DOES CAPITATION AFFECT PATIENT CARE? I SAY YES IT

Does capitation affect patient care? I say yes it does.

Does capitation affect patient care?

Thesis statement

Managed care growth has affected physicians most dramatically in the way they are paid for the services provided to patients.

Body

Capitation is a method of compensating a physician employed by HMOs. The physician receives a flat preset amount per patient per month. The physician receives the same amount whether they see the patient once or many times. All too often this structure results in the rationing of medical care in order to reap higher profits for the physician and the HMO. The phases of managed care penetration into a region are characterized to a great degree by the change in payment methods. Markets see their traditional fee-for-service payment replaced by discounted fee schedules and eventually are dominated by per member fixed dollar prepayments to contracted physicians. In exchange for a guaranteed monthly capitation payment, physicians or physician groups are required to provide all contracted services to the extent needed by any patient of the member population. (Bollet, Alfred J. 2004 p26.)

Capitation payments can take different forms depending on the agreement with the managed care organization (MCO). Most physicians are familiar with MCO direct capitation to individual providers for primary care services. In most plans, other services remain the responsibility of the MCO to be paid on a fee-for-service basis. Alternatively the MCO can arrange a specialty capitation contract for specific services with specialty physician groups. The MCO can effectively offload almost all of its risk, keeping a significant percentage of the premium dollar for the marketing of the plan and coordinating the various capitated contracts. (Bollet, Alfred J. 2004. p26.)

Although the number of at-risk specialty contracts is currently small, they are increasing in frequency and have had significant influence on other health care payment strategies. Capitation can align the incentives of patient, provider, carrier, and purchaser to keep covered members as healthy as possible at the least cost possible. The responsibility of cost-effectively managing resource utilization can rest in the hands of the providers. It is the providers who have the scientific training, clinical knowledge, and history of being patient advocates.

A multiphysician group may be paid by an MCO on a global or whole-life capitated basis and divide the pool of funds internally on a fee-for-service basis. The fee schedule is typically set using a relative value system. The payments for services are usually adjusted on a monthly basis depending on the total amount of relative value units provided by the entire physician group. Any needed service not provided by a physician within the group must be paid out of the pool to a subcontracted provider. (Lowry, Thomas P. 2002 p8)

Many physicians misunderstand the theory of capitation and argue that patients will be denied needed services because the incentive once the capitation payment is received is to withhold medical services. In contrast, MCOs have complained that even under discounted fee-for-service arrangements the cost of health care has not ...