Physician's Capitation Trends-'Market capitation' takes sting out of referrals
Physician's Capitation Trends-'Market capitation' takes sting out of referrals
Try this variation on 'contact capitation'
There's a new twist on "contact capitation" that has the potential to take the headache out of capitation for specialists — it's called "market capitation."
Designed specifically for specialists, market capitation is a form of contact capitation, according to actuary Brent Greenwood, a principal in the Atlanta office of Towers Perrin, an actuarial and health care consulting firm. It works on the same principal of contact capitation — an "it's who you know that counts" approach. But instead of being production-based, as the typical contact capitation approach is, it's population- or market-based, Greenwood says. It bases payment on a proportion of patients treated by specialists, rather than on the number or type of services provided to patients referred for specialist care.
Mixing capitation with fee for service
For example, typical contact capitation arrangements work this way: The primary care physician serves as a gatekeeper, referring patients to physician specialists within the contract's panel of doctors. The primary care doctor receives a capitation payment for each patient he or she sees.
From that overall capitation payment (per member per month, or PMPM, payment), a portion is set aside for specialist services. When specialists are called upon to care for a patient, the specialist typically is paid from that set-aside pool on a fee-for-service basis. The fee-for-service amount typically is determined by Medicare's resource-based relative value scale (RBRVS) or some variation of RBRVS.
Contact capitation refers to the referral mechanism. When the primary care doctor refers a patient to a specialist, he or she "makes contact" with that patient. Usually, however, specialists have been immune from accepting a capitated payment for these "contacts," or patients.
In the market capitation scenario, however, capitation does extend to the specialist — with some exceptions. Instead of being paid per service, the specialist receives a PMPM payment each month based on the percentage of the market, or enrollees in the health plan.
"If a group sees 20% of the patients in a 12-month period for that particular specialty, the group receives 20% of the monthly capitation," Greenwood says. "This corresponds to an average per patient reimbursement model."
Exceptions would be granted for high-cost and/or high-tech specialist services when they are needed. "Only those services provided by select 'super-specialists,' such as retinal surgery, or those services identified as low-frequency, high-unit-cost, and low-discretion can be reimbursed on a fee-for-service basis," he explains.
To make this approach work, you select prospectively the high-frequency, lower-cost or lower cost-variability specialist services by CPT code and earmark them as part of the capitated category of services. In Greenwood's experience, codes for these kinds of core procedures make up between 80% and 90% of total specialty cost.
Overall reaction in group practices testing market capitation has been excellent, Greenwood says. Physicians say the system is more fair and equitable because individual physicians' results aren't totally dependent on the performance of their peers in the specialty pool.
For example, sometimes so-called "withhold amounts" are set aside as payment targets. When specialists exceed targets by "over-servicing," all the specialists stand to lose their full payment share. That system penalizes high-tech providers or specialists who care for intensive cases, and disgruntles those who keep costs in line.
By contrast, the market capitation approach allows fee-for-service payment for high-cost services, and those services don't count against a physician or pool of physicians. At the same time, there is an incentive for judicious use of specialist services because more services don't automatically translate into higher reimbursement.
This mixed-model approach also is attracting some international attention. Researchers at The Hebrew University Medical School in Jerusalem recently released a study analyzing the value of what they call "soft contracts" in capitation.1 Soft contracts look remarkably like the market capitation method in that both fee-for-service and PMPM approaches are used. In their study, researchers Amir Ahmueli and Jacob Glazer say soft capitation should incorporate a phasing-in of capitation for physicians to ease them into the system.
Also, soft contracts should vary or "soften" the length of time that a particular PMPM is in effect, leaving room to adjust after gaining more experience with the patient population, Ahmueli and Glazer suggest.
Another advantage built into the standard contact capitation approach — providing an incentive for specialists to win patient satisfaction — also remains intact with market capitation, Greenwood says. As in contact capitation, a patient can leave one specialist for another in the market capitation system, which would then decrease the dropped physician's PMPM payment.
Reference
1. Ahmueli A, Glazer J. Addressing the inequity of capitation by variable soft contracts. Health Economics 1999; 8:335-343.
Subscribe Now for Access
You have reached your article limit for the month. We hope you found our articles both enjoyable and insightful. For information on new subscriptions, product trials, alternative billing arrangements or group and site discounts please call 800-688-2421. We look forward to having you as a long-term member of the Relias Media community.