The Citicare program in Louisville, Kentucky, worked well as part of its capitulation revenues, saving about 10% more than initially projected (Freund, 1984). However, there was resistance to the plan from some doctors. Some consumers complained that it was difficult to obtain referrals for specialized care; and political considerations also seem to have played a role. The programme was discontinued in June 1984. However, after a 3-year hiatus, the state now runs a similar program throughout the state. The savings from mandatory registration capsule programs appear to be in the order of 5%. If the initial estimate of the cost of the fee to the state is correct, the government`s savings are guaranteed. The main questions affecting these economies are whether the HIO or the scheme itself can control costs sufficiently to remain within the capitulation rate and remain solvent, and whether financial incentives lead to limited access, denial of necessary care or poor quality of care. The Omnibus Budget Reconciliation Act of 1981 (OBRA 1981, P.L. 97-35) requires that capitation payments to risk-based managed care plans be made on an actuarially sound basis (section 1903(m)(2)(A)(iii) of the Social Security Act). States typically pay managed care organizations for risk-based managed care services through periodic fixed payments for a defined set of services. These capitation payments are usually made per member per month (PMPM). Managed care organizations negotiate with providers to provide services to their members, either on a fee-for-service basis (FFS) or through agreements under which they pay providers a fixed periodic amount to provide services.
While federal reimbursement rules prohibit spending on most non-medical services, plans can use administrative savings or government funds to provide these services. `value-added services` means additional services outside the covered contractual services and shall not be considered as covered services for the purposes of setting the capitalisation rate. In a 2020 KFF survey of Medicaid directors, AGC states reported on a variety of value-added programs, initiatives, or services newly offered by MCOs in response to the COVID-19 emergency. The most frequently cited offers and initiatives were food assistance and meals delivered to your home (11 states), as well as improved care management and awareness efforts of MCOs, which often target people at high risk of COVID-19 infection or complications, or people who test positive for COVID-19 (8 states). Other examples include states reporting the provision of personal protective equipment by MCOs (4 states), expanded telemedicine and remote support by MCOs (3 states), expanded pharmacy home deliveries (3 states), and AGC gift cards for members to purchase food and other goods (2 states).19 Capitation is a fixed amount of money per patient and per unit of time paid in advance at doctor for the provision of health services. The amount of money actually paid is determined by the areas of services that are provided, the number of patients involved and the period during which the services are provided. Capitalization rates are calculated based on local costs and average service utilization and may therefore vary from one region of the country to another. In many schemes, a risk pool is set up as a percentage of the capitation payment. The money from this risk pool is withheld from the physician until the end of the fiscal year. If the health care plan is doing well financially, the money goes to the doctor; If the health care system goes wrong, the money is kept to pay for the costs of the deficit.
With 69% of Medicaid recipients enrolled in comprehensive managed care plans, the plans play a critical role in responding to the COVID-19 pandemic and in the fiscal impact on states. Given the unforeseen costs associated with COVID-19 testing and treatment, as well as the low usage impacting financial stability of many Medicaid providers, states are currently considering options to adjust current payment rates for managed care organizations (MBOs) and/or risk-sharing mechanisms, and to assess options and flexibilities under existing managed care rules for direct payments to Medicaid providers (Figure 1). This letter provides an overview of how ACC capitation rates are developed by states and approved by cmS, highlights the options available to states to adjust current MCO payment rates and/or risk-sharing mechanisms, describes how MCOs pay suppliers, and describes government options for routing MCO payments to suppliers in response to conditions created. by the pandemic. The main findings are explained below. The amount of capitation is determined in part by the number of services provided and varies from one health care plan to another. Most capitation payment plans for primary care cover the core areas of health care. The partial capitulation approach was the preferred method of paying primary care providers in the two financially successful IOTs (Santa Barbara and Citicare), but the government`s direct experience with partial surrender remains limited to this day. Oregon`s medical care organizations recently completed their first year of contract, so no data is yet available. Michigan`s capitation outpatient plans (PACs) have been in effect for some time, but the results are still preliminary. The CAP receives a capitation payment of 100% of the estimated costs of fees for medical services and outpatient care, and they contribute to the savings if they reduce the use of inpatients, which continues to be paid by the state on a fee-for-service basis.
The results for the first year of the contract were positive, with total savings for the state estimated at around 10%. However, registrations were low and some plans started late and were less operational than all year round. The issue of choice bias has been raised in this program. Preliminary results for the second year of the contract are even more positive, but the final results may not be known until all hospital bills are received.2 Other states are actively seeking prepaid contracts with state-funded municipal health centers, many of which do not need to be formal HMOs to serve Medicaid patients on a prepaid basis. For example, Pennsylvania asked community health centers for prepaid capitation agreements, which resulted in a new prepaid contract. .