Practice Management Alert

Find out whether capitation will help, or harm, your practice Capitation was a commonly heard word in the billing world in the 1990s, but it fell out of use several years ago. With Blue Cross and Blue Shield of Massachusetts- new plan to stop paying doctors and hospitals for each patient visit or treatment and instead pay doctors and hospitals a flat sum per patient each year, capitation is in the billing forefront again. Now's the time to make sure you know the ins and outs. Take a look at this capitation FAQ to learn the capitation basics. Question 1: What is capitation? Capitation is a payment method in which the payer reimburses the provider a fixed amount per month for every member of the health plan panel to whom they provide some type of service, says Peter Lucash, MBA, MPH, a medical practice consultant and trainer in Charleston, S.C., who writes the "Medical Practice Business Blog" at http://www.allbusines.com/11417 and is the author of Medical Practice Business Plan Workbook -- 2nd edition. The payer reimburses the provider at set intervals throughout the year, as set up in the capitation contract -- usually monthly, quarterly, semiannually, or annually. Under capitation the contracted payer reimburses you based on the number of patients covered in the contract (by head) rather than by the number of services your physician provides. Example: You bill for an internist. Health Plan A has 1,000 members who are assigned to your provider as their primary-care physician. Based on your contract with Health Plan A, your office gets a check for $15 per member each month, or $15,000 per month. This is known as "per member per month" (PMPM), Lucash says. Some months the internist sees 50 patients from this panel, and in the height of the flu season he-ll see 275 per month. "You will get the same check, regardless of the services rendered to this group, more or less," Lucash says. Question 2: How do I bill claims under capitation? Under capitation, you have to track services for the panel and will probably have to submit claims, even though the payer won't pay you on a per-claim basis, Lucash says. "That said, there may be services that are not covered by the contract and for which you will be paid in addition to the capitation fee," he adds. Flu shots are often an example of these non-contract-covered, or carve-out, services. Tip: Check to see how your billing software deals with capitation claims. "Some software, if set up correctly, will adjust off all of the charges at the time of posting and leave the patient's copay," says Melinda S. Brown, CMBS, insurance biller for a primary-care provider [...]