Effect of A Capitated Primary Care Payment Method on Quality and Cost

By July 17, 2019 Commentary

Does how you pay a physician impact quality or cost outcomes for the patients they treat?  That is the question explored in research carried by the Journal of the American Medical Association.   (JAMA Article)   The setting for the study was the Blue Cross plan in Hawaii.  Prior to the implementation of the program, physicians were compensated in a fee-for-service system, which might create incentives to increase visits to generate more revenue, but they also got a quality of care bonus and a small per member per month if they had patient-centered medical home characteristics.  The new system paid a per member per month risk-adjusted amount for each patient covered by Blue Cross.  This new payment represented about 80% to 90% of total revenue received from the plan by the physicians.  The remainder was a shared savings payment based on spending per member against a benchmark, and the quality bonus program remained in effect, although the measures were revised.  In addition, physicians could lose up to 20% of the per member per month payments if they failed to meet “engagement” measures which were aimed at making the practice and its processes  more efficient and effective. The program was rolled out in waves, allowing for a comparison of practices in and outside the new reimbursement method and comparison of performance before and after implementation.  Only one year post-implementation was included, which honestly is just much too short a period to evaluate any major change in reimbursement.

The primary outcome was a change in quality measure scores.  In addition, changes in primary care utilization and spending were examined, as was utilization and spending for other major categories.  The first year’s results are underwhelming, but as I said, it is simply too short an evaluation period to understand long-run implications. There was an improvement in some quality scores, although there was a comparative decline in a couple of measures.  There was a decline in primary care visits and primary care spending in the capitated group, but no change in overall spending, and prescription drug use and spending rose.  Half of the physician practices earned a shared savings payment.  Overall, the plan paid more for primary care and total cost of care.  On the plus side, the program demonstrates the feasibility of switching primary care doctors to capitation, which may be desirable in the long run.  But any substantial change in outcomes needs a much longer term evaluation.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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