Medicare's new capitation method

The method used to determine capitation rates for Medicare risk-bearing health plans changed on January 1, 1998. The new approach establishes a minimum rate that is substantially higher than the amounts Medicare previously paid in most of the nation's counties, reduces the volatility in the rates, and guarantees all participating health plans at least a 2 percent annual rate increase for the next several years. It is hoped that the methodological improvements will motivate more health plans to become Medicare contractors.