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Capitation: Really briefly, what is capitation? Under what circumstances would a MCO use capitation reimbursement for...

Capitation:

Really briefly, what is capitation? Under what circumstances would a MCO use capitation reimbursement for a hospital?

If a hospital is operating in an environment that is heavily capitated, what kinds of management tools can they incorporate to be successful in such an environment?

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Capitation is a payment arrangement for health care service providers such as physicians, physician assistants or nurse practitioners. It pays a physician or group of physicians a set amount for each enrolled person assigned to them, per period of time, whether or not that person seeks care.

Capitation payments are used by managed care organizations to control health care costs. Capitation payments control use of health care resources by putting the physician at financial risk for services provided to patients. At the same time, in order to ensure that patients do not receive suboptimal care through under-utilization of health care services, managed care organizations measure rates of resource utilization in physician practices. These reports are made available to the public as a measure of health care quality, and can be linked to financial rewards, such as bonuses.

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