How is a medical group compensated when paid fee-for-service with a withhold amount?

In a fee-for-service arrangement with a withhold amount, a portion of the payment is retained by the managed care organization until specific performance metrics or cost-saving measures are achieved. This means that when medical groups are compensated in this way, they typically receive a percentage (in this case, 75%) of the fee at the time of service. The remaining amount (25%) is withheld and can be released later, contingent upon the management care organization's assessment of whether certain criteria, such as cost-effectiveness or quality of care, have been met.

This model encourages medical groups to provide high-quality care in a cost-effective manner, as they are incentivized by the potential for receiving the withheld amount based on their performance outcomes. It’s a way for managed care organizations to control costs while still providing medical providers with the ability to earn the full fee for their services based on performance standards.

Options that refer to capitation or are based solely on annual performance evaluations do not reflect the immediate payment structure combined with a withhold component, emphasizing that the fee-for-service model contingent on withhold requires a specific payment method that aligns with performance metrics, which is well illustrated by the correct answer.