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The challenges of lowering care costs and improving healthcare quality may lead payers to consider the use of capitated payments as part of their value-based payment model strategies.
Capitated payments are pre-arranged payments for healthcare providers to deliver services on a per member per month (PMPM) basis. Providers are paid a set amount for each patient they see, regardless of the costs each individual actually incurs.
Under a capitation contract, providers cannot receive more than the established rate for care whether or not a patient’s care exceeded the capitation amount, otherwise known as the “cap.”