It is time to care about capitated payment. For too long, fee-for-service (FFS) models have dominated the American healthcare system, prioritizing profits over patients and quantity over quality. Conversely, capitation ensures that healthcare providers are held accountable for their quality of care and the health of their populations. Insurance providers pay a certain annual payment per patient, healthcare providers must allocate their dollars to provide the best care for their patients, keeping practice savings and absorbing additional costs. Capitation is key to a more just healthcare system for all. This model also works towards the Institute for Healthcare Improvement's Triple Aim Initiative: simultaneously improving the population's health, elevating care experience, and lowering per capita costs. Undeniably, the American healthcare system must transition from the current exploitative FFS model to the just capitation payment system to bolster healthcare justice for all in the United States, rightfully placing the patient at the heart of the healthcare system. 

The Center for Medicare and Medicaid, the nation’s largest insurer, already successfully and efficiently utilizes capitation. Its Center for Medicare and Medicaid Innovation uses capitation for its payment method to providers. As private health insurers typically follow Medicare’s suit, an increased emphasis on capitation would transform the American Healthcare system for quality, efficiency, and justice. This capitation payment plan creates Accountable Care Organizations, which assume responsibility for their designated populations. The Center for Medicare and Medicaid pays these Accountable Care Organizations an annual fee per patient cared for by the organization. If ACOs spend more than this amount, this fee comes out of their own pockets; however, if ACOs have money left over, they get to keep it. This method promotes cost-efficient, quality healthcare delivery and savings. Additionally, the healthcare system further values population health, as proactive healthcare prevents costly reactionary emergency visits. As a result of this collaborative effort, the Triple Aim is achieved, advancing health justice for all. 

Healthcare systems should not fear this demand and should transition to a new system. Instead, they should view it as an opportunity to optimize operations that allow them to simultaneously better the health of our country and accordingly pocket their savings. Currently, half of healthcare delivery waste is avoidable; however, providers can retain these savings under the capitation payment plan. Investments in such innovation and reorganization of payment systems can help create a better tomorrow for everyone. This idea is not foreign, as hospitals use similar methods of grouping payments using Diagnostic Related Groups in the FFS model. 

It is evident that the current FFS model is flawed. This flaw was especially apparent during the pandemic, as hospitals hemorrhaged money due to elective surgery suspension. In a capitated payment model, this loss would not occur. Furthermore, while FFS models only retain 5-9% of new revenues for their healthcare organizations’ bottom lines, capitated payment plans boost this share to 50-100%. Studies have proven that healthcare organizations' finances improved from 23% to 29% of their payments coming from the capitation payment model. Abandoning high-cost and low-quality care, capitation payment plans replace the outdated, unjust FFS models with low-cost and high-quality care, punishing inefficient healthcare organizations and rewarding high-performing ones, elevating the healthcare system overall for all in the United States. 

Critics of capitated payment methods have flawed arguments. Some argue that capitation will cause provider care rationing: studies demonstrate the contrary. Capitation plans emphasizing value-based care have safeguards within their policies to ensure that every patient receives needed and high-quality care. In addition, they remove insurance dictating specific coverage for patients, allowing patients to receive high-quality care. Furthermore, studies have proven that healthcare providers still do their best for their patients, even when told to prioritize cost reductions. Another false claim is that healthcare organizations should not focus on population health; this is simply not true. Healthcare should be a human right. Nevertheless, it is in a healthcare organization’s best interest to promote population health, as this proactive, preventative approach reduces preventable, complex, and costly emergency visits that drain the system.  In fact, healthcare organizations have proved the financial benefits of capitated payment. For example, Intermountain Health saved $688 million in waste, holding the highest bond ratings for nonprofit healthcare. This greater involvement also improves community trust in the long run, furthering healthcare delivery and its future outcomes. 

Furthering health justice – increasing quality, reducing costs, improving health, revolutionizing the healthcare system, achieving the Triple Aim, and more – still has greater lengths to go. It is time to care about capitated payment.