Capitation survival kit: how to fashion provider excess coverage.
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Managed care techniques first used in the private sector are increasingly being applied to control costs in the public sector. When the system places the burden of recognizing, diagnosing, and even treating mental illness on the primary care physician, however, a number of problems can result.
The Oregon Health Plan is being implemented at a time when many states are revising their Medicaid mental health programs. A national overview places this state's efforts into context.
Initial financial information appears to indicate that rates were adequate in the phase-in regions and that state payments were about in the range that was expected.
The overall complexity and systemic impact of what is ostensibly a simple change in payment methods were the most important lessons to learn.
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Capitation financing for the delivery of mental health care under public programs is receiving increasing attention from policymakers. Most initiatives in this respect are in the planning or early implementation stages. This paper describes five years of experience with capitated financing for mental health care in the state of Rhode Island. It discusses the motivation for the programs, their design, and the issues that have arisen with respect to their operation. The Rhode Island experience demonstrates that capitated financing for mental health care is feasible and that Community Mental Health Centers can operate effectively as providers of care under these arrangements. It also suggests that capitated programs can have unanticipated impacts on the operation of community-based mental health service delivery programs.
The city of Philadelphia was one of nine sites selected by the Robert Wood Johnson (RWJ) Foundation and the U.S. Department of Housing and Urban Development (HUD) to receive five-year funding to improve the delivery, quality and cost efficiency of public mental health services to its chronically mentally ill population. As part of the RWJ project, the city plans to restructure its delivery and reimbursement system, creating a not-for-profit central authority which will function as a health insurance organization (HIO) responsible for coordinating and managing psychiatric care to Medicaid clients. Operating under a model of capitation, the central authority will employ diverse funding mechanisms to finance and manage service delivery. This paper examines the benefits and risks inherent in the reorganization of Philadelphia's mental health service system under a capitation financing model. Issues considered include cost and utilization patterns, treatment outcomes, providers and their staffing patterns, service mix and the overall impact of capitation on clients.
Capitation is a system of reimbursement for services under which providers are paid a fixed amount per client served per time period. An experiment from April 1981 to December 1981 involved the use of a capitation system of reimbursement to pharmacies participating in the Iowa Medicaid drug program in 32 counties in Iowa. It was essential to demonstrate that cost savings were feasible and pharmacy reimbursement would be adequate before the capitation experiment was begun. An assessment of this issue was developed using simulation and data base management techniques. The positive results of this assessment gave evidence that cost savings due to capitation potentially could be realized by both the Medicaid drug program and pharmacists during the experiment.
Six urban community mental health centers participated in a capitated payment system designed for persons with severe mental illness who frequently used the state hospital. The centers and their funding agency agreed that a chief outcome measure would be the length of time clients were able to remain enrolled in the outpatient program. Clients of the six agencies were quite similar to one another. During the 18-month study length of enrollment in the outpatient program did not vary among the agencies whereas agency expenditures varied by more than three-fold. Although some of this expenditure variation was due to economies of scale at larger agencies, different practice styles also contributed to variable efficiency.