Procedural Protections for Patients in Capitated Health Plans

Abstract

In the American health care system, payers are rapidly moving toward the use of capitation as the preferred method for paying for health care services for sponsored patients. n capitation, the payer pays a provider organization a set rate per patient to care for a group of patients. The provider organization assumes the risk of the actual costs of caring for these covered lives. The theory of capitation is that providers, by assuming risk, will have incentives to contain their costs.The provider entity that provides the care can take many corporate forms. A capitated provider can be a small group of physicians with admitting privileges at a single hospital or a complex integrated delivery network comprised of hospitals, physicians, and other health care professionals and institutions with integrated case management and data systems. Currently such integrated delivery networks assume a variety of organizational forms, ranging from traditional staff model health maintenance organizations (HMOs) in which physicians are employees of the health plan to physician hospital organizations (PHOs) in which physicians and hospitals join together for purposes of contracting with payers. Hospitals and physicians belonging to their medical staffs are motivated to form integrated delivery networks or other consolidated business organizations in order to contract with payers that seek providers willing to accept financial risk for the care of sponsored patients. Providers join such arrangements out of fear of losing patients if they do not.