Managed Care

Capitation: How well is your back covered?

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Make no mistake: Capitation — despite the beating its reputation has taken of late — isn't out of fashion. In fact, its prevalence is increasing, with 14 percent more physician groups having some involvement in capitation last year than in 1998. But to succeed under capitation, physicians and other providers need a strategy for protecting themselves in the face of catastrophic loss. A new survey by Evergreen Re, a Florida-based health care reinsurance broker, suggests that an understanding of this is dangerously lacking among many providers.

When asked how they protect themselves from excessive claims, 24 percent of the managed care contract administrators surveyed said they didn't know. Of those who had some kind of stop-loss coverage, 30 percent were unsure of what type or level of coverage they had. At the same time, these people report increasing dissatisfaction with HMOs' data reporting, which practice administrators rely on to manage risk. The authors warn that providers who don't have solid a understanding of capitation risks and contract liabilities are playing a dangerous game that could lead to insolvency.


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