A primary care physician is invited to give a presentation to a local employer. He is a member of a large multi-specialty medical group, which he joined less than a year ago after completing residency. During the presentation, the physician discusses the various medical specialties available within the group, as well as the range of ancillary services the group offers at its facilities. In the ensuing discussion, the physician learns that the employer has been facing financial difficulties. The employer wishes to continue offering health care coverage to its employees but needs to reduce expenditures. As a result, the employer would like to negotiate a contract in which the medical group would provide care to all the company's employees in exchange for a set monthly fee per employee. Which of the following payment methods best describes this type of health care financing arrangement?

Question

A primary care physician is invited to give a presentation to a local employer.  He is a member of a large multi-specialty medical group, which he joined less than a year ago after completing residency.  During the presentation, the physician discusses the various medical specialties available within the group, as well as the range of ancillary services the group offers at its facilities.  In the ensuing discussion, the physician learns that the employer has been facing financial difficulties.  The employer wishes to continue offering health care coverage to its employees but needs to reduce expenditures.  As a result, the employer would like to negotiate a contract in which the medical group would provide care to all the company's employees in exchange for a set monthly fee per employee.  Which of the following payment methods best describes this type of health care financing arrangement?

Quizplus · Accepted Answer

An arrangement in which a payor (individual, employer, or government entity) pays a fixed, predetermined fee per patient to cover all required medical services is termed capitation. Capitation is the payment structure underlying health maintenance organization (HMO) provider networks. Under capitation, there is an incentive for the provider and patient to reduce expenses, usually by restricting patients to a limited panel of providers within the plan, requiring referrals from a primary care provider prior to specialist consultations, and denying payment for services that do not meet established evidence-based guidelines. Capitation payments are often made to a private insurance company, which then negotiates with individual physicians or physician networks to provide care. Alternately, a very large physician group (including primary and specialty physicians) may contract directly with employers to provide capitated care for their employees. (Choice B) Discounted fee-for-service is a payment arrangement in which an insurer pays a provider for each individual service provided at a pre-arranged, discounted rate. Employers would not generally negotiate a fee-for-service contract directly with a provider. (Choice C) Global payment is an arrangement in which an insurer pays a provider a single payment to cover all the expenses associated with an incident of care. This is most commonly done for elective surgeries, in which the global payment covers the surgery as well as any pre- and post-operative visits needed. (Choice D) A patient-centered medical home is a specific model of primary care in which patients have access to a personal physician who coordinates care and sees the patient through all aspects of care, including preventive services and acute and chronic disease management. Payment for these services may be capitated or fee-for-service. (Choice E) Point-of-service plans require patients to have a primary care provider and obtain referrals for specialty consultations. They differ from HMO plans in that they allow patients to see providers outside the network, albeit at higher out-of-pocket costs (copays and deductibles). Educational objective: Capitation is an arrangement in which a payor pays a fixed, predetermined fee to provide all the services required by a patient. Payors may negotiate a capitated contract with an insurance company that then pays the providers, or a large medical group may negotiate directly with the payor.

A Primary Care Physician Is Invited to Give a Presentation