Capitation is a system of payment to health care providers determined by the number of patients seen. Under a capitation system, health care providers are paid a set amount for each enrolled person assigned to that physician or group of physicians, whether or not that person seeks care, per a period of time. The amount of remuneration is based on the average expected health care utilization of that patient, with greater payment for patients with significant medical history. Since a capitation check is one large sum paid to the physician or office, it should not be applied to a single patient's account. You must create a system in your office for entering checks, applying payments as needed, and tracking capitation payments as it is being used in your office.
For Medicare-Medicaid plans, under the capitated model, the Centers for Medicare & Medicaid Services (CMS), a state, and a health plan enter into a three-way contract to provide comprehensive, coordinated care. Prior to enrolling or marketing under the capitated model, each health plan must pass a readiness review.