Capitation for Dermatologists

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Abstract
A S MORE and more patients are covered by managed care plans, dermatologists are being faced with alternative systems of reimbursement as a method of cutting health care costs. This article discusses the advantages and disadvantages of capitation for dermatologists, reviews important points of capitation contracting, and discusses the ethical dilemmas of practicing under this form of reimbursement. DEFINITION AND SCOPE Capitation is a method of payment to providers of medical services (such as physicians) based on a fixed payment for a population of persons covered by a health care plan ("covered lives") rather than based on services provided to particular individuals (patients). Capitation rates are usually expressed in a per member per month (PMPM) payment. The essence of the difference between capitation and fee-for-service reimbursement is that under capitation the provider rather than the insurance company assumes the risk for the health of the covered population. Capitation must be

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