Behavioral Provider Payment Arrangements

Fee-for-Service (FFS)

The most widely used payment arrangement today is fee-for-service. A fee-for-service arrangement means that there is payment for individual services at an established contract rate which is often negotiated and discounted based on the promise of a large volume of services. The length and intensity of behavioral services are managed by an MBHO through various utilization and quality control mechanisms.

Capitation

Capitation is a fixed payment, usually calculated on a per-member per-month basis, for the delivery of a defined range of behavioral services to a defined member population. Financial risk is assumed by the provider and the provider's profit is contingent on expending less money on caring for the capitated population than is received in capitation fees. Organized group practitioners are more likely to handle capitation arrangements than are solo practitioners.

Per Diem and Case Rates

The most common payment arrangements for facilities and organized programs are per diem and case rates. A per diem rate is a negotiated and contracted daily rate for all services provided while a patient is in an inpatient program. A case rate, essentially a capitated arrangement for individual cases, is no longer common except in chemical dependency treatment, where an MBHO may contract with a treatment facility or program to pay a flat fee for the treatment episode.