When it comes to healthcare, many patients are confused by the terms and jargon used by insurance companies, healthcare providers, and medical professionals. One term that may cause confusion is “capitation agreement” or “managed care plan denial.” These phrases are often used when discussing the cost of healthcare services, but what exactly do they mean?

A capitation agreement is a contract between a healthcare provider and an insurance company that sets a fixed fee for medical services provided to the insurer`s members. Under a capitation agreement, the provider agrees to provide certain medical services to the insurer`s members for a set fee, regardless of how many times those services are used. The insurer pays the provider a predetermined amount per member per month, and the provider is responsible for providing all necessary medical services to the insured patients.

Managed care plans, on the other hand, are insurance plans that control the costs of healthcare services by limiting the amount of care provided to patients. Managed care plans often use a capitation agreement to control healthcare costs for their members. Because the provider receives a fixed fee for each member, they have an incentive to provide only necessary medical services and to limit unnecessary testing or procedures.

If a patient receives healthcare services that are not covered under their capitation agreement or managed care plan, they may receive a denial from their insurer. This denial means that the costs of the services are not covered by the capitation agreement or managed care plan, and the patient is responsible for paying for the services out-of-pocket.

To avoid unexpected costs, patients should always check with their insurer or healthcare provider to see which services are covered under their capitation agreement or managed care plan. It is also important to review any claims or explanations of benefits (EOBs) received from the insurance company to ensure that services were properly covered.

In conclusion, a capitation agreement is a contract between a healthcare provider and an insurance company that sets a fixed fee for medical services provided to the insurer`s members. Managed care plans use capitation agreements to control healthcare costs, and patients may receive a denial for services not covered under their capitation agreement or managed care plan. Patients should always check with their insurer or healthcare provider to see which services are covered and review any claims or EOBs received to avoid unexpected costs.