section2 - Capitation Capitation Determination of Premium...

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Capitation Capitation
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Determination of Premium Determination of Premium Rates Rates Benefit Payments Paid to providers Risk Premiums Profit earned by payer as a function of accepting financial risk Administrative Costs Claims processing, marketing, insurance coverage, etc.
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Determination of Premium Determination of Premium Rates Rates Marketing Expenses Intangibles (i.e. market power, good service)
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Definition of a Stop Loss Definition of a Stop Loss Specific Stop Loss Severity of claims Aggregate Stop Loss Frequency of claims
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Corridors & Trends To Specific Corridors & Trends To Specific and Aggregate Stop Loss and Aggregate Stop Loss Trends Measured by Utilization Level & Charges Related to Aggregate Stop Loss Corridors Refers to Costly Claims Requiring LCM Intervention Refers to Specific Stop Loss
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Risk Rating Risk Rating Process of adjusting healthcare utilization for demographic factors and other factors
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Other Factors Affecting Other Factors Affecting Healthcare Utilization Healthcare Utilization Income Wealthier use more services Education More educated use more services Type of Employer Manufacturing, healthcare, and unionized workers use more services
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Other Factors Affecting Other Factors Affecting Healthcare Utilization Healthcare Utilization Location Urban residents use more services Benefit Design Sex Women use more services Men have more catastrophic care
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Other Factors Affecting Other Factors Affecting Healthcare Utilization Healthcare Utilization Age 0-17 yrs. has lowest utilization Utilization increases for 18-34 yrs. Utilization decreases for 35-44 yrs. Utilization rapidly increases for 44+ yrs.
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Causes of Financial Risk in Causes of Financial Risk in Capitation Capitation Adverse Selection Occurs when a group’s characteristics predispose them towards higher than predicted utilization Random Nature of Healthcare Demand Much of utilization results from random events (i.e. epidemics, accidents, etc.)
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section2 - Capitation Capitation Determination of Premium...

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