1) The employer enters into an agreement with a Health Plan to provide its employees with health care coverage.

2) With the departure of Kaiser Permanente in 2000, there are no longer any straight HMO's in the state that can provide health care coverage and who also have hired providers and facilities to deliver the actual health care. As a result, Health Plans in this state contract with local PHO's to provide the care for their covered members.

3) Vermont Managed Care contracts with local PHO's, community providers and facilities to form a region-wide PHO.

3) Vermont Managed Care contracts with local PHO's, community providers and facilities to form a region-wide PHO.

4) In its contracts with the Health Plans, VMC is paid via a monthly Global Capitation Fee. This money is used to pay for all health care delivery within the VMC Network for the given month.

5) For every claim paid to a VMC provider or facility, VMC withholds 15% of the reimbursement to ensure adequate available funds, should utilization exceed calculated budgets.

6) After reconciliation of yearly performance and claims, withhold is returned to providers. Amount of withhold returned depends on the amount of withhold that was used to cover costs above estimated budget.

7) If utilization exceeded budgeted estimates, less withhold is returned.

8) If utilization was within budgeted estimates, all withhold is returned.