Capitation Payments

DEFINITION of 'Capitation Payments'

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

BREAKING DOWN 'Capitation Payments'

Capitation payments are defined, periodic, per-patient payments (usually monthly) for each individual enrolled in a capitated insurance plan. For example, a provider could be paid per-month, per-patient, despite how many times the patient comes in for treatment or how many services needed. The payment varies, depending on the capitation agreement, but generally they are based on characteristics such as the age of the individual enrolled in the plan. Modifying the plan according to specific characteristics for groups of patients is one way to compensate providers for the medical care expected for similar ailments within a group.

RELATED TERMS
  1. Capitated Contract

    A healthcare plan that allows payment of a flat fee for each ...
  2. Case Management

    Planning, processing and monitoring the healthcare services given ...
  3. Health Insurance

    A type of insurance coverage that pays for medical and surgical ...
  4. Net Collections

    A term used in medical accounting to describe the amount of money ...
  5. Accountable Care Organizations

    Healthcare providers that take a group approach to coordinating ...
  6. Informed Consent

    Permission from a medical patient to a doctor to receive treatment ...
Related Articles
  1. Personal Finance

    How To Avoid Medical Debt

    Find out what you can do to avoid a financial meltdown when there's a medical emergency.
  2. Personal Finance

    Health Open Enrollment: Read This Before You Renew

    Time to renew your health plan – or shop for a new one for 2016. Here's how to get the most from marketplace open enrollment for the Affordable Care Act.
  3. Personal Finance

    5 Alternatives to Traditional Health Insurance

    Discover five of the most popular alternatives to traditional health insurance plans, alternatives that are increasingly popular as health insurance costs rise.
  4. Retirement

    Medicare’s New Payment Rules: Should You Worry?

    Medicare is moving from a fee-per-service model for hip and knee replacements to one that involves bundled payments. How to protect your rights.
  5. Personal Finance

    Do This If Health Insurance Doesn’t Cover Your Bills

    Health insurance doesn't pay enough to help the millions of consumers who are drowning in medical debt. Are there any other options to soften the blow?
  6. Personal Finance

    7 Mistakes to Avoid When Buying Health Insurance

    Understand the need for health insurance and why some undervalue the need for coverage. Learn about the top seven mistakes to avoid when purchasing insurance.
  7. Personal Finance

    Do You Need Short-Term Health Insurance?

    Yes, if you've no other coverage options. Here’s what you need to know about how it works and how it differs from employer-provided and marketplace plans.
  8. Retirement

    Proposed Medicare Drug Rules: Good or Bad for Seniors?

    The federal government is proposing a solution to the rising prescription drug prices that Medicare and seniors who use Medicare Part B pay. Will it work?
  9. Personal Finance

    4 Ways to Find Good Health Insurance

    Follow these 4 steps to get the best coverage at the most affordable price.
  10. Personal Finance

    Important Dates to Know

    There are five important dates to know.
RELATED FAQS
  1. How can I use zero-based budgeting for my own finances?

    Learn the difference between a copay and a deductible, two very common features of most health insurance plans in the United ... Read Answer >>
  2. What is a gatekeeper?

    A gatekeeper is a health insurance term used to describe the person in charge of a patient's treatment. Anyone who receives ... Read Answer >>
  3. How does being overweight affect my healthcare costs?

    Learn why health-care costs are often higher for overweight and obese patients. Find out how insurers and employers are recovering ... Read Answer >>
  4. How is working capital different from fixed capital?

    Understand the differences between working capital and fixed capital, including definitions and examples of how businesses ... Read Answer >>
  5. What are the advantages of paying your taxes with the Electronic Federal Tax Payment ...

    The Electronic Federal Tax Payment System (EFTPS) is a free tax payment service offered by the U.S. Department of the Treasury ... Read Answer >>
  6. What role does the agency problem play in the modern Health Care industry?

    Read about the role of the principal-agent problem in the modern American health care industry, and learn why health insurance ... Read Answer >>
Trading Center