Capitation

 Capitation:

Capitation is an arranged payment for health care providers (i.e. doctors, medical groups, hospital, or integrated health systems) that are paid a set fee for a period of time whether or not the individual seeks care. Patients are usually contracted with a type of managed health care plan such as an HMO, regardless of the finances of that individual's care. Rates are affected by factors such as race, sex, type of employment, and geographical location that influence the cost of providing care.  

Since physicians, hospitals, or health care system is responsible for their member's health regardless of costs, it motivates the health care providers to provide health screenings, immunizations, prenatal care, and other preventative care to enrolled members. 

Health care providers' primary focus under capitation is on preventative health care. There is a greater financial reward in prevention of illness than in treatment of the ill. These plans keep providers away from the use of expensive and newly developed treatment that maybe nonetheless be less effective.

After expenses, this model is based on economics where the remaining revenues are divided evenly among the group of physicians. The majority of patients enrolled in a health care plan will never use the health care services within any given month. Capitation, therefore, is meant to balance out the patients that DO utilize most of health care services within the month.  This type of model discourages over-utilization. 

There are drawbacks to this model as it assumes that all physicians are equally productive, skilled and motivated to work for the group's best financial interest.  There could be within these groups physicians who are high producers with little long term incentive along with those on the more extreme end who are considered 'low producers' may ride on the finanical coattails of those more productive physicians.  The reason as to why single specialty groups still use this model is because all of these services are valuable and necessary to those groups of individuals who are in fact looking to work in a full-service practice.

 

TWO KINDS:

There are two kinds of capitation. The first is Global capitation which involves whole networks of hospitals. The second kind of capitation is when physicians work together to receive a set monthly payment for enrolled health plan members. The providers sign a contract with a health plan to cover the care of groups of members, and must determine a method of dividing up the capitated check among themselves. Capitation that is not under global capitation is a capitated payment contracted to a specific provider group (i.e. a physician group or a hospital) 

DEBATE:

Payment from capitation has become a major issue in federal government's medicare managed care program and an even larger area of controversy. Many health plans and providers have left the government's medicare managed care programs because they feel that capitated payments are too low (compared to those in competitive managed care markets like North and South California, Portland, Oregon, and other markets) to provide the sufficient kinds of preventative care services (that capitation should theoretically encourage) and subsequently an overall successful process. 

To make up for the low payments, physicians and other providers may withhold care or provide less expensive care to save money. But, this creates an inherent conflict of interest. For example, care providers might substitute a generic drug for a name brand pharmaceutical.

When a bonus or incentive is added into this set salary, physicians think about how, when, and under what circumstances the sum is paid. 
(For most physicians starting out, min income guarantee (w/ or without bonuses) is the most used model.)This type of salary is usually seen in HMOs, academic settings, and large corporate/physician owned practices. The benefits of this set income salary is that physicians know how much they will earn for that month and provides a sense of security for new physicians. However there is very little long term financial incentive if there is no ownership. This, therefore, could ultimately discourage entrepreneurship by supporting minimum work ethics. 

Too many health plans offer physicians bonuses for efficiency from following 'utilization management' guidelines (aka, guidelines that try to keep the use of health care services within a certain limits on patients and doctors) and subsequently creates ethical conflicts of interest. Physicians end up being rewarded to make conservative decisions on the care they provide for their patients. (B)

 On the other hand, fee-for-service health insurance coverage has been criticized for encouraging excessive and unnecessary care by physicians. Physicians might order extra tests on patients knowing that they are unnecessary so that he or she will be paid extra for these services. 

So, the question remains; Which is better? Capitaiton which discourages entreprenourship by supporting min work ethics or fee-for-service health insurace coverage where phsyicians overcompensate by being encouraged to provide excessive care to patients? 

Physicians and hospitals find that they often lose money on capitated contracts, and end up going back to discounted fee-for-service payment. However, capitation will remain a major method of managed care payment for organized physician groups in the West Coast and in regions of the United States. (B)
 

Implications of Capitation on Physicians and Patients?: 

  “Physicians need to understand their personal objectives. If they’re interested in a very collegial environment, they might not want to be in a group where each physician is paid on his or her own production, because that will be pretty competitive,” says Cornett. (C)

Nowadays, the patient doctor visit is now more difficult and complicated than ever before. The number of different health plan contracts alongside the different rules about which drugs the doctor can prescribe and the authorizations that are necessary for referral of patient to see a specialist are just some of the factors that can complicate the patient visit. Essentially, physicians are paid a percentage of either billings or collections, or they are paid based on the resource-based relative value scale units assigned to procedures or patient-visit types. The overhead costs of the practice — both fixed and variable — are allocated among the physicians. (C)  In order to maintain income levels, physicians are seeing more patients making the average patient visit to be about 10 minutes long. (B) 

Because of the constraining time limits during a patient doctor visit (of about 10 minutes) that patients should be prepared before walking into the doctors office. They should do research on the web before AND after the visit. This way patients will have specific questions prepared for their doctor that will not only give the patient a sense of peace knowing that all their questions have been answered but also in knowing that the visit was a proactive and productive one. Educating themselves will make a more effective visit on time and financially pressured physicians.

Links:
(A)http://www.pbs.org/wgbh/pages/frontline/shows/doctor/care/capitation.html
(B)http://www.hci3.org/content/capitation
(C)http://www.nejmcareercenter.org/article/physician-compensation-models-the-basics-the-pros-and-the-cons/
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