What Is an Insurance Capitation?

In the health care industry, capitation is a payment method wherein medical providers such as doctors receive a specific amount of money for every person or group of people assigned to them. Under this method, practitioners receive fixed compensation in advance from the managed care organizations (HMOs) in which the patients are enrolled.

Features

• HMOs make an agreement with health care practitioners to provide and oversee the care of the individuals enrolled in their insurance plan. The healthcare practitioners contracted with HMOs are referred to as an independent practice association (IPA).

Identification

• HMOs determine the remuneration an IPA receives by weighing in a number of factors pertaining to the patient. In addition to medical history and preexisting conditions, the IPA will take into account a patient's age, gender, race, occupation and geographical location.

Considerations

• Managed care organizations use capitation to keep health care costs under control. The fixed rate covers all services rendered within a designated time; the fee remains the same regardless of the number of times a patient seeks treatment.