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Comprehensive and Global Payments

Learn what you need to consider about comprehensive/global payment to assure success of your practice.

What is capitation?

Capitation is a single payment to cover all services needed during a defined period of time, but across many episodes of care. A physician receives payment every month a patient is enrolled in the plan, whether or not any services are provided.

  • An example of a comprehensive payment is the Per Member Per Month (PMPM) payment used for Patient Centered Medical Homes to cover costs of increased coordination of care.
  • Another example is population-based payment model that will be tested by Medicare in the Pioneer ACOs initiative.
Do comprehensive payments really work?

Comprehensive payment rewards physicians for keeping patients healthy. This is because healthier patients will require less services and therefore reduce costs of care.

Capitation payments were widely used in the 1990's in the HMOs arrangements and were proven successful in limiting costs but became unpopular with the public because they may restrict access to services or incentivize providers to 'cherry pick' the healthier patients.

Proponents argue that previous technology did not support the now available access to data that allows for accurate calculation of utilization rates and measurement of physician performance.

Actual utilization patterns: how much does it cost to manage your practice?

It is important to understand how much it costs to operate your practice to assure that your global payments will meet your practice costs.

For successful capitation systems, specialists should:

  • Review data regarding actual utilization patterns
  • Compare these against projected utilization budgets
  • Compare results with utilization patterns of your peers
What tips should I consider?
  • Identify all global services to ensure your comprehensive contract does not allow the health plan to add services without your consent.
  • Predict the extent to which your patient population will use identified services.
  • Contract provisions should include the following:
    • You will not accept global payments until the number of enrollees is adequate.
    • Certain services shall be paid by the plan at a fee-for-service rate.
  • Evaluate the risk adjustments to PMPM payments to be sure they will realistically cover the costs of caring for a sicker patient.

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