IHC Health Plans, Inc. - Page 21

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          against a capitation budget.7  In particular, petitioner                    
          consulted a variety of sources to determine an estimate of market           
          rate charges or fees for specific physician services.  Petitioner           
          then applied a discount to the estimated market rate fee to                 
          determine the amount of the fee to be paid to the physician                 
          medical group providing services to SelectMed enrollees.  As of             
          1999, petitioner applied a 25-percent discount to estimated                 
          market rate fees for PCPs.  Petitioner then reconciled the                  
          discounted fees for services paid to each physician medical group           
          on a monthly basis against the group’s capitation budget.8  When            
          the total fees that petitioner paid to a physician medical group            
          were less than the group’s capitation budget, petitioner paid the           
          difference to the group.  However, when the total fees that                 
          petitioner paid to a physician medical group were greater than              
          the group’s capitation budget, the group was required to pay the            
          difference to petitioner.                                                   
               Petitioner compensated SCPs on a discounted fee-for-service            
          basis settled against a capitation budget.  As of 1999,                     

          7    Eighty percent of SelectMed and SelectMed Plus enrollees               
          resided in Salt Lake, Davis, and Weber Counties, Utah.  Although            
          the record is not clear on the point, we assume that PCPs from              
          other areas also were compensated on a discounted fee-for-service           
          8    The term “capitation” refers to the practice of paying a               
          physician group a fixed fee for each enrollee under the group’s             

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Last modified: May 25, 2011