When capitation’s hold weakens

Say what you will about capitation (and a lot has been said), it did help to put the brakes on costs in the 1990s. Now, according to the Segal Co., the West may well experience higher claims thanks to “the erosion of prepaid … arrangements … (which was the predominant method of reimbursement for many provider groups in the West).”

Other causes include “negotiation of significant increases in reimbursement by hospital and physician systems, price concessions made in previous years, and liberalization of plan rules for participants, such as open-access arrangements and elimination of precertification rules.”

Segal defines a cost trend as the average forecasted change in health plans’ per-capita claims cost. “It is important to note that although there is usually a high correlation between trend and plan sponsors’ actual cost increases, trend and net change in year-to-year plan costs are not the same,” the authors write.

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