Estimation of Capitation Expense for Specialty Services

Sources of financial uncertainty under capitation plans include not knowing the game rules, using the wrong game rules, basing financial decisions on incomplete data, or even being clueless about the factors that will determine financial risk. Financial risks under managed care can involve price, utilization, selection, and partner risks. Risks can vary by contract type. Controlling risk requires adequate information. Methods to manage risk include the modeling of risk implications; reliance on the law of large numbers; and the use of risk-sharing arrangements, stop-loss insurance, traditional insurance techniques, and various specific contracting techniques.