Capitating primary-care physicians, that elixir meant to reduce overall healthcare costs, hasn't always worked according to plan.
In fact, some prepaid medical groups and independent practice associations are considering a return to old-fashioned fee-for-service pay.
One went a step further and has announced it will make the switch. Berkeley, Calif.-based Alta Bates Medical Group, California's fifth-largest IPA with 130,000 covered lives, recently told its 250 primary-care physicians that they would be back to fee-for-service on July 1 (June 2, p. 4).
Alta Bates was one of the first to convert its primary-care physicians to capitation in 1993.
Executive Director Lori Hack said the return to fee-for-service is meant to reward productivity and encourage better reporting of data.
Under capitation, some primary-care physicians refer procedures that could be done in their offices to specialists, leading to higher specialty costs for the IPA, she said.
Alta Bates expects to reduce its primary-care costs by 10% to 15% and eventually cut payments to specialists who will see fewer patients, Hack said. Some physicians will be paid more, and others will see their incomes drop.
The underlying motive is to differentiate the IPA in a market where prices have leveled off, Hack said. Employers are beginning to demand quality as well as low cost, and physician organizations are undergoing more scrutiny.
For example, the Pacific Business Group on Health, an employer consortium, is expected to release its first consumer satisfaction survey of large California medical groups this summer.
Fee-for-service compensation will require primary-care physicians to keep thorough records, which will enable the IPA to document its preventive services to HMOs and employers. The IPA will also institute bonuses for patient satisfaction and open access.
To help physicians cope with the change, the IPA will install electronic claims systems in the doctors' offices throughout Contra Costa and Alameda counties.
"In order to enhance future revenue, we have to demonstrate that we are providing services to enhance quality," Hack said. "It's the old value equation."
Alta Bates' 500 specialists will remain under capitation, paid a set fee for each patient. Such a system, in which only specialists are capitated, is called reverse capitation, since it runs counter to the prevailing trend of capitating only primary care.
It remains to be seen whether other veteran prepaid-care groups will follow Alta Bates' lead into reverse capitation. However, some groups that have recently moved into prepaid care do use reverse capitation to compensate their physicians, according to several sources.
St. Louis-based Cejka & Co., a physician recruitment and consulting firm, heartily endorses reverse capitation.
"It (motivates) the primary-care physician to hold onto the patient as long as possible (and) to give lots of patient access," said President Sue Cejka.
Nevertheless, primary-care capitation and fee-for-service for specialists remains the standard model. One-quarter of large medical groups capitate primary-care physicians vs. 3% that capitate specialists, according to a survey released by Cejka last week (See chart, opposite page).
"Most groups will capitate their primary-care physicians before they capitate the specialists" because the compensation formula is easier for primary care, said Geoff Staub, Cejka's director of marketing.
Not every consultant is rushing to recommend reverse capitation. Michael Alper, president of Thousand Oaks, Calif.-based Meridian Health Care Management, thinks it's risky for a physician organization with fixed revenues to open the fee-for-service spigot.
Alper said groups need to find ways to compensate primary-care physicians for extra work involved in submitting data for the National Committee for Quality Assurance's quality measures under the Health Plan Employer Data and Information Set.
"I haven't seen any data that supports that quality of care has gone down under capitation," Alper said.
At Alta Bates, Hack predicts the shift to fee-for-service will be difficult. "I hope (the physicians) will be able to step up to the plate. Some may not. Some may leave," she said.