MPN and capitation payments, how it can affect your recovery

Some argue, that the insurance claims fraud that takes place in a fee-for-service health care market, is eliminated with a system of capitation. A health care provider no longer has to file a claim but is compensated according to the established fee schedule. However, a California State Senate report titled “Fraud and Abuse in the Health Care Market of California" exposes the potential for a different type of fraud: underutilization fraud, where the health care provider withholds treatment as much as possible to maximize profits, given the low capitation payments. 

According to the report, capitation “gives providers the incentive to reduce the quality of care. What many people do not realize is that capitation passes on the insurance function, namely the risk, to the person or entity who receives the capitation and provides the medical service.”

 As the medical provider now assumes the risk of delivering care to workers, he needs to mitigate that risk by spreading it across a larger patient base. But with a larger group of patients, the provider, out of necessity, must spend less time in treating each patient. “The provider is put in a difficult situation. Fraud can then occur when a provider attempts to make money by cutting corners in the delivery of medical care.”