How are incentives to providers different when they are paid on a capitated basis rather than...

How are incentives to providers different when they are paid on a capitated basis rather than a fee-for-service basis?

Discuss the arguments for using capitation over fee-for-service.

Which would you prefer?

Solutions

Expert Solution

Capitation as the payment method used in healthcare sector. This is based on the quality and the improving patient outcomes. There are mainly two types of capitation; global and partial. Among his partial is more flexible than other. This is better for primary care services and specialists. The incentives for these services were based on the service rendered by the patient. The providers keep the money above they spend on patient services. This includes cost control, preventive care, quality care and the outcome of patients. The providers are able to supplement some services among the patients for certain services. All these are different from the fee for service.
The capitation is a fixed per capita payment which made periodically. Here the risk was hand over by the doctors and healthcare providers. But in fee for service system, the risk managers were the insurance companies. Capitation gives more preference to the wellness and prevention. This makes the people healthy. The capitation provides financial certainty for both doctors and hospitals and the insurance companies. The fee for service (FFS) focuses only the insurance companies, their risk management and financial features. The capitation is more beneficial than the FFS. This will ensure the wellness and prevention of illness of the patients.

Rahul Sunny answered 1 year ago

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