M7 Managed Care Discussion/Capitation Paper - Assignment Example

A hallmark of a PPO is that benefits are reduced if a member seeks care from a provider who is not in the PPO network. In the event that a subscriber chooses to seek care from a nonparticipating provider, the responsibility falls on the subscriber and the subscriber bears any charges not paid by the PPO. PPOs are far less expensive than traditional insurance, though usually more expensive than HMOs unless the PPO has a high degree of cost sharing with consumers. HMOs are fundamentally different from the other open plans with exception of open-access HMOs similar in benefits design to PPOs (North Carolina Institute of Medicine, n.d.).

With a few exceptions, benefits to members in an HMO must be provided by the HMO’s providers in compliance with the HMO’s authorization procedures. HMOs is referred to as prepaid plan because the plan only pays for services up to a certain amount which an individual has subscribe with the additional costs payable by the subscriber. Advantages and Disadvantages of the Capitation System In Relation To Dental Health Care In terms of the cost of raising the level of dental health, capitation programs emerge to be more efficient for several reasons.

Since where enrolled populations are stable, operators of capitation plans have the financial incentive to encourage preventive services to reduce the incidence of disease and need for curative services (Kongstvedt, 2009). Capitation plans are based on the notion that prevention is cheaper than treatment of dental diseases. Another advantage of capitation practices is that they have a defined patient population enabling allocation of proportionately more resources to those with high dental care service needs.

This is an advantage over fee-for-service plans where patients are treated on demand. Capitation plans provide better quality services because their financial incentives are to have patients reach maintenance levels of care as soon as possible. In terms of total expenditures capitation system are thought to have an advantage because dentists are at financial risk with a fixed budget (Kongstvedt, 2009). In circumstances where capitation payment plans encourage more patients to accept necessary care, the total cost may exceed any savings gained from reducing the overtreatment seen in fee-for-service practices.

In capitation programs, owners of prepaid groups can reimburse employee dentists by different methods including straight salary or salary with a production bonus so that employee dentists may have different financial incentives from practice owners. However, there are certain disadvantages associated with this system, especially in dental care coverage. Provision of dental care under capitation payment methods provide dental-practice owners with financial incentive to provide fewer services per patient and, where possible, to substitute less costly services.

Since dentists under capitation payment methods are typically paid a salary, they tend to produce fewer services per unit time. The major potential problem associated with the capitation system revolves around the issue of under treatment. Capitation has been associated with the potential to lead to lower productivity and total expenditures. Although, it is postulated that capitation practices might provide better quality services, this does necessarily translate into increased dental health because of issues of under