Withhold Amount
A withhold amount is the portion of payment retained by payers to cover potential overpayments or disputed claims until resolution is reached.
What is a Withhold Amount?
A withhold amount is the portion of payment retained by payers to cover potential overpayments or disputed claims until resolution is reached. This is a long-standing type of risk arrangement where the health plan withholds a portion of payments otherwise owed to providers and places these amounts into risk pool funds.
Whether or not all or a portion of the withhold is paid back to the provider depends on how the provider and all participants perform against a predetermined utilization budget set by the health plan. Payers may also withhold amounts to recover overpayments when billing errors, duplicate claims, or fraudulent activities are identified. Once providers fulfill requirements, the withheld amount is released.
What is the difference between a Withhold Amount and Capitation?
While both withhold amounts and capitation involve payments between health plans and providers, their mechanisms and purposes differ significantly. A withhold amount is a portion of payment retained by payers to cover potential overpayments or disputed claims, with the possibility of being returned based on performance. Capitation, conversely, is a fixed payment per patient regardless of services, transferring risk to the provider.
A withhold amount is a portion of payment retained by payers, placed into risk pool funds, and can be paid back to the provider based on performance against a utilization budget, or recovered for overpayments.
Capitation is a fixed payment amount per patient to a provider, regardless of the services provided, effectively shifting financial risk to the provider for managing the patient's care within that fixed payment.
What are examples of a Withhold Amount?
A health plan withholds a portion of a provider's monthly payments and places these funds into a risk pool. The provider receives this withheld amount back if they meet predetermined utilization budget targets for patient care.
A payer discovers billing errors in a hospital's claims. To recover the overpaid amount, the payer withholds a portion of future payments to the hospital until the overpayment is fully recovered.
A health insurance company identifies fraudulent activity in a clinic's claims. The company withholds payments to the clinic while an investigation is conducted and releases the funds once the clinic fulfills all compliance requirements.
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