Capitation creeping into contracts


Looking back, it's hard to argue that capitation models have plenty of flaws--but of late, they seem to be creeping back into the consciousness of health executives, legislators and policymakers anyway. Apparently, all of the strengths that made them seem attractive in the mid-90s, particularly cost control and pressure on providers to coordinate care, are looking pretty good again.

The thing is, few healthcare players seems to like the word "capitation" any more, which is apparently so over. While there are a few horses in the tourney, it's looking like "bundled payment" will take over this time around. And bundled payment does differ from old-school capitation. But it doesn't make sense to forget where we came from, either, does it?

One example: About 18 months ago, I wrote about some reimbursement changes being made by Blue Cross and Blue Shield of Massachusetts, in which the health plan announced plans to move to per-patient, risk-adjusted flat rates. The whole thing looked an awful lot like a capitation, but the health plan steadfastly refused to call it one, apparently because they feel the scheme got a bad name with consumers during its heyday.

Policy experts seem a bit leery, too. For example, a group of academics meeting at Dartmouth a couple of years ago suggested creating a flat "chronic condition coordination" payment covering all routine care and minor acute episodes, which would be delivered through a single medical home.

Still other stakeholders like to talk about "bundled payment" schemes, which cover not only inpatient care, but related outpatient treatment across doctors, hospitals and possibly even home care or long-term care services. As of January, Congress was taking a hard look at whether Medicare should pay for some episodes of care this way, which strongly suggests that the rest of the country will, too.

Obviously, payment models change and grow as the healthcare industry evolves. And I'm not so in love with the capitation model I knew in 1993 that I'm determined to preserve its honor.

But on the other hand, it doesn't make sense to have an extended debate about flat payment schemes without looking at history. Refusing to admit that these new schemes resemble older capitated models is like putting your head in the sand and saying "nyah, nyah, nyah, I can't hear you." Come on, guys, get ahold of yourselves and engage in some straight talk. I promise nobody will capitate you without your permission. - Anne

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