Dr Cannon

Blog | Aug 17, 2022 | Article

Full-Risk Capitation vs. Fee-For-Service

Full-Risk Capitation vs. Fee-For-Service

As a primary care physician, you want to do what’s best for your patients as well as your practice. You want to practice care that benefits your patients and get paid fairly.

At agilon health, we understand that physician payment and delivery models and how physicians are compensated can impact both patient care and a practice’s bottom line. The federal government and private payors are changing the way they pay health care providers and are moving toward models that are intended to improve quality and reduce costs. While many physicians currently use fee-for-service reimbursement, full-risk capitation is growing in use and is part of agilon’s total care model. We’ll look at how these payment systems differ and how they can affect patient care and health care spending.

What is the Difference Between Fee-for-Service and Full-Risk Capitation Models?

Fee-for-service reimbursement has long been used in health care, but today, that is changing because it is increasingly seen as costly and burdensome to both providers and patients. According to a 2021 survey, just 39.3% of health care dollars went to traditional fee-for-service or other legacy payments not linked to quality. With fee-for-service reimbursement, insurance companies or government agencies are billed for each test, medical procedure, consultation, and treatment provided every time a patient goes to the doctor or is hospitalized. Physicians are rewarded for the number of patients they see and the number of services they provide.

By contrast, full-risk capitation is a performance-based system that provides incentives for better health care, while also creating stable budgets and improving physician quality of life. Capitation is a stable payment model, offering a fixed monthly payment to physician practices. Payments to providers are based on the expected care the patient will receive, and higher payments are made for patients who have more extensive medical histories.

Fee-For-Service vs. Full-Risk Capitation

Fee-For-Service Full-Risk Capitation
Quantity-based system Quality-based system
Risk is assumed by payors (insurance companies) Risk is often assumed by health care providers
Provider is paid for each visit, test and procedure after services are completed Practice receives a monthly flat fee for each patient enrolled
Focuses more on the number of services as opposed to patient wellness Focuses on patient wellness over the number of services provided

Is Full-Risk Capitation a Better Model for Physician Practices?

The National Academy of Medicine (formerly the Institute of Medicine) has long been concerned with waste and inefficiencies in the health care system, and in a 2021 report recommended that to meet the goal of providing universal access to high-quality primary care, public and private payers should shift from fee-for-service reimbursement to more value-based models.

One clear advantage of full-risk capitation for physician practices is that physicians get paid a flat fee every month rather than being paid for services and care months after a lengthy billing and record submission process.  But there are additional benefits for physicians, including:

  • More control over your patients’ care
  • Reduction of unnecessary spending
  • Reduction of unnecessary care
  • Increased administration efficiency

As a physician, you know the importance of quality care. Are you ready to be compensated for value provided instead of volume? As payment models shift, agilon health is partnering with primary care physician (PCP) groups to empower them improve outcomes, reduce costs and transform the future of health care in their communities through full-risk capitation.

agilon provides the capital, data, payor relationships, executive experience, and contract support that allow physician groups to take on the risk of total care for their most vulnerable patients. At the center of our Total Care Model is our unified operating platform. It combines people, process, and technology to help our physician partners identify gaps in care, integrate seamlessly with payors, grow their practices, and identify untapped opportunities for improved outcomes. The platform is shaped to fit each physician’s own local market.

Managing Your Practice with agilon

Navigating the changing landscape of payment models can be complicated, especially when caring for senior patients. Learn more about how agilon health can make it easier to focus on providing care and developing your practice.

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