C
Definition
A payment model where a provider or broker is paid a set amount for each enrolled person assigned to them, per period of time (usually per member per month, or PMPM), regardless of whether that person seeks care/transport.
Overview
Why it Matters
This shifts the financial risk from the State to the Broker/Provider. If few people ride, profit is high. If utilization spikes, profit disappears.
How it Works
The Broker receives $2.00 per member for 100,000 members ($200k/month). They must pay for all required rides out of that pool. Whatever is left is their profit.
Code Comparison
Comparison: Capitation vs. Fee-For-Service (FFS)
Capitation: Fixed monthly revenue, variable cost (Risk based).
FFS: Revenue is tied directly to work performed (Pay per trip/mile).
Common Questions
- Underestimating Utilization: bidding on a capitated contract without realizing the population is high-needs (e.g., dialysis patients), leading to bankruptcy.
- Skimping on Quality: Incentivizing denial of trips to save money (illegal and unethical).
- Analyze historical claims data extensively before accepting a capitated rate.
- Focus on "Demand Management" (e.g., public transit vouchers, gas reimbursement) to lower the cost of expensive van trips.
Sources
ACP - Understanding Capitation