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PubMed1991

Alternative methods of hospital remuneration in Israel.

The current method of remunerating hospitals by an average per diem fee tends to over-reimburse hospitals that have a concentration of departments whose true costs are less than the average price received. Hospitals with a high concentration of expensive high-technology service departments whose true costs are more than the average price received will be under-reimbursed and are obliged to cover their running deficits by other means, e.g., donations. Reimbursements on a per diem basis provide a 'perverse incentive' for all hospitals to maximize the length of patient stays in order to maximize their income. This paper briefly examines alternative methods to the deficient per diem method of reimbursing hospitals, such as fee for service, historical budgeting, capitation, gatekeeper's fees and diagnosis-related groups (DRGs). Fee for service or historical budgeting shows little or no advantage over the present system. However, a combination of capitation and/or DRG linked with some form of payment via physician gatekeepers appears to provide a favorable option for correcting the distortions of the per diem system. Department-specific DRG weights for each hospital's department admission mix are used to estimate the magnitude of the current distortion in resources allocated to hospitals. The calculation is based on the changes in hospital income were a DRG mechanism introduced instead of a per diem method. Such changes would increase the hospitalization income of hospitals with low lengths of stay and high bed turnover rates up to 39%. Regional hospital centers with high lengths of stays and low bed turnover rates would receive as much as 17% lower income in some cases. Only if DRG weights were available for each individual hospital would it be possible to ascertain whether differences in lengths of stay reflect differing severities of case loads or differing hospital efficiency levels.

Capitation Fee↗
PubMed1998

Oncology services for members of a national managed care company.

BACKGROUND: Oncology services in a managed care organization may be defined by the structure of the provider network, coverage policies, and specific health plan programs for oncology services. METHODS: The policies and programs of Aetna U.S. Healthcare were reviewed to illustrate the approach of a large, national health benefits company in the provision of oncology services to its members. RESULTS: Standard oncology services are provided by a network of independent participating providers, paid fee-for-service. There are no capitated arrangements for oncology services. The process is driven by the participating providers. For patients requiring bone marrow transplant or therapy available in few medical centers, precertification and case management are provided by the health plan, through the National Medical Excellence Unit. Criteria are used to select facilities for these services and global case rates are negotiated. In the health maintenance organization, educational material is distributed by the health plan to physicians and members to encourage the use of cancer screening services. In addition, reimbursement to primary care physicians can be enhanced by the screening rate for their members. The overall policy of Aetna U.S. Healthcare is to cover Phase II and III clinical trials. Coverage for Phase I trials or use of non-Food and Drug Administration approved drugs is based on reported safety and efficacy and participation in an academic program. CONCLUSIONS: Through arrangements with participating providers, dedicated support for transplant and rare cases, programs encouraging the use of cancer screening, and member-focused policies on coverage issues, managed care companies can provide complete oncology services to its membership.

Capitation Fee↗
PubMed2002

Contextual factors affecting job satisfaction and organizational commitment in community mental health centers undergoing system changes in the financing of care.

This study examines the relationship between contextual factors and job satisfaction and organizational commitment among a sample of 148 administrators and staff in 17 community mental health centers undergoing the transition from fee-for-service (FFS) reimbursement to capitation of Medicaid-funded mental health services in Colorado. Hierarchical linear modeling was used to assess both organizational level factors as well as factors at the individual level of analysis in relation to job satisfaction and organizational commitment. Results indicated significant associations between type of financing for Medicaid-funded services and organizational commitment. Direct, nonprofit capitation was positively linked to organizational commitment, relative to traditional FFS reimbursement. Aggregate perceptions about the organization, including its culture and climate, and the formalization of policies and procedures were strongly linked to job attitudes, over and above individual perceptions about the organization. Individual perceptions of the organization were also related to job attitudes as was respondent level within the hierarchy of the organization. These findings are discussed in terms of their implications for research and intervention in mental health service settings.

Attitude of Health Personnel↗
PubMed1989

Managed health care.

The fundamental components of managed-care plans are described; the development of managed-care programs is discussed; and the impact of managed care on pharmacy services and the price, quality, and accessibility of health care are reviewed. Health care can be considered to be managed when at least one of the following fundamental components is present: prospective pricing, "UCR" (usual, customary, and reasonable) pricing of services, peer review, mandatory use review, benefit redesign, capitation payments, channeling, quality criteria, and health promotion. The managed-care industry consists of health maintenance organizations (HMOs), preferred provider organizations (PPOs), and managed fee-for-service plans. Managed-care reimbursement principles involve transferring some or all of the impetus for controlling use of services to the health-care provider. Means by which this is done include prospective pricing, services bundling, price discounts and negotiated fees, and capitation financing and reimbursement. Financial risk-sharing arrangements with providers--including hospitals, physicians, pharmacies, and home-care companies--are necessary for any managed-care plan to attain true control over its service costs. Use-review and use-management services are also fundamental to containing health-care spending. These include retrospective, concurrent, and prospective reviews of the necessity and appropriateness of medical services. Use management, like services bundling and prospective pricing, has been more effective in reducing costs of hospital inpatient services than costs associated with ambulatory care. Per case payments and services bundling have made individual charges for items irrelevant to hospital revenue. This has forced hospital pharmacy managers to become more sensitive to cost management. Drug formularies, improved productivity, and use of prescribing protocols are means by which hospital pharmacies have controlled costs. However, since shorter hospital stays are not associated with a linear decline in the need for drug therapy, reducing pharmacy operating expenses in proportion to the decline in hospital occupancy is probably not possible. Community pharmacies have responded to managed care by forming pharmacy services administrative organizations. Application of managed-care principles has reduced the use of inpatient hospital services by Medicare beneficiaries, helped HMOs and PPOs to lower prices for some services, reduced use of hospital services by HMO members, and redirected some inpatient hospital care to alternate-care providers.(ABSTRACT TRUNCATED AT 400 WORDS)

Capitation Fee↗
PubMed1992

Balancing incentives. How should physicians be reimbursed?

The May 15, 1991, JAMA theme issue presented 14 different proposals for reforming the US medical care system. Though these proposals varied widely, they encompassed only three proposed methods for paying physicians: fee-for-service, salary, and capitation. When examined from a perspective that considers the incentives affecting practicing physicians, each of these methods has serious flaws. I outline these flaws and suggest an alternative method for reimbursing primary care physicians: that of combining capitation and fee-for-service. Specialists would be paid fee-for-service, but the cost of specialty care would be limited by giving each primary care physician a budget for such care. Consistent failure by a physician to stay within the budget would result in ongoing review, but not in direct financial sanctions. This system of reimbursing physicians is intended to balance incentives so that physicians can concentrate on making medical decisions with a minimum of distraction by third parties and by personal financial considerations.

Capitation Fee↗
PubMed2004

Do children receiving Supplemental Security Income who are enrolled in Medicaid fare better under a fee-for-service or comprehensive capitation model?

CONTEXT: States have been reluctant to enroll children with special health care needs (SHCN) into capitated managed care, because the financial incentives inherent in such plans may elicit undertreatment, restrict access to specific services and providers, and have adverse effects on quality. Little research has examined how children with SHCN who qualify for Supplemental Security Income (SSI) fare under managed care versus the fee-for-service (FFS) system. OBJECTIVE: To examine how enrollment of children with SHCN with SSI into a Medicaid capitated managed care plan differs from regular FFS with respect to unmet needs and access to care in the District of Columbia. DESIGN, SETTING, AND PARTICIPANTS: We conducted telephone interviews with a random sample of 1088 caregivers of children with SHCN who resided in the District of Columbia during the summer and fall of 2002. MAIN OUTCOME MEASURES: 1) Usual source of care; 2) unmet need for the following services during the 6-month period prior to the interview: physician/hospital, mental health, therapy services, dental care, durable medical equipment and supplies, prescription drugs, and home health services; and 3) caregivers' ratings of dimensions of access to services. RESULTS: The percentage of FFS children who did not receive needed dental care, durable medical equipment/supplies, or prescription drugs was significantly larger than the percentage of children enrolled in the capitated managed care plan. We found no significant differences by plan type in unmet need for physician/hospital care, mental health services, home health service, or therapy services. The most problematic areas of access seem to be "wait time between making an appointment and the actual visit," "waiting time in the doctor's office," "office hours for appointments," "getting medical advice by phone," and "getting specialist's care if needed." For each of these dimensions of access, children in the FFS system experienced significantly more of such access problems, compared with children in Health Services for Children With Special Needs (HSCSN). These 4 dimensions of access cause problems for 18% to 29% of FFS parents but only 13.6% to 22.3% of caregivers with a child in HSCSN. Three other dimensions of access, "convenience of doctor's office," "getting emergency care if needed," and "getting hospital care if needed," also seemed to pose significantly more problems for caregivers with children in FFS plans, compared with those in HSCSN. These dimensions of access were only problematic for 9% to 14% of FFS caregivers and 5.9% to 7.7% of caregivers with children enrolled in HSCSN. CONCLUSIONS: Children in the managed care option have lower levels of unmet need than children in FFS plans. Caregivers of children in FFS plans encountered more difficulties in navigating the health care system, compared with those with children in managed care. We conclude that a combination of factors that characterize the capitated managed care plan are responsible for improving access to care and mitigating the level of unmet need among children with SHCN. These include the comprehensive care plan assessment, ongoing case management, primary care providers' gatekeeping role, and higher physician reimbursement.

Adolescent↗
PubMedDate not supplied

Information management for managed care.

A key concern for medical groups is how to manage information in a dual environment of capitation and fee for service. Information systems that work for one may not work for the other. Finding a system that works for both is critical. Some of the data that would be beneficial to collect for starting managing capitation contracts include: age/sex ratios of the practice patient population, average number of visits per patient per year, average number of visits by ICD-9 code for total population, average procedures per patient per year, and analysis of paverage payment per visit/procedure for commercial and Medicare patients. Some of the major concerns addressed include operational issues, financial viability and automated billing systems.

Capitation Fee↗
PubMed2002

Solving the claims conundrum.

Healthcare providers are being pushed to provide better service, yet maintain costs; and one of those costs is claims processing. There are many hurdles providers must jump over in the transition from capitation to "fee for service" billing structures, as well as potential issues surrounding new claim payment timeliness legislation. This article presents some possible solutions for making the claims process more efficient.

Capitation Fee↗
PubMed1998

Family practitioners' remuneration and patterns of care--does social class matter?

The objective of the study is to examine whether medical care patterns and/or outcomes for patients under a prepaid system differ from those under fee-for-service according to social class. An effect of this kind was suggested by the investigators reporting on the RAND Health Insurance Experiment (RAND HIE). We performed a cross-sectional study in family practice in Germany (fee-for-service) and the UK (predominantly capitation i.e. prospective payment). 778 attending patients aged 18 and above were included. Indicators of care, relating mainly to cardiovascular prevention, were collected by patient interview and questionnaire, doctor's questionnaire, analysis of records, and blood pressure (BP) measurement. Multiple linear and logistic regression models with these indicators as dependent variables were calculated to examine possible interactions between social class and system of payment. Social class as a main effect was related to diastolic BP, BP measurement frequency, and the number of non-pharmacological interventions to lower BP. The data on the process and the outcome of primary care from British and German family practice do not show any significant interaction between system of family practitioners' remuneration and patients' social class. We were unable to reproduce the effect postulated by the RAND HIE investigators.

Adolescent↗
PubMed1999

Financial incentives influencing the integration of mental health care and primary care.

Psychiatric problems are common in general medical practice and strongly influence utilization of medical care. Although several studies have demonstrated the positive clinical and financial impact of psychiatric interventions for medical patients, historic and economic forces have tended to maintain the separation of the primary health and mental health components of care. The author discusses the financial incentives that influence the success or failure of initiatives to integrate mental health care and primary care. Most models for financing care that use fee-for-service, carve-out, or capitated arrangements have done little to encourage collaborative treatment planning and coordination of care or have created conditions that work against such integration. True financial incentives for integration of psychiatric and primary health care are provided only by a shared-risk model of capitation-a model that has long existed in staff-model health maintenance organizations. This model increases motivation to lower overall utilization of care, improve patients' overall health status, and search for more effective models of care.

Capitation Fee↗
PubMedDate not supplied

Relationships among prescription payment methods and interactions between community pharmacists and prescribers.

OBJECTIVE: This research was performed to examine community pharmacists' interactions with prescribers and to determine if these interactions are related to payment method. DESIGN: Randomly selected pharmacists (47 in chain pharmacies and 26 in independent pharmacies) collected data concerning prescriber interactions for a 40-hour period. These interactions were analyzed in terms of payment methods, prescriber acceptance, and types of information discussed. RESULTS: Information concerning 730 interactions by 72 pharmacists was obtained. Payment methods were related to the frequency of interactions per pharmacist (p less than 0.01). There were higher percentages of interactions for self-pay (median 2.2 percent) and Medicaid (median 1.8 percent) prescriptions than for third-party fee-for-service (mode 0 percent) or capitation prescriptions (mode 0 percent). Type of information discussed was related to payment method. The vast majority of information provided by pharmacists (91 percent) was accepted by prescribers. The rate of acceptance was 97 percent for prescriber-initiated interactions versus 88 percent for pharmacist- or patient-initiated interactions (p less than 0.01). CONCLUSIONS: Relationships between payment method and interactions were identified. These findings may be attributable to prescribing policies and reimbursement policies. Prescribing policies that restrict prescribers to a formulary may help make them become more adept at using those products; thus, they will make fewer prescribing errors. Reimbursement policies that require patients to consistently use a specific pharmacy (i.e., capitation) may help pharmacists become more familiar with the patient's prescription history. Therefore, interactions with prescribers are needed less frequently for these patients' prescriptions.

Capitation Fee↗
PubMed1997

A new primary care rostering and capitation system in Norway: lessons for Canada?

Providing every patient with a personal primary care physician or, from the physician's perspective, establishing a stable roster or list of patients is currently being actively debated in Canada. Norway's system of primary care medicine, similar to Canada's, faces many of the same problems. In 1992 a trial rostering system with blended funding (capitation, fee-for-service and user fees) was established in 4 Norwegian municipalities. After 3 years of close monitoring, the results of system evaluations have attracted strong interest. This article reports on the benefits and problems encountered with the new rostering system in Norway. If Canada is moving in the same direction, some of the lessons learned may be helpful.

Canada↗
PubMed1995

Fee-for-service versus capitation-based reimbursement: how the payment method affects utilization of echocardiographic services by referring physicians.

Historically, health insurance carriers (HIC) have reimbursed physicians on a fee-for-service basis for echocardiographic studies. With the emergence of managed care, the HIC now may have the option of paying on a capitation basis. To determine whether the method of reimbursement had any bearing on the types of patients referred for echocardiographic services, we conducted a two-phase (retrospective) study. In Phase One, we assessed two groups of ambulatory patients with regard to patient characteristics, medical reason for referral, and echocardiographic results. Group A (4,066 patients) had insurance plans that stipulated reimbursement for echocardiographic services as part of capitation for cardiology services. Group B (3,061 patients) had plans that reimbursed for echocardiographic services on a fee-for-service basis. In Phase Two, we assessed a total of 5,947 patients (3,833 from Group A and 2,114 from Group B) over a period of 40 months to determine the frequency of referral for a second echocardiogram within 2 years of a normal one and the repeat normalcy rate. The results showed that the capitation reimbursement group included younger, predominantly female patients who were referred more often for a more benign reason and who more frequently were diagnosed echocardiographically with less severe disease, higher rates of normalcy, and repeat normalcy. These findings suggest that in our geographic area the capitation method of reimbursement permitted more liberal utilization of echocardiographic services. In this era of cost awareness, the study suggests the need for better screening of patients referred for echocardiographic services.

Capitation Fee↗
PubMedDate not supplied

Incentives and provider payment methods.

The mode of payment creates powerful incentives affecting provider behavior and the efficiency, equity and quality outcomes of health finance reforms. This article examines provider incentives as well as administrative costs, and institutional conditions for successful implementation associated with provider payment alternatives. The alternatives considered are budget reforms, capitation, fee-for-service, and case-based reimbursement. We conclude that competition, whether through a regulated private sector or within a public system, has the potential to improve the performance of any payment method. All methods generate both adverse and beneficial incentives. Systems with mixed forms of provider payment can provide tradeoffs to offset the disadvantages of individual modes. Low-income countries should avoid complex payment systems requiring higher levels of institutional development.

Argentina↗
PubMed2006

Salaried services in the delivery of dental care in Western industrialised countries: implications for the National Health Service in England.

OBJECTIVE: To examine the provision of dental services by salaried personnel in the countries of Western Europe, together with Australia, Canada and New Zealand, and to weigh the merits of this method against alternatives, namely, capitation and fee for item of service. In light of the findings, to consider the future role of salaried dental services in the National Health Service (NHS) in England. METHOD: Information was gathered from published reports, the World Wide Web and by mailed questionnaire to national chief dental officers or equivalents. RESULTS: Narrative descriptions of service provision in the countries with salaried primary dental care services were compiled. Demographic, macro-economic, workforce, and oral health data for the broader spectrum of Western industrialised countries were tabulated. Examination of the quantitative data showed no strong associations between variables. CONCLUSIONS: Dental services delivered by a salaried workforce can be costly in relation to the volume of clinical activity produced. However, deployment of clinical auxiliary personnel can keep costs down. Salaried services foster a preventive approach to care and are particularly suitable where care is directed towards vulnerable groups within the community. Salaried staff generally receive a lower level of remuneration than private practitioners but usually work in an environment less subject to undue pressures of time.

Australia↗