Tufts Health Plan

Running Head : TUFTS HEALTH PLAN

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On what assumptions is capitation based

Capitation is a fixed charge paid by a person or by the person 's employer to a specified health management organization (HMO ) no matter whether the person makes use of the HMO 's providers or not (Kleinke 2008 . Payments are usually made every month and do not depend on the number of services offered to the members (Hidalgo , 2008 . Capitation is based on the following assumptions

First , it is assumed that the mean

utilization rate for each service is known or can be forecast with precise accuracy . Secondly , assumptions aver that variations in utilization rates in different areas can be precisely forecast . The third assumption is that the cost of each service is known and will not change in the duration of the contract Fourth , it is assumed that no hidden costs are present and amendments can be made in the PMPM (per member per month ) for such costs . Fifth , it is assumed that all the covered and excluded services have been adequately characterized . An additional assumption is that discounts represent efficiency . Finally , it is assumed that the PMPM can be boosted by extra income

2 . What other incentives do physicians have

Physicians have a host of incentives among them access to training opportunities and vastly improved and efficient systems . Other incentives include competitive reimbursement arrangements and the Medical Director meetings which help strengthen the partnership . For the MSF , physicians retain all the surpluses . These...