Delegated Arrangements

Delegated arrangements are shared risk models involving a health plan, managing entity (acting as the payer), and provider with a goal of providing efficient, quality care to patients. The health plan has an arrangement with the managing entity, typically a management services organization (MSO), independent practice association (IPA), medical group, or hospital. The managing entity can also be the same provider group or organization as the provider delivering the services. The health plan, under the arrangement, pays the managing entity for the health care services provided to its members, which is usually a set rate per-member-per-month. The managing entity then contracts with providers who care for the payer’s members. Providers submit claims to the managing entity for the services they provide to the members. The managing entity pays the provider based on the contract. The managing entity submits encounters for each members’ services to the health plan. Services covered under the delegated arrangement can vary. In some cases, the health plan may retain risk and claims payment responsibility for inpatient and outpatient facility services, home health, durable medical equipment (DME), and certain injectable drugs. In other cases, inpatient and outpatient facility services, home health, DME, etc. payment is made to the provider on a capitated basis under a global or partial capitation arrangement.