Method of compensation used by managed care plans in which a provider is paid either a flat amount per year per subscriber or a predetermined amount for each service. For the flat amount per year arrangement, the provider must treat the subscriber as often as needed during the year.
Insurance Encyclopedia
Capitation rate (cap rate)
1. Providers and managed care plans negotiate a per member per month (PMPM) amount per enrollee to cover the expected cost of services to be provided to a member. The provider gives all contracted care and services to members for a prospective payment with retroactive adjustments, taking the risk that the capitation rate will cover all of the costs of care to the members. Although cap rates are usually fixed, they can be adjusted for the age or gender of members based on actuarial (statistical) projections of health care utilization. 2. Under Medicare guidelines, fixed amount the Centers for Medicare and Medicaid Services (CMS) pays to an approved managed care plan selected by an enrolled Medicare beneficiary.
Capped fee
See: fee schedule.
Capped rental item
Durable medical equipment that costs more than $150 (e.g., nebulizers, manual wheelchairs) and is rented by the supplier to Medicare beneficiaries more than 25% of the time.
Capsized
Upset or overturned vessel or craft.
Captain of the Ship Doctrine
This term applies to medical malpractice liability. It is a doctrine in common law that the physician in an operating room situation can be held liable for the actions of subordinates (e.g., nurses) including their negligence. This is based on the physician role as “captain of the ship” in that he or she controls and directs the actions of everyone else in the operating room. (See Professional Liability).
Captain’s Room
The restaurant at Lloyd’s.
Captive
Insurer that is created and owned by one or more noninsurers to provide their owners with insurance coverage.
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An insurance or reinsurance subsidiary of an industrial company, trade association, or not-for-profit organization. Captives insure or reinsure parent-related business, non-parent business, or both. Though the number of domestic captives is increasing, most captives are still located in tax-advantaged offshore domiciles, such as Barbados, Bermuda, or the U.K.’s Channel Islands.
Captive Agent
(i) Either a “Direct Writer” or an Agent that has agreed to sell Insurance for only one Company or fleet. (ii) Either a sales representative of a Direct Writing Insurer or an outside Agent who has agreed to sell Insurance for only one Insurer.
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An agent who represents one insurance company exclusively.
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Captive agents, also known as exclusive agents or direct writers, are usually restricted to representing only one insurance company and are restricted contractually from selling insurance for another company. The best known of this type company is State Farm. Captive agents may be independent contractors, that is, self-employed, or they may be employees of the company they represent. (See Direct Writers).The goal of the captive agent is to develop business for his or her parent company. In exchange, the insurance company typically provides the captive agent with an office allowance to cover rent, utilities, and other office expenses. In addition, most captive agents are able to participate in the company’s retirement plan and receive life, health, and other benefits. Captive agents also receive periodic training from the parent company on new products and selling skills.The number of captive agents has been slowly declining as insurance companies look for ways to cut costs and streamline operations. Many companies that used captive agents have gone to a dual distribution system by adding independent agents. Another cost-saving move companies have employed is to go directly to the customer through advertising, inbound telemarketing, and the Internet. (See Agent).
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MEDICAL,USA: Individual who has agreed to sell insurance for only one company. Also called exclusive agent.
Captive Insurance Company
“A captive insurance company is one that is owned by its insureds. Often, it is closely held by a major corporation. The insured is active in the underwriting, management, and operations of the company.Captives may be used to provide all of the insurance of a parent company or may be used to perform certain specific functions. For example, a captive may be used to purchase “”deductible buyback.”” In this case, the captive insurance company funds some or all of the company’s deductible.Captives may also be owned by associations or groups. In this case, the captive is owned either by the members of the association or by the association itself. Generally, premiums paid to a captive owned by one entity are not tax deductible while premiums paid to a group or association captive are. Captives may be “”onshore”” (domiciled in a U.S. state or
territory) or “”offshore”” (domiciled outside of the U.S.).”
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A company formed exclusively to insure a parent company.
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US: A company owned solely or in large part by one or more non- insurance entities for the primary purpose of providing insurance coverage to the owner or owners.
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UK: a company whose business is wholly or mainly derived from a company or group of companies of which it is usually a subsidiary or associated company.
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UK: Company owned and operated by the corporation it insures. Usually registered and domiciled in tax havens, e.g. Bermuda, captives combine tax efficiency with the benefit of self-insurance and/or mutual insurance. Most captives have a presence in the reinsurance market (inward and outward) and some have become substantial writers of third party business. See PROTECTED CELL COMPANIES; RENT-A-CAPTIVE.
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MEDICAL,USA: Insurance company formed and controlled by a separate company, whose purpose is to insure the risks of its owner(s) such as hospitals, physicians, companies that extend credit to customers, banks, and retailers. Also called captive insurer.