Institute: ONC | Component: 1 | Unit: 5 | Lecture: b | Slide: 14
Institute:Office of National Coordinator (ONC) Workforce Training Curriculum
Component:Introduction to Health Care and Public Health in the U.S.
Unit:Financing Health Care - Part 2
Lecture:The Billing Process of Various Health Care Enterprises
Slide content:EOC : Capitation - 1 Health care organization receives fixed sum per person enrolled in the plan Same amount paid regardless of the number of plan patients requiring care, frequency of visits, or severity of illness PMPM : per member per month Payor knows costs in advance Provider assumes some risk, but has guaranteed income 14
Slide notes:Moving now from the fee-for-service payment methodology to the episode of care, or ECO, methodology, we encounter Capitation. Capitation payments are typically paid by Health Maintenance Organizations, or HMOs. The provider or health care organization receives the same amount from the third-party payor per length of time, usually a month, for the care provided at the health care organization to all of its members. Regardless of the number of patients enrolled in the plan who require care, the frequency of their visits, or the severity of an illness, the provider receives a preset amount per enrolled patient each month. The term used to describe this approach to payment is per member per month, or PMPM . The advantage of this method of payment for the payor is that the third-party payor knows the total costs in advance and places some of the risk on the provider. The advantage to the provider is a guaranteed stream of payments or income. However, the disadvantage is that the provider must assume the risk of loss should the cost of care exceed the payments received. Health IT Workforce Curriculum Version 4.0 14