Weavermom asked a good question about the difference between capitation payments and bundled payments:
Is this the same as capitation? Where doctors basically get paid more when they provide the least treatment? I believe that this has been tried, and I find it personally terrifying. The minute I get expensive, I’m expendable. The minute I get really sick, I am ‘stealing’ my doctor’s take-home pay. If I am mis-construing the point, please let me know….
Capitation payments are when a provider group gets a set fee per person it covers per month to maintain their patient pool’s health. If the provider group spends less than the total payment, they keep the difference as profit. If they spend more than the total payment, the provider group eats the loss. The goal of this payment structure is to encourage providers to perform efficient and effective care on patients while also encouraging preventative and low cost early interventions instead of high cost emergency/acute interventions. Capitation models have been around for a couple of generations now, and it effectively shifts some of the popualtion health management risks and responsibilities away from the insurance company and towards the primary care providers.
Bundled payments are also lump sum payments which are intended to promote efficient, effective care while shifting some of the treatment and outcome risk onto the providers. However, bundled payments are far more targetted than general capitation payments. In the example that Weavermom respnded to, the bundle payment was for less than a dozen types of cancer diagnosises. The providers are given a big lump of money per person with the specific diagnosis and that money can be spent however the doctors think is appropriate. The goal, in the example that I used this morning, would be to encourage doctors to use a shorter treatment at higher doses which is as safe and effective as a longer course of treatment at lower dosing while being significantly less expensive and disruptive of patients lives. Bundled payments are often calculated as the sum total of the best practice course of treatment plus a small percentage added in for contingencies and profit. The goal is to not pay for expensive and ineffective treatments.
Both of these payment schemes do provide an incentive for doctors to undertreat initially. That is a downside to the system when the current treatment levels are either at the ideal point or are already under the ideal point. However, from a system/policy perspective, most Americans are overtreated for mimial real gain in health (see the cancer example from this morning, back surgery versus physical therapy etc) but at great additional cost, so as long as there are strong quality metrics built into the program that monitor results for performance similar to or better than traditional payment schemes, I think this is a risk worth taking.
Finally, as a side note, bundled payments and capitation payments can be quasi-blended together when capitation payments are aggressively risk adjusted. For instance, if a diabetic individual is in a capitated group where the baseline capitation payment is $450 per person per month, the fact that the person is diabetic might lead to a risk adjustment of 100%, so the diabetic person would be a revenue stream of $900 per month as diabetics are significantly more expensive to keep in good health than non-diabetics, all else being equal. So there is a back door way of a chronic condition becoming a quasi-bundled payment within a capitation scheme.
Keith P
Jeez, that’s dense stuff for a Friday night.
WereBear
I belong to a nutrition discussion group which has many members who are controlling their diabetes with diet and exercise, careful supplementation, and responsive blood sugar monitoring.
Most of them are off meds and at low risk for complications — which is where diabetes gets both expensive, and miserable.
Something that encourages diabetics to follow such a low cost regimen would be good all-around.
JCJ
Hi Richard. I think one way to avoid undertreatment would be to require a treatment plan to meet the guidelines set by the National Comprehensive Cancer Network, American Society of Clinical Oncology, the American Society of Radiation Oncology, or the American College of Surgeons. As an example I treated a lady recently with widely metastatic lung cancer who is not doing well. She had a painful metastatic lesion in her left hip area (femoral neck) that did not yet need surgical stabilization. To expedite her pursuing a clinical trial which requires at least a two week interval from her last dose of radiation I treated her with a single fraction of radiation. ASTRO guidelines basically state treatment could be 10 treatments (two weeks), five treatments (one week) or a single treatment. Someone at her insurance company questioned whether one treatment was sufficient. I presume this person was a primary care or other physician unfamiliar with the guidelines (or radiation oncology in general.) Just as the insurance company might not allow payment for too many treatments they could also insure adequate treatment. Doctors would piss and moan (they are, by nature, a bunch of crybabies) but so what.
jl
@Keith P:
” Jeez, that’s dense stuff for a Friday night. ”
Yes, it is. It inspires me to wolf down a whole bunch of double plus rich and sugary Christmas cookies, which just happen to have arrived in the nick of time. If we are going to have quality of care efforts, I don’t want the US health care system efforts ruined by the bigotry of low expectation or me setting the bar too low.
Thanks to RM for another informative column. I have to read up on quality of care efforts in other countries. Went to a talk on Quality of Outcomes Framework in UK that addresses and links reimbursements to quality of care more directly. I wonder how comparable the efforts in PPACA are and how they are faring (edit: from a health insurance oligarch’s inside view, of course)
Seems to me a simple measure that would make money go further is program to make sure most cost-effective treatments and protocols used first. I think that could be designed so that less cost-effective treatments would be available for those whom the first line treatments failed. But those are death panels and look what they have done in Switzerland, and Australia (increased utilization, access and life-expectancy from what I can see, but maybe it is just me).
One problem is that any payment method that bases reimbursement on average cost of care will cause tension between the clinicians and the money people. The clinicians figure they are losing on some and making money on others and ignore marginal costs. The money people think that a buck is a buck and their getting more bucks depends on rigid control of marginal costs, who cares about the average costs as long as the premiums or reimbursements exceed them. The idea of blended payments has been around for awhile, but I don’t think widely adopted as linked to quality metrics. Does RM have any info on that?
jl
IIRC, blended payments have been around for awhile but aimed at blending FFS and capitation, figuring FFS portion will take care of quality, But RM’s posts today indicate that will not work for cost saving and cost reducing treatments that docs perceive as threatening their revenue.
Little Boots
okay,was going to make a silly omnes joke, but this is all pretty interesting.
Hal
So a friend of mine who is no fan of the ACA (OBAMA LIED!!!) was ranting on Facebook the other day that come tax time, people were about to shocked! His father is an accountant and just all you libs wait and see.
He didn’t clarify and I didn’t bother to ask, but I’m perplexed. There is a medical device tax, but that is on manufacturers not consumers, and the mandate penalty won’t be due until 2016.
Are there other tax increases from the ACA people will see this coming tax year?
Omnes Omnibus
@Hal: A penalty of $95 per family member who was uninsured. Next year it will go to $395 per head.
Little Boots
@Omnes Omnibus:
thank you, doctor lawyer.
Mike J
@Omnes Omnibus: And even that is only held back from any refund. If you’re not getting a refund. They don’t add it on and try to collect.
If you feel that you must go without insurance, just make sure your aren’t over withholding, which you shouldn’t do anyway.
jl
@Mike J:
‘ And even that is only held back from any refund. If you’re not getting a refund. They don’t add it on and try to collect. ”
I don’t know, that sounds pretty complicated and tricky to me. What are the PPACA thugs trying to hide?
/snark tag goes here
Little Boots
at least everyone’s waking up.
Omnes Omnibus
@jl:
Sure, that’s were it goes, but I note with suspicion that you did not actually put a snark tag there.
::side eye::
Little Boots
might even favor everyone with this, cause of the love, which is real:
https://www.youtube.com/watch?v=rEZH0t5Yozw
jl
@Omnes Omnibus: What is that joke about lawyers and a good start again? Now, excuse me while I go stuff some more Christmas cookies down my gut.
Little Boots
@jl:
no starting with omnes.
Little Boots
feeling all milky way:
https://www.youtube.com/watch?v=g6jhpaX7fNQ
weavrmom
Thanks so much Richard. I appreciate your thoughtful, informative reply.
Bjacques
Dutch doctors are notorious for undertreatment on your first visit. Getting them to recommend you to a specialist is like pulling teeth. It’s been like that for at least the last few years. I can see that it discourages timewasters and hypochondriacs, but sometimes it borders on the ridiculous.
This week the government almost fell because one of the coalition parties (“Labor”) resisted allowing insurers to sell policies that only cover doctors and hospitals that are in their network. It’s supposed to save the government (and consumers) by encouraging competition among insurers, but the most likely outcome is that such policies will quickly become the only ones available, with little or no reduction in premiums, but lots of blandishments about how much higher they would have been otherwise.
It’s the result of straight-up lobbying of the government, because the insurers never promoted these policies publicly, as far as I know.
Over the last couple of years, people realized they were overinsured and went to less elaborate (and cheaper) plans. I cut my premiums by 40% by reducing my dental coverage. This hit to profit is probably at least part of the reason for the above.
I also found out that next year the government plans to push home care for the disabled and chronically ill onto the neighborhood. You know, Big Society.
The Raven on the Hill
@Bjacques: “I can see that it discourages timewasters and hypochondriacs, but sometimes it borders on the ridiculous.”
And sometimes, probably, it kills.
The Raven on the Hill
That this system comes from UnitedHealth, a much-hated firm which has had multiple judgements against it, does not lead me to believe it will be applied in a way that will produce anything but human misery.