5.4 Other Payment Methodologies
Key Takeaways
- Capitation pays a fixed per-member-per-month (PMPM) amount regardless of services used, often with a withhold or risk pool that depends on utilization performance.
- Per-diem reimbursement pays a flat amount for each inpatient day rather than per discharge or per service.
- Case-rate and global surgical packages bundle a procedure and its related care into one fee, with Medicare assigning 0, 10, or 90-day global periods.
- Post-acute settings use specialized prospective systems: home health uses PDGM, skilled nursing uses PDPM, and inpatient rehab and hospice use their own per-period or per-diem models.
- ASCs, durable medical equipment, and outpatient therapy each have dedicated Medicare fee schedules separate from the physician fee schedule.
Beyond RBRVS and Prospective Hospital Systems
The CPB exam tests whether you can match a setting and payer to the correct payment method. The MPFS, IPPS, and OPPS cover physician services and acute hospital care, but several other methodologies govern managed care, surgery, equipment, and post-acute settings.
Capitation
Capitation pays a provider a fixed per-member-per-month (PMPM) amount for each enrolled patient, regardless of how many services that patient uses. The provider profits when members stay healthy and loses money when utilization is high. Many capitated arrangements include a withhold or risk pool: a portion of payment is held back and released only if utilization or quality targets are met. Capitation is common in managed care and Medicare Advantage primary-care contracts.
Per-Diem and Case-Rate Payment
- Per-diem — a flat amount paid for each inpatient day. Common in commercial inpatient and behavioral-health contracts.
- Case rate (global package) — a single negotiated fee covering a defined episode such as a delivery or a joint replacement, including pre- and post-service care.
Medicare Global Surgical Packages
Medicare assigns each surgical CPT code a global period of 0, 10, or 90 days. The global fee bundles the operation plus routine pre-operative and post-operative care:
| Global Period | Typical Procedure Type | Post-Op Care Bundled |
|---|---|---|
| 0 days | Minor procedures, endoscopies | No post-op days bundled |
| 10 days | Other minor surgery | 10 days of routine follow-up |
| 90 days | Major surgery | 1 pre-op day plus 90 post-op days |
Services within the global period for routine follow-up are not separately billable; modifiers (such as 24, 25, 57, 58, 78, 79) identify care that falls outside the package.
Dedicated Fee Schedules
- Ambulatory Surgical Center (ASC) payment — ASCs are paid from the ASC fee schedule, which is largely derived from OPPS APC relative weights but uses its own conversion factor.
- Durable Medical Equipment (DME) — paid from the DMEPOS fee schedule; many items use competitive-bidding pricing.
- Outpatient therapy (PT/OT/SLP) — paid from the MPFS. The hard therapy cap has been removed, but a threshold for targeted medical review still applies, and claims above the threshold need the KX modifier to attest medical necessity.
Post-Acute Patient-Driven Models
Post-acute care moved to patient-driven systems that pay based on clinical characteristics rather than therapy minutes:
| Setting | Payment Model | Basis |
|---|---|---|
| Home Health | Patient-Driven Groupings Model (PDGM) | 30-day periods grouped by clinical and functional characteristics; replaced HHRG/therapy-volume payment |
| Skilled Nursing Facility | Patient-Driven Payment Model (PDPM) | Per-diem rate driven by patient clinical characteristics, not therapy minutes |
| Hospice | Per-diem | Daily rate by level of care (routine, continuous home care, inpatient respite, general inpatient) |
| Inpatient Rehabilitation | IRF PPS | Per-discharge case-mix group payment |
Knowing which model applies prevents billers from submitting a setting on the wrong claim form or expecting fee-for-service payment where a bundled or per-diem rate applies.
A primary care group is paid $45 for each enrolled HMO member every month, whether or not the member is seen. A portion is held back and released only if referral utilization stays under target. Which payment methodology is this?
A patient is discharged from a skilled nursing facility. The biller needs the correct Medicare payment model for the SNF stay. Which model applies?