The problem with capitation, some argue, is that Jenny and her doctor are now at odds. Jenny wants care and the doctor is reluctant to give care. Often patients expect a level of care that is, in reality, excessive; a little incentive for restraint on the physician side is good but too much can put the physician in an ethical dilemma, directly pitting patient care vs. financial benefit.
How do we make sure Jenny gets good care?
A natural incentive is if Jenny gets regular care she will have less emergent episodes requiring costly treatment. One acute exacerbation can skyrocket the cost of care - costs that would come out of the physicians pocket. It becomes in the financial self-interest of the physician to keep Jenny healthy. Ideally, the healthier Jenny is, the less resources she uses, the more money the physician gets to keep.
The physician benefits the most by keeping Jenny as healthy as possible while using the fewest resources as possible. Ideally these two forces are balanced just right to encourage the delivery of cost-effective and adequate care. For the skeptics, other mechanisms can also be used to ensure adequate care.
The most direct way is to create criteria that constitute "good" care of asthma and ensure that the physician is fulfilling at least those criteria. The measurement of quality of care is all the rage right now and something that was sorely missed in the HMO days. To be fair, the flagship provider networks that pioneered the HMO model, such as Kaiser Permanente, understood the importance of measuring quality. The delicate balance between business-savvy, efficiency minded administrators and the practicing, in-the-trenches clinicians, produced a model of care that delivered higher quality at a lower price.
However, the early to mid-90's marked a rapid expansion of the HMO model. During the expansion, the cultural components, critical to a well functioning managed care model, were compromised. In many cases less focus was placed on ensuring quality care, or appropriate access to care. Though care was being delivered at a low price, it was done at a lower quality than acceptable for most patients.
Another, more general, concept to consider is risk to the physician. Capitation involves a prediction on how much care for a person will cost in the future. Jenny may get sick regardless of her doctor's actions. What if, like many adolescents with a chronic disease, Jenny decides she doesn't need medicine any more and continually requires acute, expensive care? The physician has to keep paying out of his pocket and has very little control over Jenny's actions.
We can apply this idea more broadly, what if the physician was provided capitated payments for the general medical care of any person. It makes sense then for the doctor to find the healthiest most responsible people possible - as he would be paid the same for a distance runner as he would for an older obese diabetic smoker. The process of selectively caring for healthier people in a capitated system is called "cherry picking". It notably occurred in the 90s and was a natural consequence of paying a single rate for the care of a person, regardless of health status. Newer forms of capitation have responded by "risk adjusting" their rates. Physicians get paid more when they care for riskier - more expensive - patients.
Another domain to examine capitation is the level of capitation. Individual physicians form groups which, in turn, form networks; one could capitate payments on a network or group level and still reimburse physicians with fee-for-service. This discussion leads naturally into a description of Accountable Care Organizations (ACOs), as an ACO is essentially network-level capitation.
Next week we'll delve into the mystical beast that is an ACO, understand its most devious inner workings, and then celebrate our genius...
