The Hospital Capitation Payment Project: new incentives and tools for cost containment

Blue Cross of North Dakota, Blue Cross of Massachusetts, and the Blue Cross and Blue Shield Association, along with 10 hospitals, developed and implemented the Hospital Capitation Payment Project as a novel approach for containing escalating hospital costs. The hospital is paid a prospective, fixed amount for each person covered; in exchange, it assumes responsibility to provide or pay for all covered services needed by that individual. This responsibility extends to payment for covered care provided by other hospitals. The new tools and incentives created by the program, notably an innovative management information system, are designed to help hospitals better manage the health care needs and related costs of a defined population.