February 4, 2014

Is This A Fair Way To Pay Docs?

Related Industry Healthcare

Is This A Fair Way To Pay Docs?

The changes contemplated by potentially going to a capitated model require both cost information and good actuarial understanding. The type of analysis needed to go forward with these changes needs good, solid financial analysis, as we have found with several groups.

The Affordable Care Act, ACOs, and the inflationary effects of fee-for-service payments have led to a resurgence in the use of capitated payment methodologies. Providers should have a good understanding of what capitation is, and what risks are inherent. A capitated agreement is essentially a risk management agreement. Just as a gambler would contemplate the risks inherent with each wager, the physician, too, should engage in a similar decision making process when determining whether to participate with a capitated plan.

To determine if the capitated payment adequately compensates the provider for the risk assumed, the provider needs to have the information necessary to make an informed decision. The insurance carrier should be asked to provide utilization data. The provider should have a fundamental understanding of what constitutes a fair per-patient encounter reimbursement; the capitated plan’s anticipated utilization based on historical data; the anticipated number of Members that will be assigned to the provider; and the anticipated PMPM (per member, per month) and copayment amounts for the Members in the plan. The provider needs to have a clear understanding of the practice’s operational metrics and should be able to anticipate how an influx of capitated patient volume could affect the practice’s bottom line.

Full text at Physicians News