Capitation Payments

AAA

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.

INVESTOPEDIA EXPLAINS '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. Group Health Insurance Plan

    An insurance plan that provides healthcare coverage to a select ...
  2. Insurance

    A contract (policy) in which an individual or entity receives ...
  3. Accident And Health Benefits

    Fringe benefits provided to employees for sickness, accidental ...
  4. Co-pay

    A type of insurance policy where the insured pays a specified ...
  5. Health Insurance

    A type of insurance coverage that pays for medical and surgical ...
  6. Commercial Package Policy (CPP)

    An insurance policy that combines coverage for multiple perils, ...
Related Articles
  1. Home & Auto

    Health Insurance: Paying For Pre-Existing Conditions

    If you bring a pre-existing condition to a new insurer, you may find yourself without coverage.
  2. Insurance

    Health Insurance Tips For College Students

    Why buy for health insurance when your parents' policy can cover you? Read on to avoid paying twice.
  3. Insurance

    Get Sale Prices On Healthcare With Discount Plans

    Medical discount plans can help the uninsured or underinsured afford better healthcare.
  4. Insurance

    Buying Private Health Insurance

    Getting your own policy isn't easy or cheap but in some cases, it's well worth the effort.
  5. Home & Auto

    Selecting The Right Mix Of Insurance Benefits

    Choosing employee benefits involves weighing the probability you will need them against taxes and cost.
  6. Options & Futures

    What's The Difference Between Medicare And Medicaid?

    One program is for the poor; the other is for the elderly. Learn which is which.
  7. Retirement

    Healthcare: What Are You Really Paying For?

    Long-term care costs rise fast and long-term care providers bundle services together, making it tougher for families to understand what they are paying for
  8. Retirement

    4 Myths You Don’t Know About Medicare

    Here are four common misconceptions about Medicare, the federal government’s health insurance program for people who are 65 and older or disabled.
  9. Professionals

    Does the Middle-Class Need LTC Insurance?

    Long-term care insurance is as expensive as it is necessary for many people, but is it right for all financial advisor clients?
  10. Insurance

    What Happens If Your Insurance Company Goes Bankrupt?

    When insurance companies go bankrupt or face financial difficulty, it's bad news for policy holders.

You May Also Like

Hot Definitions
  1. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  2. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  3. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  4. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  5. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  6. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
Trading Center