Managed Care


Abandonment of capitation may inflate MCOs' costs

MANAGED CARE November 2004. © MediMedia USA
Compensation Monitor

Abandonment of capitation may inflate MCOs' costs

MANAGED CARE November 2004. ©MediMedia USA

Approximately 25 percent of physician organizations pay their doctors on a purely fee-for-service basis, 25 percent pay them on a purely prospective (capitation or some method completely unrelated to productivity) basis, and 50 percent pay the physicians by using blends of retrospective and prospective payment methods, according to a study by researchers in the School of Public Health at the University of California– Berkeley. Medical groups and IPAs in strong managed care markets are significantly less likely to use fee-for-service methods to pay their physician members than are organizations in markets with less managed care presence.

Medical groups and IPAs tend to blend elements of fee-for-service, salary, and subcapitation for their physician members, as each payment method offers advantages in terms of motivating productivity, cooperation, and practice efficiency.

"Physician organizations in markets with extensive HMO penetration have been most willing to shift away from fee-for-service and towards individual physician payment methods that reward efficiency rather than productivity," says the lead investigator, James C. Robinson, PhD. "By implication, the contemporary shift among insurers away from capitation for physician organizations will encourage these organizations to shift their individual physicians back to fee-for-service, thereby stimulating more billable claims, more revenues for the physician organizations, and higher expenses for the insurers."



Private Health Insurance Exchanges Conference Washington, D.C. October 7–8, 2014
National Healthcare Facility Management Summit Palm Beach, FL October 16–17, 2014
National Healthcare CFO Summit Las Vegas, NV October 19–21, 2014
National Healthcare CXO Summit Las Vegas, NV October 19–21, 2014
Innovative Member Engagement Operations For Health Plans Las Vegas, NV October 20–21, 2014
4th Partnering With ACOs Summit Los Angeles, CA October 27–28, 2014
2014 Annual HEDIS® and Star Ratings Symposium Nashville, TN November 3–4, 2014
PCMH & Shared Savings ACO Leadership Summit Nashville, TN November 3–4, 2014
World Orphan Drug Congress Europe 2014 Brussels, Belgium November 12–14, 2014
Medicare Risk Adjustment, Revenue Management, & Star Ratings Fort Lauderdale, FL November 12–14, 2014
Healthcare Chief Medical Officer Forum Alexandria, VA November 13–14, 2014
Home Care Leadership Summit Atlanta, GA November 17–18, 2014