Healtn plans that participate in Medicare Advantage got more good news in April when the Centers for Medicare & Medicaid Services announced a 4.8% increase in capitated payments. It is the third straight year CMS increased rates following the passage of the 2003 Medicare Prescription Drug, Improvement and Modernization Act, fueling a resurgence in Medicare risk contracting.
Data Insight: Health care spending in the U.S. grew 7.7% in 2003, down from 9.3% in 2002, marking the first decline in costs in seven years, according to a report by the Centers for Medicare & Medicaid Services Office of the Actuary. CMS economists say spending declined because state Medicaid programs cut budgets and became more efficient through the use of managed care.
Union Health Services is celebrating its 50th year managing capitated patients. One measure of its success is the staff model HMO's ability to hold down premium hikes to 3.4% compared with the national average of 11.5%. Read about how the Chicago-based non-profit does it.
Physician adoption of electronic medical records will be swift over the next several years, says the chief medical officer with Geisinger Health System. Read about how Geisinger is improving patient care and reducing per member per month costs using EMRs.
Integrated delivery systems focus on service delivery after capitation efforts stall. Integrated delivery systems are going through changes that are focusing the provider organizations more on delivering care than managing risk, says Dean C. Coddington, one of the leading researchers into capitated organizations and a senior consultant with McManis Consulting in Denver.
Hospitalizations increase when only generic drugs are used for Medicare Advantage members. A Medicare health plan in California that offered generic-only prescription drug coverage reduced its own per member per month costs for pharmacy, but members paid higher out-of-pocket costs and the number of hospital admissions rose.
Capitated organizations should reassess their risk coverage, say experts. With all signs pointing to a growth spurt in capitation during 2005, Charles Crispin, president of Evergreen Re, a Stuart, FL-based reinsurance brokerage and consulting company, says capitated physician organizations need to reassess their carve-out strategy and make sure they have enough reinsurance to avoid catastrophic loss.
Capitation remains a fundamental strategy of health plans in offering complementary and alternative medicine services to members.
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