Managed Care

Interest in capitation backs off

More than half of provider organizations surveyed by Evergreen Re, a national reinsurance consultant and broker, had at least one capitation contract last year — but use of capitation fell dramatically from 1999 to 2000. Perhaps not surprisingly, net profit, as a percentage of capitation revenue, for physician groups was down from 16 percent in 1999 to 8 percent in 2000.

Fewer physician groups capitated

Involvement in capitation among physician groups — that is, the share of groups with at least one capitation contract — was down 17 percentage points, and even more dramatically among single-specialty physicians.

Change in services for which groups are capitated varies

As for physician groups that are staying with capitation, they're taking on more of it — suggesting that fewer yet better-prepared groups are taking on risk contracts. Double-digit increases in capitation use occur for some hospital-related services, but drops are seen in pharmacy risk and, notably, physician services.

Risk level related to reinsurance coverage

As use of capitation for physician services dropped, so did the average stop-loss deductible for professional services. Other deductibles rose, consistent with increased use of capitation for hospital-related services.

SOURCE: FOURTH ANNUAL MANAGED CARE INDICATOR, EVERGREEN RE, STUART, FLA., 2001

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