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Definition: Capitated Pricing
Capitated pricing is a pricing model / a payment arrangement for health care service providers to purchase medical products and devices from a variety of Original Equipment manufacturers at set levels based on product levels.
For example, there may be three levels: standard, medium, and low. Original Equipment manufacturers will establish their products that make these products “equal” from a clinical effectiveness point of view. The Original Equipment manufacturers will pay the same amount for products in each category, of standard, medium and low. Like for example, 3000$ for standard products, 2000$ for medium products, and 1000$ for low products. The pricing model also helps the Original Equipment manufacturers to produce or introduce a niche product that doesn’t fit into the above categories, if they provide the necessary clinical reasoning behind it.