Assignment: Under Capitated Price

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Assignment: Under Capitated Price

Assignment: Under Capitated Price

ORDER NOW FOR AN ORIGINAL PAPER:Assignment: Under Capitated Price

Healthcare organizations using this system receive reimbursement from the third-party payer based on the diagnosis of the patient. The per diagnosis rate provides financial risks and financial incentives for the healthcare organization. The better the organization controls costs, the more profit it makes. However, there is no way an organization can “pad the bill” the way it can in a per diem system (by extending the length of stay), since the third-party payer is reimbursing by the diagnosis instead of by the day.

Under capitated price, or capitation, healthcare organizations receive a fixed amount of money each month for every person enrolled in the plan, regardless of whether a given person receives care. Capitation as a payment method provides the greatest financial risk and opportunity to the healthcare organization because the fixed amount is based on the cost of care projected to be used by the covered population, rather than the cost of care actually used. If the costs to care for the covered population fall below the capitated price, the healthcare organization makes money. If the costs exceed the capitated price, the orga- nization does not profit.

The other payment methods mentioned previously provide financial incentives to healthcare organizations to contain costs after the patient seeks care, primarily by controlling use, but capitation also provides financial incentives to healthcare organizations to contain costs before the patient seeks care, primarily by encouraging prevention. Third-party payers and healthcare organizations negotiate capitated payments, often called premiums, based on their perceptions of the actuarial experience of the covered population. Whether the healthcare organization realizes a profit or incurs a loss depends on its ability to project demand for care by the covered population and negotiate the appropriate capitation, and then to contain costs when a member of the enrolled population—a subscriber—seeks care.

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