The financial structure of Managed Care providers differs depending on the structure of the organization. In this regard, there are three major types of payment plans for service providers. These are capitation policy, discounted fees and salaries. This paper discusses the three payment plans outlining their benefits and risks.

In the capitation policy, a service provider is paid a monthly fixed amount of money for each member assigned to them. The provider receives the remuneration regardless of the frequency members seek services. Capitation puts the primary care provider at financial risk in the event a member’s expenditure exceeds the cap. However, the policy ensures that the payers of the services cut their costs and promote value-based care solutions. Therefore, members receive the best medical care for the value of their money.

Discounted fees is another major remuneration plan. In this method, a provider agrees to supply their services with payments discounted by a specific rate from their usual charges. Through the discount fee method, providers have a higher chance of increasing the volume of clients through referrals from the MCO translating to more income. Moreover, the process allows individuals to receive services at lower prices. On the other hand, discounting focuses the attention of MCO and the clients to prices rather than the quality of services provided.

Furthermore, salaries is another payment plan for managed care service providers. The providers are employees of the MCO receiving a monthly salary and other bonuses depending on their performance. The main advantage of the salaries method is that the MCO can control the quality and types of services provided. Moreover, the providers enjoy consistency in the remunerations. However, the providers paid using the method usually receive no payments for holidays or overtime. Also, the providers carry more expectations from the management.

In summary, there are three primary payment plans for managed care providers. These are salaries, discounted fees, and capitation policy. However, the three methods have both benefits and risks such as consistency and financial risks for the providers.