Evolution of Managed Care

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Evolutionof Managed Care

Evolutionof Managed Care

Whatis capitation? How does this payment arrangement share riskproviders?

Capitationis a term that refers to the payment of a fee or a grant to a doctorsuch that the amount given is determined by the number of patientsserved by the medical practitioner. The healthcare service providerssuch as nurses and physicians are paid a particular amount based onthe enrolled patients assigned to them whether these patients seekhealth care services or not. This managed payment is guided bycontracting the health service providers through an IPA (IndependencePractice Association) which is a type of HMO (Health maintenanceorganization) (Cox, 2011). the IPA enlists the practitioners toprovide care for patients enrolled in HMOs. Remuneration is thusbased on the expected health care utilization of each patient withgreater amounts for patients with relatively greater medical history.

Capitationpayments control health care resource usage where the physician is afinancial risk for the health services provided. Cox (2011) statesthat risk pools are developed with a percentage of the payments. Themoney within the risk poll is withheld from the physician until thefiscal year ends. They will only receive this money if the healthplan does well financially. However, physicians are not the only onesat risk. The risk pools established include one for professionalservices which involves physicians only and another for inpatientservices that is shared by the hospital, the HMO and the physicians(Cox, 2010).

Whatincentive do the providers have in giving discounts under thediscounted fee arrangements?

Underthe inpatient services risk pool, parties with some control ofutilization of health services are encouraged to limit inpatient daysfor use only when it is necessary for patient welfare. Hence, it ismeant to motivate physicians to motivate physicians with control overdischarges and admissions. Under per diem, the hospital has incentiveto give discounts because these discounts result in long term higherprofits (Cox, 2010). The discounts are pre-arranged andpre-determined hence, the physician does not absorb financial loss ontheir part by giving discounts. In addition, discounts encourage morepatients to use the health services.

Whyshould the long-term care system be equipped to provide a variety ofLTC services?

Itis important to avail a variety of services in long term care becauseLTC needs vary from patient to patient and from diagnoses todiagnoses. Long term care should meet both non medical and medicalneeds of patients who cannot care for themselves for long periods.While some LTC can be catered for by unskilled care, an increased inolder populations necessitates the availability of medically skilledpractitioners who can help address multiple conditions associatedwith ageing populations (Kane,2012).In addition, the worlds’ demographic is changing where birth ratesare lower while people live longer. Hence, families are smaller andnot all can afford high cost LTC facilities. Thus, having varyingtypes of services gives such families options. Patients using LTCservices are diverse in terms of clinical needs and age. According toKane(2012) notall LTC services are used by the elderly, certain degenerativeconditions, disabilities, accidents and chronic illnesses can leaveeven a child fully dependent on others for daily care. Once a personhas a condition that deprives them of the ability to fulfillactivities of daily living, they will require some form of LTC. Owingto these varying needs and potential patient pool, it is important tohave a variety of LTC services.


Cox,T. (2011). Exposing the true risks of capitation financed healthcare.Journalof Healthcare

RiskManagement,30: 34–41

Cox,T. (2010). Legal and Ethical Implications of Health Care ProviderInsurance Risk

Assumption.JONA’SHealthcare Law, Ethics, and Regulation,12(4), 106-116

Kane,R. (2012). Thirty years of home and community-based services: Gettingcloser and closer to home.&nbspGenerations:Journal of the American Society for Aging,1-5

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