How Care Choices Compensates Your Physician

Care Choices HMO pays our physicians and facilities in a number of ways that could affect your use of referrals and other services that you might need. We have listed our compensation methods below.

Why is this information important for our members?

This information helps our members understand the variety of methods that Care Choices HMO uses to compensate physicians and facilities in an effort to better manage the cost of health care services. By better managing the cost of services, our goal is to provide better quality health care services for all members.

Physician Arrangements

1. Fee-For-Service. Physicians are paid a pre-determined amount for each service they provide. Both the physicians and Care Choices HMO agree on this amount each year. This amount may be different than the amount the physician usually receives from other payers.
2. Capitation. Physicians are paid a fixed amount of money each month to provide specific services to the members they see. This capitation payment may be divided into separate amounts for the services they provide directly to their patients, services provided by referral physicians, and for hospital and other types of services.
3. Bonus. At the beginning of each year, both physicians and Care Choices HMO agree on a goal for the amount of services or cost of services patients will use. At the end of the year, Care Choices HMO pays physicians an extra amount of money if patient care costs less or patients used fewer services than the budgeted goal agreed to at the beginning of the year.
4. Withhold. At the beginning of each year, both physicians and Care Choices HMO agree on a goal for the amount of services or the cost of services their patients will use. However, Care Choices HMO keeps a portion of this payment. At the end of the year if physicians overspend or exceed this budgeted goal, Care Choices HMO keeps the amount of money it withheld to cover these over budget expenses. If the physicians underspend or use fewer services than budgeted, Care Choices HMO gives the withheld amount of money to the physicians.
5. Stop-Loss Insurance. Special insurance for physicians which protects them from very large financial losses. The Health Care Financing Administration requires physicians to have insurance if more than 25 percent of their pay could be lost if they refer patients for more than Care Choices HMO budgeted goal.

Facility Arrangements

1. Diagnosis Related Groups (DRG). A system of classification for inpatient hospital services based on principal diagnosis, secondary diagnosis, surgical procedures, age, sex, and presence of complications. This system of classification is used as a financing mechanism to reimburse hospital and selected other providers for services rendered.
2. Per Diem. A system of reimbursement based on a daily allowance inclusive of all services.
3. Percent of Charges. These are negotiated percentage reimbursements of hospital charges off of their billed rate.
4. Capitation. Facilities receive a stipulated amount established to cover the cost of health care services delivered to the member. The term usually refers to a negotiated per capita rate to be paid periodically, usually monthly, to the facility. The facility is responsible for delivering or arranging for the delivery of all health services required by the covered member under the condition of the facility contract.
5. Fee Screens. Facilities receive a predetermined amount for each type of service they provide. These amounts are established by government authorities or agreed to by the facility and Care Choices HMO each year. The amounts may be different than the amounts the facility charges or receives from other payers.