These health plan risk scores are then used to risk adjust statewide, program- specific conversion factors, or base capitation rates.
Therefore, the policy decision to base capitation payments on diagnoses from health plan claims and encounter data clearly created a powerful incentive to submit the data.
As presently conceived, the compensation system will include a base capitation
rate or fee for each specialty or service.
All of the programs described in this study base capitation
amounts, at least initially, on the FFS equivalents for a comparable population in their respective Medicaid programs.
One solution to adverse risk selection is to base capitation payments to MCOs on the recent care costs or the health status of the enrollees they draw; Oregon has recently indicated an intent to adopt this option (discussed later).
When States make the initial switch from FFS payment, they generally base capitation rates on historic costs.