A small proportion of HMOs (19%) paid for hospital services using capitated contracts in 2001. Per diem rates (used by 89% of plans) and fee-for-service (used by 71% of plans) were the most common payment methods. There has been a substantial increase in the use of these latter reimbursement approaches since 1997, when only 53% of HMOs used per diem rates and 16% used fee-for service payments. Since 1997, use of diagnosis-related groups has increased (from 55% to 62%), and use of capitation has remained the same (19%).

Notes: Data show percentage of HMOs using various methods for any portion of hospital reimbursement. Source: InterStudy Publications, The InterStudy Competitive Edge 12.1, Part II: HMO Industry Report, (reporting data as of July 1, 2001), April 2002, Table 22, p. 48 (2001 data). Kaiser Family Foundation, Trends and Indicators in the Changing Health Care Marketplace Chartbook, August 1998, Exhibit 6.4, p. 62 (1997 data).