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PubMed1996

Estimation of capitation expense for specialty services.

Sources of financial uncertainty under capitation plans include not knowing the game rules, using the wrong game rules, basing financial decisions on incomplete data, or even being clueless about the factors that will determine financial risk. Financial risks under managed care can involve price, utilization, selection, and partner risks. Risks can vary by contract type. Controlling risk requires adequate information. Methods to manage risk include the modeling of risk implications; reliance on the law of large numbers; and the use of risk-sharing arrangements, stop-loss insurance, traditional insurance techniques, and various specific contracting techniques.

Actuarial Analysis↗
PubMed1990

Assessing the effects of physician payment on treatment of mental disorders in primary care.

Despite the acknowledged importance of economic factors in the delivery of medical care, there are few empirical data on the effects of physician payment on the actual treatment of patients, particularly in terms of the treatment of patients with mental disorders in primary care. This paper discusses factors affecting the treatment of mental disorders in primary care, describes methods of physician payment and variables characterizing the nature of mental health treatment in primary care, examines hypothesized effects of payment method on treatment, suggests research approaches to the empirical study of these effects, and considers how a policy-relevant research agenda might lead to more appropriate models for physician payment.

Capitation Fee↗
PubMed1995

Initiating a capitated program for HMO patients.

In 1986, our hospitals were selected by a large Massachusetts independent practice HMO to administer a capitated program for psychiatric inpatients residing in Boston and in neighboring northern cities and towns. Administering this program necessitated designing new systems of accounting, utilization review, physician reimbursement, staff education, orientation, and management control as well as contracting with other hospitals for locked psychiatric beds. It also included developing day treatment, crisis intervention, and visiting nurse services. Psychiatrists had to adapt to a new reimbursement system which paid by the admission or which withheld 30% of payment until program performance was evaluated. Those who valued intrapsychic change found it hard to value crisis intervention and symptom reduction to the same degree. Although there was considerable variation in each hospital's performance, there was over a 25% decrease in patient days and an overall reduction in readmission rate during the first year of the program.

Adult↗
PubMed1989

Publicly financed competition in health care delivery: a Canadian simulation model.

This paper presents the simulation analysis of a proposal for publicly financed competition in the Canadian health care system. The proposal incorporates cost-conscious consumer choice among alternative delivery modalities within a system of national health insurance. Five model structures for competition are examined using data from a market area in the province of Ontario. The simulation results indicate the potential for competition to have a significant impact on health care expenditure over a range of plausible circumstances. The results also suggest that it may not be necessary to go so far as a system of formal competition in order to achieve much of the potential savings associated with alternative delivery modalities.

Capitation Fee↗
PubMed1990

A model of capitation.

This paper presents a theoretical model of capitation contracts. The consumer's ex ante choice of medical plan is derived under flexible assumptions about provider-patient decision-making. The optimal medical plan is shown to combine full insurance with a provider payment system that is a mixture of capitation and partial reimbursement of provider costs. This solution strongly parallels the 'mixed payment' system derived by Ellis and McGuire (1986, 1990) in the context of prospective payment, though the optimal medical plan derived below may in fact be preferred to that solution in a world with endogenous admissions.

Capitation Fee↗
PubMed1995

The effect of market structure on HMO premiums.

We examine the effects of HMO market structure on HMO premiums from 1988 to 1991. More competition, measured by the number of HMOs in the market area, reduces HMO premiums. Although this effect does not appear for IPAs before the highest level of competition is reached, it appears throughout the competitive range for Group HMOs. More market penetration, measured by the percent of the market area population enrolled in HMOs, reduces premiums for IPAs. Since the goal of managed competition is to reduce health care costs by creating competition among managed health care plans, our results offer encouragement for managed competition advocates.

Capitation Fee↗
PubMed1994

The threat of 'cream skimming' in the post-reform NHS.

The allocation of budgets to general practitioners to enable them to purchase selected hospital services has been one of the most imaginative elements of the recent National Health Service reforms in Britain. However, reliance on 'historic costs budgeting' has weakened the efficiency incentives of fund-holding, while perpetuating the large variations in resource use endemic in general practice. On the other hand, policy changes aimed to introduce elements of capitation funding, although welcome, raise the spectre of 'cream skimming'. The paper explores the potential for protection against 'cream skimming' offered by incorporating chronic health factors into the formula.

Budgets↗
PubMed1990

Continuity and change in preferred provider organizations.

This paper presents the results from a national survey of preferred provider organizations (PPOs) that was conducted in 1988. It is based on telephone interviews conducted by the authors with executives in over 170 PPOs in the United States. We compare the survey results with those obtained from similar surveys conducted in 1985 and 1986, allowing us to assess the extent to which PPOs have grown and changed. We found that PPOs have continued to grow at an extremely rapid rate. During the Summer and Fall of 1988, the time in which the survey took place, 37.6 million people were eligible to use PPO benefits, compared to the 16.5 million figure we obtained two years earlier. We did not find, however, that PPOs are moving in the direction of providing more innovative forms of health care cost containment. Most PPOs still rely on discounts from providers and utilization review to achieve savings. There is little trend towards using incentive reimbursement techniques and choosing preferred providers that have shown themselves to be cost-efficient. We conclude that in the coming years PPOs must demonstrate the ability to control rising health care costs. To accomplish this, they will need to put more pressure on providers to use resources more sparingly. Otherwise, they may lose their market share to other forms of managed care.

Capitation Fee↗
PubMed1993

Remuneration of GP services: time for more explicit objectives? A review of the systems in five industrialised countries.

The paper examines the nature and use of GP remuneration systems as instruments of health policy in five different countries--Australia, Canada, Denmark, Norway and the UK. Since doctors are not naturally efficient, they need to be encouraged to adopt efficient practices. The paper indicates that while there are great differences in the nature and level of remuneration across the five countries, there is little evidence that policy-makers in these countries have given adequate thought to how to use remuneration to influence the activities of GPs. In all five countries except the UK the objectives of GP services are somewhat vague and largely non-operational. The designs of the remuneration systems seem directed more towards deciding doctors' income levels and controlling public expenditure than towards meeting health care objectives. The remuneration for similar services varies widely across the five study countries. There is a need to clarify what the objectives of general practice are and thereafter to experiment more with GP remuneration systems to determine how best to get doctors to meet these objectives efficiently.

Australia↗
PubMed1993

Dental care in the NHS: reforms with teeth?

Dental services in the UK are currently undergoing a period of major upheaval. This paper examines recent policy initiatives with respect to patient charges, dentists' remuneration, information and patient choice, the supply of dental personnel, and the prevention of dental diseases. It is argued that changes in dentists' remuneration and the greater use of auxiliary personnel are likely to improve efficiency, whereas changes in patient charges are not. Water fluoridation remains the most efficient and equitable means of promoting dental health.

Capitation Fee↗
PubMed1992

Towards a capitation formula for competing health insurers. An empirical analysis.

In many countries the concept of capitating health care insurers is receiving increasing attention. The main reason is, that capitation may induce health care insurers in a competitive environment to concentrate more on cost containment. However, if the adjusters on which capitation payments are based, are too global, there may be ample room for risk selection by the insurers whilst also an unfair distribution of funds over the insurers may result, thereby undermining the objectives of capitation. The prime motivation for the present study is, that the Dutch government, as part of proposals for a new, market oriented structure of health care system, is considering to capitate insurers on the basis of global parameters like age, gender and location. Our analysis based on panel data of some 35,000 individuals, shows that the proportion of variance in annual health care expenditures that can be predicted (R2) by such a global capitation formula, is only 0.024. This is less than 1/5 of our estimate of the theoretically maximum achievable R2 which amounts to 0.138, implying the existence of abundant selection opportunities, e.g. on the basis of past expenditures or other health indicators. Alternative capitation formulae incorporating prior-year's costs and reaching about 3/5 of the maximum obtainable R2, effectively remove the profitableness of selection on the basis of past expenditures. The findings suggest, however, that selection via (chronic) health status may still be profitable to some extent. Therefore, we also analyzed data from the Dutch Health Interview Survey (N approximately 20,000) which comprised better health indicators. It appeared that a capitation formula based on the global adjusters mentioned above as well as three health status indicators and several background characteristics, yields an R2 of about 0.114, which probably accounts for 3/4 of our estimate of the maximum obtainable R2. The main conclusion is, that in the short term information on prior expenditures, which is available in the files of most insurers and thus may be used for risk selection, should be included in the capitation formula. For the more distant future, the formula should be expanded with indicators of chronic health status, possibly based on diagnostic information from previous, non-discretionary hospitalizations.

Age Factors↗
PubMed1992

List size, composition of practice and general practitioners' workload in The Netherlands.

Workload of general practitioners plays an important role in discussions about list size and remuneration in health care systems with fixed patient lists and capitation payments, such as in the Netherlands and in the United Kingdom. Against the background of the fairness of differences in income level between GPs the question is posed to what extent differences in list size reflect differences in workload and to what extent differences in patient characteristics influence workload. Both list size and practice composition relate to the demand led character of general practice. Data collected in the National Study of Morbidity and Interventions in General Practice are used. Central to this study is a three month recording of all contacts of 161 general practitioners (and their locums, assistant GPs and trainees) in the Netherlands. For each practice a patient register has been made to relate contacts to the practice population. The participating GPs kept a detailed diary covering 24 hr a day during one week. As indicators of workload several contact rates, hours worked in practice per week (in direct patient care and in other activities) and average length of office consultations are used. Demand related characteristics have the strongest relation to the number of hours worked by GPs, particularly the number of hours spent in patient-related activities. Rates of contacts, with the exception of the office contact rate, are not related to list size, but mainly to practice composition. The average length of consultations is negatively related to list size and some characteristics of the practice population.

Capitation Fee↗
PubMed1994

Forming and reforming the market for third-party purchasing of health care: a German perspective.

Germany is known for its comprehensive health care coverage by sickness funds and private health insurers and its successful cost containment policy. The stabilization of health care expenditures as a percentage of GNP was enforced by five cost containment laws since 1977. The last one became effective in 1993 and the next ones are planned for 1996 and 2000. The 1993 law has initiated drastic changes of the system. Office based physicians will be paid by a mixture of capitation, fee-for-service and fees for combined service packages. The hospital financing will be transformed from the current per diem remuneration to a payment system where per diems are combined with payments based on diagnostic related groups and patient management categories. Up till now many restrictions exist for insurees to switch sickness funds. These limitations were removed by the 1993 law. To allow unbiased competition between sickness funds, a risk compensation pool, some kind of statutory reinsurance, will transfer financial resources from sickness funds with good risk structure to those with many bad risks. In many respects health policy has imposed what health economists have recommended for a long time. However, there is some doubt whether increased competition will really increase efficiency of providing medical care because it takes place in a highly regulated market.

Cost Control↗
PubMed2004

The Pharmacy-based Cost Group model: validating and adjusting the classification of medications for chronic conditions to the Dutch situation.

In 2002, the Dutch government implemented a Pharmacy-based Cost Group (PCG) model in the social health insurance sector. This model uses specific types of medication prescribed to individuals in a base year as markers for chronic conditions, which are then employed to adjust capitation payments to their sickness fund in the subsequent year. In this study, a classification of prescribed medication is derived for 22 chronic conditions, based on an assessment of the relation between prescribed medication and diagnoses indicated by physicians on their prescriptions. Of the 22 chronic conditions in this classification, 13 were included in the PCG model that is currently used in the Netherlands.

Capitation Fee↗