An example of this is a primary care physician shifting care of the routine cases of aches or pains to the orthopaedic surgeon because the primary care physician may be capitated and therefore has no financial incentive to carry out those primary care duties. Indeed, financially it is advantageous to shift those cases to the specialist who may be at a disadvantage if he or she is in a capitated arrangement and must accept these patients without further reimbursement. Pay less There are good reasons for an insurance company to enter into a capitated arrangement. First and foremost is true dollar savings to the insurance company by being able to negotiate a lower rate of reimbursement than they had been previously paying. A second benefit to the insurance company is to be able to smooth its expenses during the year.
Insurance companies receive their income in a smooth fashion each month.
By being able to write a single check for the orthopaedic care each month, the insurance company has a cost savings and fewer administrative headaches. Physicians who work under capitated arrangements also have the assurance of a certain cash flow which may be useful in planning their business affairs. The disadvantage to the physicians may be a decrease in overall reimbursement, compared with what they had previously. Physician groups that enter into capitated arrangements must understand exactly what services are to be covered. For instance, a small orthopaedic group that enters into a contract with an insurance company would be expected to care for all orthopaedic problems.