2002 Capitation Survey Shows Risk Contracting Alive and Kicking.

Business Editors/Health/Medical Writers

ATLANTA--(BUSINESS WIRE)--Nov. 21, 2002

Despite the predictions of many experts that capitation is near its demise, the results of National Health Information's just-released 2002 Capitation Survey paint quite a different picture.

In fact, capitation contracting appears to be on the rise in some markets and stable in most others. At the same time, providers are experiencing healthy increases in capitation rates in many specialties, continuing a two-year trend, while profits among capitated organizations also are rising.

Those factors, combined with several years of double-digit hikes in health care premiums, appear to be fueling at least a modest comeback for capitation in the often-cyclical health insurance market.

"Managed care and capitation are not dead," says Beau Carter, executive director of the Walnut Creek, CA-based Integrated Healthcare Association, in an article accompanying the survey results. "Those who say that capitation is dead are just looking for a speaking platform."

Every category of survey respondent experienced healthy gains in total capitation revenue, ranging from 3% for hospitals to 9.4% for multispecialty groups. In addition, nearly 90% of respondents reported either breaking even (32%) or making a profit (55%) on their capitation business. Capitation rates increased across the board, ranging from 6% for primary care practices to 11.7% for physician-hospital organizations. The overall average increase for all providers was 9.9%.

Most specialties saw significant increases in their commercial per member per month rates over last year, while Medicare rates were more mixed.

"No one would argue that capitation has not declined in the past few years, but our data indicate continuing strength in risk contracting," says David Schwartz, president of National Health Information. "In this economy, employers will likely remember that the only period of zero inflation in health costs was during the mid-90s, when capitation and managed care dominated. Capitation will very likely be revisited, though hopefully some of the lessons learned the first time around will be applied more rigorously," Schwartz comments.

The 2002 Capitation Survey features the latest PMPM rate benchmarks available for virtually every specialty, as well as for primary care, hospital services, global coverage, and other categories. The rates in nearly all cases are reported separately for commercial and Medicare populations.

Each PMPM rate benchmark is reported as a national average culled from nearly 600 respondents to NHI's survey of subscribers. Each specialty or category also includes the high, low, and median reported rate, and three years of data are included to show trends over time. These all-new benchmarks are based on 2002 contracts.

Along with the critical PMPM rates, the survey includes key benchmark data on days per 1,000, admits per 1,000, visits per 1,000, and length of stay, as well as stop loss premiums and attachment points.

Data on capitation contracting trends also are featured, including contracting volume, rate increases, profitability, and key perfomance improvement strategies.

The results -- displayed in more than 70 tables and charts -- are compiled from surveys sent to readers of Capitation Management Report and Capitation Rates & Data, the two leading industry publications on risk contracting, which are also published by National Health Information.

"Our survey gives healthcare providers and managed care organizations a unique data set to use for benchmarking and to help in contract negotiations," Schwartz says. "These PMPM rates, utilization statistics, and capitation trend data are simply not available anywhere else."

The complete survey is available for $99 plus $5.95 shipping & handling from National Health Information, P.O. Box 15429, Atlanta, GA 30333-0429. Telephone: [phone]. Fax: [phone]. Website: www.nhionline.net.