HCA 2Reimbursement Debate

HCA 205 Reimbursement Debate

HCA 205 Reimbursement Debate

The capitation payment system is a healthcare reimbursement technique that reimburses a physician, clinic, or hospital for services that they will render to a patient under the program in the future for a defined period (Chapter 3, N.d.). In so doing, it enables these services providers to attain immense financial benefits if they render minimal health services to the patient before the expiration of the defined period. This system exerts a significant positive influence on the overall healthcare system by obligating physicians, clinics, and hospital to provide patients with quality healthcare services to minimize their hospital revisits or readmission hence amass substantial financial gains.

The capitation payment system gained popularity in the 1980s and 1990s due to pressure from both the U.S. government and private insurers to adopt a mechanism that would reduce the bloated cost of health care in the country (James & Poulsen, 2016). The tool proved integral as it enabled these institutions to curb healthcare expenditure by reimbursing health providers with specified fees for every patient for a defined period. Moreover, its avocation for patients to receive limitless healthcare services further enhanced its relevance by not only improving their access to care but also obligating care providers to provide them with quality healthcare to minimize hospital revisits and patient readmissions.

The capitation model has profoundly exerted a positive influence on the cost, quality, and access to healthcare service. By reimbursing physicians, clinics, and hospitals before the delivery of health care services, the model enables them to obtain the requisite resources necessary for the provision of quality care to patients under the program hence improving healthcare costs (Chapter 3, N.d.). Also, the program advances quality by obligating practitioners to provide patients with sound care to minimize hospital revisits or patient readmissions. Moreover, it permits access to care by ensuring that beneficiaries obtain the necessary health care services for as long as they may desire during the insurance period.

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Thank you for sharing your views on Capitation reimbursement method. However, your method is not the best method of reimbursement. The Capitation reimbursement method does not work for all hospitals, PCP, or patients. Capitation is only good for two major groups which are employers and those who utilize HMO insurance policies. However, providers are negatively impacted if one is chosen more so than the other because the one who uses the least amount of services generally gets compensated more. Employers utilize the capitation method because it provides them with a fixed rate for employee insurance coverage. Capitation provides incentives to hospitals and PCP to give fewer services to patients in order to gain more profits. That isn’t in the best interest of the patient and it only works for the provider. It isn’t a method that works for both parties. That’s precisely why fee-for-service is still the best method of reimbursement. The cost of fee-for-service is cost effective and direct. The quality of services provided are geared towards helping patients obtain services and know what those services cost. They are being treated with more care and are not in a race for compensation over the quality of care. They have access to every service they need. Fee-for-service was the first method of reimbursement created and is still used to this day because of it’s efficiency. It works for everyone.


Chapter 3. (N.d.). Healthcare Financing and Reimbursement.

Pearce J.W., (2012) Healthcare Financial Management: Journal Of The Healthcare Financial Management Association

The Capitation model seems like a strong reimbursement method.  Any method that gives incentives to doctors for providing efficient, quality care is good.  According to Batnitzky, (2018) “The provider profits if fewer services are used. However, if more services are used, the provider absorbs the cost.” (p. 61) This  This is where capitation falls short in my opinion.   When a hospital is forced, sometimes out of their own control to provide care that exceeds the annual payment contract they are the sole bearer of that cost.  depending on patient load, and the type of illnesses can greatly affect a hospitals profitability and cause a potentially huge change in year to year business plans.  The newer reimbursement types like pay-for-performance take away the fixed payment.  they add bonuses to providers for quality care and meeting certain standards, while still being penalized for sub par performance and not meeting standards.  The difference being that hospitals performance can dictate profits or penalties, and not being penalized for participating in a capitation type program.


Reference: Batnitzky, A., Hayes, D., & Vinall, P.E. (2018). The U.S. healthcare system: An introduction [Electronic version]. Retrieved from https://content.ashford.edu/Links to an external site.