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. Budgeting

    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.
  2. Insurance

    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?
  3. Economics

    The Top Medical & Healthcare Software Companies

    These are the top medical software companies--a growing and dynamic market ripe for investing.
  4. Insurance

    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.
  5. Insurance

    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.
  6. Insurance

    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.
  7. Insurance

    4 Ways to Find Good Health Insurance

    Follow these 4 steps to get the best coverage at the most affordable price.
  8. Insurance

    Investing In Health Insurance Companies

    Health insurance companies work a little differently than most companies. Here's what you need to know as an investor.
  9. Insurance

    Services That Health Insurers Often Decline

    Learning how to navigate health insurance pitfalls will make you a more educated healthcare consumer.
  10. Insurance

    How to Avoid Penalties When Postponing Medicare

    The rules and timing can be tricky; here's how to navigate them, without getting dinged by penalties.
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. 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 >>
  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. 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 >>
  6. What is the range of deductibles offered with various health insurance plans?

    Explore the wide range of deductibles available on various health insurance plans, and learn factors to consider when selecting ... Read Answer >>
Hot Definitions
  1. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  2. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  3. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  4. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  5. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center