CMS utilizes which reimbursement methodology for Medicare Advantage Payers under Medicare Part C?

Capitation is a reimbursement methodology utilized by CMS for Medicare Advantage Payers under Medicare Part C. This method involves a payment structure where healthcare providers are paid a set amount per patient assigned to them, rather than being reimbursed based on the number of services rendered or the specific procedures performed. This fixed payment is made for a defined period (usually monthly) regardless of the frequency of services provided to the patient.

The capitation model encourages providers to focus on delivering comprehensive care and maintaining the health of their patient population. This approach helps manage overall healthcare costs and promotes preventative care, as providers benefit financially from keeping patients healthy and avoiding unnecessary hospitalizations.

Other reimbursement methodologies such as fee-for-service pay providers for each individual service provided, which can lead to an overutilization of services. Diagnosis-related groups are primarily used in hospital settings to determine payment based on the principal diagnosis and procedures performed, rather than being specifically applied in the context of Medicare Advantage. Value-based purchasing focuses on rewarding healthcare providers for the quality rather than the quantity of care delivered, and while it is a growing focus within Medicare, it does not specifically describe the primary method used for Medicare Advantage under Part C, which remains capitation.