Overview: Shared risk contracting is a concept in healthcare. This process of shared risk contracting is the idea of allocating health care service costs. The process distributes costs across a larger group of people which includes those people of all ages and health conditions. Originally this idea of shared risk contracting was created by the government and aided with help from the providers and payers organizations. Shared risk contracting was created because there was a need in health care to improve the quality of services for patients, along with making health care cost effective but not compromising the quality of services provided to patients. First in shared risk contracting, a risk has to be recognized by the parties that are involved. …show more content…
This is just the idea that for every service provided to the patient, the physician bills it and is paid per service. This system has had its advantages and disadvantages. One advantage that this type of payment system has that it maximizes patients along with encouraging a healthy lifestyle for patients. However, fee for service can easily promote overutilization and is a big negative of the fee for service payment system. Patients often take advantage of this system and use services that are not medically necessary. The goal of health care has become to venture off from fee for service payment system into a system where not only one can reduce health care costs but you do not sacrifice the quality of health care that is being provided to patients. Multiple different payment system models have been presented into contracts that’s goal is to share the risk between both the providers and payers. These type of shared risk contracts will be discussed …show more content…
This is when a percentage of cash that was to be paid to the provider is held until the end of the pay year. Under the contract, at the end year if a physician does well financially, than they are returned the withheld money. However, if the provider does not meet the stated terms in the capitation contract, then the withheld money is used to make up any financial deficiencies that the provider had. This way the provider does not actually end up making a profit. This is how both the payer and the provider share the risk. PCP’s and specialty care physicians are the one on the receiving end of capitation payments. A “gatekeeper” system is often used under the capitation concept. This means that a PCP referral has to be made for a patient to be seen by specialty care physicians. This concept under the capitation system helps to keep over utilization under control. It regulates the utilization of services by patients. Not only are primary care visits fixed copays, specialty physician services are also fixed. The cost is on a per member per month basis for the services provided and received. Capitation can often be adjusted based of off certain factors including, sex, age and type of product. However it is rare to find the adjustment under PCP capitation (Kongstvedt,