How health systems work per capita

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Per capita is a type of health care payment system in which an insurer or physician association pays a physician or hospital a fixed amount per patient for a specified period of time.

It pays a doctor, known as a primary care physician (PCP) , a fixed amount for each registered patient, whether or not the patient seeks help. The PCP generally contracts with a health maintenance organization (HMO) known as an independent practice association (IPA), whose role is to recruit patients.

The remuneration is based on the expected average use of health services by each patient in the group, with higher costs of use belonging to groups with higher expected health needs.

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The term "capitation" is derived from the Latin word caput meaning "boss" and is used to describe the number of employees in an HMO or similar group.

Examples of paying health care costs

An example of a per capita model would be an API that negotiates a payment of $ 500 per year per patient with an approved PCP. For an HMO group of 1,000 patients, the PCP will receive $ 500,000 per year and, in return, will be required to provide all authorized health care services to 1,000 patients during that year.

If an individual patient uses $ 2,000 for medical services, the practice will end up losing $ 1,500 for that patient. On the other hand, if a person uses medical services for only $ 10, the doctor will make a profit of $ 490.

The projected profitability of this model ultimately depends on the amount of medical care the group may need. Since patients with pre-existing medical conditions are often mistaken for younger, healthier patients, the expected benefit can sometimes converge with the actual benefit.

There are primary and secondary ratios per capita:

  • The primary pillow payment is a relationship in which the primary care provider pays directly for the IPA for each patient who chooses to use the practice.
  • A secondary capitation fee is a method in which an IPA-approved secondary provider (such as a laboratory, radiology department, or medical professional) is paid among registered PCP members.

There are even treating physicians employed under the preventive health care model who receive higher financial rewards for prevention than for treating disease. In this model, the PCP will benefit from avoiding costly medical procedures.

Benefits of the per cushion system

The groups most likely to benefit from the health care system per capita are HMOs and TIPs.

The main advantage of a doctor is a reduction in the cost of accounting. An API contracted physician does not need to maintain a larger billing staff, nor does the physician have to wait to receive reimbursement for their services. Reducing these costs and inconvenience may allow the practice to treat more patients at a lower overall operating cost.

The advantage of the API is that it does not allow treating physicians to provide more care than necessary or to use expensive procedures that may not be more effective than inexpensive ones. This reduces the risk of over-billing for procedures that may or may not be necessary.

The main benefit to the patient is avoiding unnecessary and often time-consuming procedures, which can lead to higher personal costs .

Disadvantages of the capital system

One of the main problems with capitation healthcare (and a complaint shared by many HMO participants) is that the practice encourages physicians to enroll as many patients as possible, leaving less and less time to visit the patient. .

For example, it is not uncommon for an HMO patient to complain about appointments that last no more than a few minutes, or that doctors make a diagnosis without touching or examining the patient.

While the broader purpose of per capita payment may be to discourage overspending and overspending (which can affect the cost of premiums), it can be detrimental to the individual patient in need of improved care.

To increase profitability, a medical practice can change the way it would treat a patient differently or initiate policies that actively exclude procedures to which the patient may be entitled. This is becoming a form of rationing of health services that can reduce the overall level of care for greater financial benefits.

Some argue that capitation is a more cost-effective and responsible healthcare model, and there is evidence to support this claim. A 2009 survey of studies found that per capita administration was more cost-effective in groups with moderate health needs, with practices reporting fewer illnesses and more enrollment than fee-for-service practices.

In contrast, a study by the Center for the Study of Health System Change in Washington, DC found that up to 7% of physicians were actively cutting their services as a result of financial incentives, and concluded that 'per capita income of the group was associated with incentives to reduce services ".

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