Annual fee paid by the insurance company to the physician, hospital facility, or network that provides health care to a patient.

System of payment used by managed care plans in which physicians and hospitals are paid a fixed, per capita amount for each patient enrolled over a stated period of time (month or year), regardless of the type and number of services provided; reimbursement to the hospital on a per member per month (PMPM) basis to cover costs for the members of the plan.

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.

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.

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.