Question

This is for my Health care Finance class.

List and explain one policy, process, or program that may insulate management somewhat from the financial results of poor financial planning.

Answer 1

Ans) Capitated rate:

- Capitation rate means the fee the department pays monthly to the contractor for each enrolled Medicaid member for the provision of covered, required, and optional services, whether or not the enrollee received services during the month for which the fee is paid.

- Capitation payments are payments agreed upon in a capitated contract by a health insurance company and a medical provider. They are fixed, pre-arranged monthly payments received by a physician, clinic or hospital per patient enrolled in a health plan, or per capita. The monthly payment is calculated one year in advance and remains fixed for that year, regardless of how often the patient needs services.

- Rates for capitation payments are developed using local costs and average utilization of services, and therefore, can vary from one region of the country to another. Many plans establish risk pools as a percentage of the capitation payment. Money in this risk pool is withheld from the physician until the end of the fiscal year. If the health plan does well financially, the medical provider receives this money; if the health plan does poorly, the money is kept to pay the deficit expenses.