Modern healthcare contracting is shifting the
responsibility for improving quality, enhancing community health
and controlling the total cost of care for patient populations from
payers to providers. Population-based contracting involves capitated
risk taken across an entire population, such that any included services
within the contract are paid for by the risk-bearing entity throughout
the term of the agreement. Under such contracts, a risk-bearing entity,
which may be a provider group, a hospital or another payer, administers
the contract and assumes risk for contractually defined services.
These contracts can be structured in various ways, from professional
fee capitation to full global per member per month diagnosis-based
risk. The entity contracting with the payer must have downstream
network contracts to provide the care and facilities that it has
agreed to provide.
