Capitation

Capitation pays for enrollment rather than for visits. CMS defines it as a specified amount paid to a health plan or doctor to cover a member’s care for a set length of time. It runs at two levels. State Medicaid agencies pay managed care organizations a set per member per month payment, and CMS publishes Medicare Advantage capitation rates each year in its rate announcement. A plan can then pass part of that arrangement down to a practice through a capitated contract, either for all covered services (full capitation) or for some of them alongside fee-for-service billing for the rest (partial capitation).

For billing, capitation changes what you chase. The money arrives as a monthly payment tied to a member roster, so the work is reconciling that roster against your own patient list, posting each payment to the month it covers and following up on members who are missing or were dropped retroactively. Visits still have to be reported, because the plan needs the encounter data. In Medicare Advantage, the diagnoses from those encounters also feed the risk scores CMS uses to adjust what it pays the plan.

The mistake is posting the monthly payment and stopping there. Missing members, retroactive terminations taken back from a later month and carved-out services that were never billed separately all leak money without a single denial to warn you. Reconcile every month and keep each contract’s carve-out list next to the roster.