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PubMedDate not supplied

Global theory and the nature of risk, Part I. How orthodox managed care stifles innovation.

The growing awareness that managed care is rapidly unraveling has not only produced a good deal of alarm, but also a call for prognostications regarding the future. Unfortunately, old habits die hard, and wedded ideologies die even harder. Instead of paving the way for innovation, most managed care pundits refuse to read the tea leaves properly and acknowledge that the orthodox regime is irretrievably comatose. Not understanding the fundamental flaws inherent in the old model, many persevere with rehashed predictions that only echo the very non-starters that got us in the present jam in the first place. Managed care has so far focused its energies on integrating the wrong objects, insurance and care, with all the predictably bad effects. Part 2 of this article will explore what this means and introduce the global theory of managed care as an alternative vision. Global theory lays a new foundation based on a more sound microeconomic model of risk, bifurcated markets, global fees for integrated episodes of care, and most important of all, patient/physician sovereignty.

Capitation Fee↗
PubMed1984

How should Medicare pay physicians?

Medicare's system of paying physicians is criticized as being costly, inflationary , inefficient, inequitable , and confusing. Yet when alternative methods--to change practice arrangements, units of service, fee levels, and the assignment option--are examined, no one seems ideal. A fee-for-service system combined with a prospective payment schedule may offer the best compromise.

Capitation Fee↗
PubMed1997

Capitation conundrum.

There are clearly many differences between fee-for-service and capitation. Making the transition to capitation poses some special problems and areas of risk that are not apparent from looking at either reimbursement method in isolation. The boundary and transition issues require special attention during the next several years as capitation is implemented in new markets.

Accounting↗
PubMed2000

Primary care physician incentives in medical group practices.

CONTEXT: Although medical groups are adapting to changes in financing health care, little is known about individual physician incentives in this environment. OBJECTIVES: To describe methods group practices use to compensate primary care physicians in a managed care environment and to examine the association of revenue sources for the group practice from all patients and primary care physician incentives. DESIGN: We surveyed by mail group practice administrators for practices that had at least 200 members continuously enrolled in 1995. SETTING: Group practices that had contractual arrangements with Blue Cross/Blue Shield of Minnesota. PARTICIPANTS: One hundred of 129 group practices returned usable surveys. RESULTS: Most groups had some portion of primary care physicians' compensation at risk, although 17 groups compensated them through fully guaranteed annual salary. Seventy-one groups used productivity, 4 groups used quality of care, 1 group used utilization, and 30 used group financial performance. Factors reported to significantly influence primary care physician compensation included billings or charges, overall group practice performance, and net revenue or profit. Groups that had a higher proportion of income from various types of fee-for-service arrangements used lower proportions of base salary for primary care physician compensation and were more likely to relate physician income to measures of productivity. CONCLUSIONS: Substantial variation exists in the types of primary care physician incentives implemented by medical groups. Base salary, individual productivity, and group financial performance were most frequently used to determine compensation. Physician personal financial risk was higher overall in group practices that derived more revenue from fee-for-service contracts.

Adult↗
PubMed2005

Interventions to improve outpatient referrals from primary care to secondary care.

BACKGROUND: The primary care specialist interface is a key organisational feature of many health care systems. Patients are referred to specialist care when investigation or therapeutic options are exhausted in primary care and more specialised care is needed. Referral has considerable implications for patients, the health care system and health care costs. There is considerable evidence that the referral processes can be improved. OBJECTIVES: To estimate the effectiveness and efficiency of interventions to change outpatient referral rates or improve outpatient referral appropriateness. SEARCH STRATEGY: We conducted electronic searches of the Cochrane Effective Practice and Organisation of Care (EPOC) group specialised register (developed through extensive searches of MEDLINE, EMBASE, Healthstar and the Cochrane Library) (February 2002) and the National Research Register. SELECTION CRITERIA: Randomised controlled trials, controlled clinical trials, controlled before and after studies and interrupted time series of interventions to change or improve outpatient referrals. Participants were primary care physicians. The outcomes were objectively measured provider performance or health outcomes. DATA COLLECTION AND ANALYSIS: Two reviewers independently extracted data and assessed study quality. MAIN RESULTS: Seventeen studies involving 23 separate comparisons were included. Nine studies (14 comparisons) evaluated professional educational interventions. Ineffective strategies included: passive dissemination of local referral guidelines (two studies), feedback of referral rates (one study) and discussion with an independent medical adviser (one study). Generally effective strategies included dissemination of guidelines with structured referral sheets (four out of five studies) and involvement of consultants in educational activities (two out of three studies). Three studies evaluated organisational interventions (patient management by family physicians compared to general internists, attachment of a physiotherapist to general practices and requiring a second 'in-house' opinion prior to referral), all of which were effective. Five studies (six comparisons) evaluated financial interventions. Two studies evaluating change from a capitation based to mixed capitation and fee-for-service system and from a fee-for-service to a capitation based system (with an element of risk sharing for secondary care services) observed a reduction in referral rates. Modest reductions in referral rates of uncertain significance were observed following the introduction of the general practice fundholding scheme in the United Kingdom (UK). One study evaluating the effect of providing access to private specialists demonstrated an increase in the proportion of patients referred to specialist services but no overall effect on referral rates. AUTHORS' CONCLUSIONS: There are a limited number of rigorous evaluations to base policy on. Active local educational interventions involving secondary care specialists and structured referral sheets are the only interventions shown to impact on referral rates based on current evidence. The effects of 'in-house' second opinion and other intermediate primary care based alternatives to outpatient referral appear promising.

Family Practice↗
PubMed1996

Strategic options in capital budgeting and program selection under fee-for-service and managed care.

Many assets and projects provide value to organizations in excess of the direct and indirect cash flows that they generate. Under pure capitation, the link between individual investment decisions and future cash flows is completely severed. Including the value of strategic options enhances the usefulness of the capital budgeting process for health care organizations and provides a means of adapting that process to managed care settings.

Budgets↗
PubMed1998

The relationship between method of physician payment and patient trust.

CONTEXT: Trust is the cornerstone of the patient-physician relationship. Payment methods that place physicians at financial risk have raised concerns about patients' trust in physicians to act in patients' best interests. OBJECTIVE: To evaluate the extent to which methods of physician payment are related to patient trust. DESIGN: Cross-sectional telephone interview survey done between January and June 1997. SETTING: Health plans of a large national insurer in Atlanta, Ga, the Baltimore, Md-Washington, DC, area, and Orlando, Fla. PARTICIPANTS: A total of 2086 adult managed care and indemnity patients. MAIN OUTCOME MEASURE: A 10-item scale (alpha = .94) assessing patients' trust in physicians. RESULTS: More fee-for-service (FFS) indemnity patients (94%) completely or mostly trust their physicians to "put their health and well-being above keeping down the health plan's costs" than salary (77%), capitated (83%), or FFS managed care patients (85%) (P<.001 for pairwise comparisons). In multivariate analyses that adjusted for potentially confounding factors, FFS indemnity patients also had higher scores on the 10-item trust scale than salary (P<.001), capitated (P<.001), or FFS managed care patients (P<.01). The effects of payment method on patient trust were reduced when a measure based on patients' reports about physician behavior (eg, Does your physician take enough time to answer your questions?) was included in the regression analyses, but the differences remained statistically significant, except for the comparison between FFS managed care and FFS indemnity patients (P=.08). Patients' perceptions of how their physicians were paid were not independently associated with trust, but the 37.7% who said they did not know how their physicians were paid had higher levels of trust than other patients (P<.01). A total of 30.2% of patients were incorrect about their physicians' method of payment. CONCLUSIONS: Most patients trusted their physicians, but FFS indemnity patients have higher levels of trust than salary, capitated, or FFS managed care patients. Patients' reports of physician behavior accounted for part of the variation in patients' trust in physicians who are paid differently. The impact of payment methods on patient trust may be mediated partly by physician behavior.

Attitude to Health↗
PubMed1985

Are fee-for-service costs increasing faster than HMO costs?

It is well known that the costs of care at health maintenance organizations (HMOs) at any point in time have been lower than in the fee-for-service sector, but how costs have changed in each of these sectors has been less well-documented. The only previous study, which examined the HMO experience during the 1960s and early 1970s, found that HMO and fee-for-service costs rose at approximately the same rate. The present study, which extends this analysis to the period 1976-1981, also demonstrates that HMO costs increased at a rate not detectably different from that in the fee-for-service sector. These results are consistent with the earlier conclusions that HMOs cause a once-and-for-all reduction in cost. They also indicate that the public has been willing to pay for much of the increased costs of modern medical technology. Key words: fee-for-service; health maintenance organizations; Rand Health Insurance Study; Group Health Cooperative data.

Capitation Fee↗
PubMedDate not supplied

Revenue models in managed competition.

As physicians and medical centers move into a changing reimbursement era, it is valuable for physician executives to have tools to help physicians understand the relationships among costs, revenues, and utilization. These relationships differ within the fee-for-service, prepaid, and managed fee-for-service revenue models. This article describes these different revenue models and highlights the benefits and issues associated with each model.

Capitation Fee↗
PubMed2001

Episodes of care: an overview of legal and regulatory issues.

The use of managed care, with its chief goal of delivering cost-efficient health coverage, predominates the American health benefit arena. Though the advent of managed care unquestionably has saved billions of dollars since the late 1980s, patients raised on a diet of unfettered treatment have seen choices decrease and care diminish. "Episodes of care," in which teams of professionals contract to provide an entirety of health care services involved with a given procedure in exchange for a fixed, global fee, allows for broader choices for patients at competitive costs for insurers.

Antitrust Laws↗
PubMed1994

Physicians in health care management: 5. Payment of physicians and organization of medical services.

The financing, payment and organization of medical services are closely related. Canada's health care system is financed publicly, from tax revenue, and administered in each province by a single government payer. Although the chief method of payment to physicians is fee for service (FFS), the need to control costs and organize practice more efficiently has led to increased interest in FFS variants, such as capping payments at a certain level or fixing a budget, and alternative payment methods such as capitation-based payment, salary and combinations of these methods. Although solo practice is reportedly still the chief method of practice organization, it is being steadily replaced by arrangements in which physicians share expenses or calls, and by formal partnerships and group and team practices. As medical practice in Canada continues to shift from solo to group and team practice alternative payment methods that facilitate these models will become more common.

Canada↗
PubMed1998

Practice or medical management: which key to success?

In the past, practice management systems were considered most important. Since revenues were based on fees for services rendered, the more patients and particularly procedures that could be scheduled in a day, the greater one's income. However, medical management systems are essential for the financial success of HMOs; these functions must also be present for the capitated group practice to be successful.

Actuarial Analysis↗
PubMedDate not supplied

Reimbursement for preventive services: can we construct an equitable system?

This report examines alternative methods of paying for clinical preventive care services. First, the extent of coverage of preventive health care services in public and private health insurance plans is reviewed. Included in this review are Medicare, Medicaid, health maintenance organizations, and private health insurance plans. Second, four alternative methods for paying for preventive care are discussed. These options are: 1) fee-for-service; 2) a periodic preventive health visit fee; 3) capitation; and 4) a preventive services account. The report concludes with recommendations for constructing an equitable system for increasing access to preventive services. A multi-pronged approach is recommended involving improvements in public and private coverage of these services; development of a periodic preventive health visit fee payment mechanism; initiation of additional research and demonstration efforts designed to determine cost-effectiveness of services and payment approaches; and modifications to the current coding system that would lead to a more appropriate method for reimbursement of preventive care services.

Abstracting and Indexing↗
PubMed1995

Adverse selection among multiple competing health maintenance organizations.

This study examines risk selection among nine health plans competing for 16,182 employees of one large firm in 1989: one conventional fee-for-service plan, one group-model health maintenance organization (HMO), and seven network and independent practice model HMOs. We develop and compare measures of risk using weights based on HMO and fee-for-service expenditure data, respectively. We use a multiequation statistical model to develop two sets of utilization and expenditure weights for enrollees in each plan. One set of weights, based on discharge abstracts and outpatient records from the large group-model HMO, measures how much each of the nine groups of employees and dependents would have spent, had they been enrolled in a stringently managed plan with no consumer cost sharing. The other set of weights, based on fee-for-service claims data, measures how much each group would have spent, had it been enrolled in an unmanaged health plan with significant coinsurance and deductibles. Predicted annual expenditures per enrollee exhibit a 23% range from lowest (favorable selection) to highest (adverse selection) risk plans using the HMO weights and a 17% range using fee-for-service weights. The fee-for-service plan and group-model HMO with large enrollments have risk mixes near the center of the spectrum. Smaller HMOs exhibit the extreme forms of both favorable and adverse selection. The statistical methods adopted in this study can be used to risk-adjust capitation payments to competing health plans. As mergers among HMOs and group purchasing arrangements among employers increase the average enrollment in each plan from each payor, however, risk differences among plans will be attenuated and the need to risk-adjust payments will be less severe. Key words: health insurance; adverse selection; managed competition; health maintenance organization.

Actuarial Analysis↗
PubMed1993

A comparison of S/HMO disenrollees and continuing members.

Four Social/Health Maintenance Organization demonstration projects had disenrollment rates of about 8.6% annually during the first 36 months. This study compares those who disenrolled to those who remained S/HMO members. The analysis found that S/HMOs sponsored by HMOs had lower disenrollment than S/HMOs sponsored by long-term care organizations. The major reasons for disenrollment were dissatisfaction with physician services and premium costs. Having other insurance, not living alone, having inadequate information upon enrollment, having no physical impairments or health problems, and no use of hospital or chronic care were found to be positive predictors of disenrollment. Switching from the S/HMO to another HMO rather than to fee-for-service was associated with having no health problems, having no other health insurance, living alone, and being married.

Aged↗
PubMed1995

Geographic variation in medical costs: evidence from HMOs.

This Data Watch presents data on geographic variation in medical costs across a sample of forty-six cities, using enrollment-weighted average Federal Employees Health Benefits Program (FEHBP) health maintenance organization (HMO) premiums. Variation of average HMO premiums is markedly less than variation of per capita fee-for-service costs as measured by Medicare's adjusted average per capita cost (AAPCC) index. Moreover, average HMO premiums across the sample were largely uncorrelated with AAPCC values. These findings raise some doubt about the suitability of using the AAPCC index for geographic adjustment of Medicare's HMO capitation payments.

Capitation Fee↗