As our world changes, so does our vocabulary. Here are some terms that have crept into the health care lexicon:
Capitation vs. Discounted Fee-For-Service
Capitation: A reimbursement method that pays a set fee per patient per month in exchange for all medical care. This type of approach puts physicians and hospitals at financial risk. In some systems, primary care physicians may manage the capitation fee, setting aside a portion of it to pay specialists and hospitals. This process is called subcapitation.
Discounted fee-for-service: A reimbursement system commonly used by preferred provider plans in which physicians agree to provide care to a health plan's patients at a discount from the customary fee. The discount may be further reduced by a "withhold," a sum that the payer deducts from the initial payment and withholds until the end of the year, when it is reimbursed to physicians only if they meet cost saving goals.
Managed Care vs. Managed Competition
Managed Care: The meaning of this phrase is still evolving, but generally it refers to a method of delivering, supervising, and coordinating health care to control costs and maintain quality. The system works in many organizational guises, including HMOs, PPOs, IPAs, and managed health insurance indemnity plans.
Managed Competition: A plan for health care reform that would combine limited government regulation with free-market forces to reduce costs and increase access to care. Under this plan, consumers and businesses would form large groups to buy health care from organized networks of doctors and hospitals that would compete to attract patients by offering the best quality at the lowest price.
These definitions are reprinted with permission from the glossary of Revolution: The New Health Care Takes Shape, authored by noted health care futurist Russell C. Coile Jr., published by Whittle Direct Books, 1993.
