Capitated Contract
What Does Capitated Contract Mean?
Capitated contracts are health insurance plans where a healthcare provider is paid a fixed, flat fee for each patient covered under the plan, regardless of the amount or type of care the patient receives. This means that, under a capitated contract, the payments made by the insurer to the providers remain the same for each patient, regardless of how much care or services each patient requires.
Insuranceopedia Explains Capitated Contract
Capitated contracts can be highly appealing to healthcare providers because they simplify the billing process. Providers receive a consistent payment for each patient, which allows them to make accurate monthly income estimates.
This model contrasts with the traditional fee-for-service approach, where healthcare providers submit individual bills to insurance companies for every service rendered. The fee-for-service method can be tedious and time-consuming compared to the streamlined, predictable billing process of capitated contracts. As a result, capitated contracts offer administrative efficiency and reduce the complexity of managing payments.
