicians to provide more treatments because payment is dependent on the quantity of care, rather than quality of care.
  • Health Maintenance Organization (HMO): A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO. It generally won't cover out-of-network care except in an emergency.
  • Preferred Provider Organization (PPO): A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. You pay less if you use providers that belong to the plan’s network.
  • Risk adjustment: A statistical process that takes into account the underlying health status and health spending of the enrollees in an insurance plan when looking at their healthcare outcomes or healthcare costs.

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