In a “pioneering” effort to solve the reimbursement issue, a major Massachusetts health insurer proposes the following:
Blue Cross and Blue Shield of Massachusetts wants to stop paying doctors and hospitals for each patient visit or treatment, a common arrangement that most experts agree has led to unnecessary, inefficient, and fragmented care that is sometimes harmful to patients.Instead, they want to pay doctors and hospitals a flat sum per patient each year, adjusted for age and sickness, plus a significant bonus if the providers improve care, Blue Cross officials said.
This is called capitation, and it was tried in the 1990’s. I think it works, and I would welcome the change. In general, primary care does financially better in a capitated environment versus a fee-for-service model.
Patients however, soundly rejected this form of reimbursement, saying it gave physicians a financial incentive to scale back testing – which generally is the point when it comes to controlling costs.
So, the onus is on the patient. How will they react when they are told “no”? Will capitation fail again in this second reincarnation? We’ll see.
Related posts:
- Physician payment reform by capitation, will it work this time?
- Blue Cross targeted its "rat out" letters to capitated doctors
- Tufts Medical Center versus Blue Cross Blue Shield, who blinked?
- Tufts Medical Center plays the Partners HealthCare card and drops Blue Cross Blue Shield
- Hospital charges and the uninsured
- Don’t blame doctors for capitation’s downfall
- Hospitalists are here to stay
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Here in California there are several capitated plans. The problem with capitation is that it 1) it encourages physicians not to follow guidelines, and 2) it rewards physicians who treat inappropriately. For example, AAP guidelines recommend using objective tests before treating strep throat. So a physician following AAP guidelines would run a culture. Whether the culture turns out negative or positive it will take more work hours to follow up on the test and convey the results to the patient. But to be more efficient another physician might just treat all sore throats with antibiotics. As such this second physician would be able to see patients faster and thus be able to take on more capitated patients and generate more revenue. The capitated plans would then be able to decrease the amount of capitation. This only penalizes the physician who follows recommendations.
i bet if the cardiologists doing echos were capitated on procedures, we’d see a 90-plus % decline in the performance of echocardiograms.
It boggles me that EVERY patient sent to a cardiologist gets the trifecta of echo, stress, holter. Not just once, but EVERY SINGLE $%#&%@-ing YEAR!
And you’d probably see a 90% increase in malpractice suits against cardiologists- AND the gatekeepers.
any honest cardiologist will tell you that MOST of the echos done are for the money, not any malpractice fears.
As one put it to me recently: “the echo is the best bang-for-the-buck in medicare reimbursement today”.
I worked in capitation for 6 years. This is how it worked:
“We spend $x ppm (per member per month) on care for your specialty now, and these other folks have offered to do it for 75 % of x. We will give your department 60%”
That was right after I went to work there. I just took care of my patients the way I thought they should be taken care of without chasing production or utilization targets. The patients were happy, I was happy, and the accountant was happy as it turned out at the then of the year that we were doing it for 50% of x and so making the clinic a ton of money on paper.
Then:
“Well, since you are doing so well, and some other departments aren’t, we are cutting your cap to 30% of x”
I whined, I complained. Then I complied and started looking where I could squeeze and trim–and got under the target. I was a little uneasy and not quite so happy, but convinced myself that while we were practicing lean, it was still good medicine–and I believe that it was.
So they cut it to 25%.
I ranted, that I couldn’t do it, but in the end did–and made some compromises that I was losing some sleep over.
Since I could do that, they then slashed it to 9%. Yes, that is correct. I was expected to provide all care in my department for 9% of what was being spent per member in the HMO at the time I came on board.
At that point, after explaining until I was blue in the face, that I could only PRETEND to practice medicine with that restriction–not actually do it–I quit.
Capitation–NEVER AGAIN–it is self limiting. Perhaps an entire new generation of physicians will have to learn that. I was the new guy out of residency in the early 90’s and bit. The old dogs told me that I would get screwed in the end. Boy were they ever right.
Anyone who believes capitation is desirable either works for an insurance company or is naive.
Capitation effectively transfers underwriting risk from the insurance company to the physician and/or medical group. These plans typically feature small provider panels, and attract sick patients with high medical costs. It costs the physician every time a patient is seen, tested, or operated. As a result the incentive is to do as little as possible in as little time as possible. Rationing care is the only economically correct response. The physician is incentivized to do less to maximize profit. Non-physician extenders must be used as much as possible to avoid having to spend physician time with patients. Limits must be placed on how many capitated appointment slots are available each day, especially when copays are low to nonexistent. “Shotgun” workups are encouraged, to avoid follow-up appointments, resulting in unnecessary testing. Primary care physicians are little more than triage nurses, referring the patient to the specialist ASAP to get them out of the office. And beware lest you profit more than the amount Medicare would have allowed. The insurance company will believe the capitation rate is too high and lower it. And how do you really know you are being paid for all the insured lives? Are you really going to trust what the insurance company tells you? Heads they win, tails you lose. Get your head out of the sand.
Good physicians do not need capitated contracts, and good patients will see you because they choose you, not because you are “on the plan”.
So 90% echocardiograms are fraudulently ordered/performed by what percentage of unscrupulous cardiologists, Happyman?
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