Consumer-driven health plans could mean end of capitation

Although employers aren't rushing yet to embrace defined-contribution health care, change is on the way and it will affect physician practices.

By Julie A. Jacob, AMNews staff. Aug. 13, 2001.

Managed Care: What's Next?"
With the managed care system drawing complaints from all quarters, doctors, patients, payers and even insurers themselves found themselves looking for alternatives to a concept that hadn't met its promise of improving care while reducing costs. This 2000-02 occasional series highlighted what physicians and others were doing to come up with a way to improve the system -- or replace it with something else.

Managed care in its current form is nearing the end of its life cycle, and whatever form of health insurance takes its place will give consumers much more control and choice over their health care benefits.

That was the consensus of speakers at a defined-contributions conference sponsored by Global Business Research, held July 12-13 in Chicago.

For physicians, a shift to greater patient choice and control over their health plans means that risk-bearing independent practice associations and physician-hospital organizations formed solely in response to the rise of capitated managed care will likely dissolve, said David Gibson, MD, president of Pacific Development Group, a corporate consulting firm in Sacramento, Calif.

The speakers agreed that it's not exactly clear what form a defined-contribution system -- in which employers give employees more choice and control of their health care, but set employer contributions at a fixed dollar amount and expect employees to pay premium costs above that amount -- will take. However, it's clear that capitated managed care with gatekeeper physicians is fading away, said Dr. Gibson.

As capitation dwindles as a form of reimbursement, more physicians will go back to practicing in solo or small-group practices, he predicted.

However, the transition from capitation-based managed care to a more patient-driven, fee-for-service form of health care won't be easy for medical practices that have become accustomed to the steady flow of income from capitated contracts, said Dr. Gibson. [...]