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Does capitation have a future?

Alex Hunter

YES

Capitation does have a future, but it will have to evolve as different markets continue to evolve.

In markets in which it already exists, such as Orange County, Calif., it may not have to change much. But if capitation is going to catch on in other markets in which it has not yet made a dent, it will have to transform itself.

First, patient expectations will have to change. Patients will have to be willing for physicians to manage their care through seeing more "physician extenders" like physician assistants and nurse-practitioners.

Today if a mother in Dallas has a sick child, she's not likely to say, "My son isn't feeling well. I'm going to call the physician assistant." She'll call the doctor instead. So that will have to change.

Second, there will have to be more standardization in the way care is being delivered. It's like the joke that goes, "What's the difference between a New York gallbladder and a Los Angeles gallbladder? Five days in the hospital." Those kinds of disparities will have to be eliminated.

Standard protocols will have to be adhered to by a majority of doctors in a majority of cases, It's easier to accept capitation reimbursement if you are able to provide a consistent level of care to a stable patient population.

In addition, businesses will have to stop changing HMOs every year. That way, the patient population will become stable enough for capitation to really work. Otherwise, the doctor has difficulty managing the patient's care over time.

Finally, some payers have to be more flexible with the rates they're offering. Right now, payers are offering rates so low and pushing so much risk on physicians--including pharmacy risk--that it's becoming an impossible situation for doctors.

If health plans start offering more competitive capitation rates, it will become popular again.

Alex Hunter is a partner at the Norcross, Ga., office of Cajka & Co., a national physician recruiting firm.

Dr. Jane Orient

NO

The point of capitation is to make doctors take on risk by having to pay for patients who need other treatment. They're going along right now because they're scared; the health plans are saying, "Take this contract or leave it.

If you don't sign it, someone else will."

As more and more physicians realize that capitation actually pays them not to do things for their patients, they'll begin to demand some other type of insurance plan.

Doctors will begin refusing to work under those circumstances if they're conscientious. It's bad for their patients, and it's bad for them.

The only way to change the system is to have patients take back their power over medical decisions. The way to do that is to pay for most medical care using a medical savings account, or MSA, and to keep third parties out of medical decision making.

With an MSA, patients pay for minor medical expenses with money from the tax-free account, and then they have a catastrophic policy to cover any high-cost, serious illnesses. If they don't use all of the money in their MSA, whatever is left over is theirs to keep.

The federal government is letting 750,000 patients who work for themselves or for small employers sign up for MSAs. So far, the accounts haven't exactly taken off--only 54,000 people have signed up.

But that's not because the MSA idea is flawed. It's because the program is so restricted, and insurance companies don't think it's worth marketing the MSAs.

Instead of making it so difficult to market MSAs, there should be no limit on the number of people who can sign up, and all state and federal regulatory hassles should be removed.

If that happens, MSAs will take off, and physicians will realize what a terrible thing capitation was.

Dr. Jane Orient is executive director of the Association of American Physicians and Surgeons in Tucson, Ariz.
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Publication:OB GYN News
Date:Apr 1, 2000
Words:648
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