Under capitation, assuming financial risk for the cost of care can yield a
variety of potential benefits: upfront cash flow, the ability to invest in
infrastructure and care model redesign, and increased capacity to move physician
incentives away from volume, to name a few. It’s one of the most advanced risk
payment models, and AMGA’s membership includes some of its most skilled and
Atrius Health: Strong Partnerships Power Success
With roots in the HMO staffing model, multispeciality group Atrius Health has
a long history of managing global capitation payments, which today represent 75%
of the organization’s $1.9 billion in annual revenue.
Here’s how it works: A health plan pays a monthly amount for patients who
have an Atrius Health primary care provider—regardless of whether services have
been delivered that month. Payments are made on a “per member per month” basis,
with services from outside providers and for medications deducted from the gross
Engaging the right partners, like lower-cost hospitals, has been critical to
capitation’s success, Chief Contracting Officer Beth Honan told participants in
an AMGA pre-conference workshop on risk models. Also critical: supporting these
relationships with robust performance measures, IT interoperability, and
collaborative risk arrangements.
As partnerships hit key milestones, “think long and hard about budget
adjustments,” Honan advised. How might your population’s demographics, health
status, or mandated benefits change? Make sure you have the right provisions in
place with health plans to make adjustments as needed. And make sure any
prospective partner has strong actuarial capabilities.
Strategic collaboration has lowered the cost of care for patients across age
groups. Over a 12-month period, Atrius Health reduced total medical expense by
10% among its pediatric Medicaid patients by hiring care facilitators to handle
social, emotional, and community needs. And when the organization brought its
own clinicians to manage patient discharge in skilled nursing facilities, the
savings amounted to nearly $4,000 per case.
MemorialCare: Aligning Strengths with Capitation
Capitation is a prevalent payment model in California. MemorialCare Health
System in the southern part of the state turned to commercial risk when
commercial HMO membership flattened and the organization needed new ways to
protect and grow membership among large employers like Boeing.
Today, MemorialCare provides care for 265,000 at-risk lives: 148,000 HMO
patients and 107,000 ACO patients. To do so, it aligns the efforts of 261
employed providers, 1,500 contracted specialists, and over 1,000 independent
primary care physicians and specialists.
Accurate coding for risk adjustment is a must, particularly for Medicare
Advantage capitation, CEO Mark Schafer told attendees at AMGA’s 2017 annual
conference. MemorialCare enlists coders and auditors to ensure appropriate
documentation and a physician champion for peer education.
He also cited the importance of shifting care from hospitals to ambulatory
facilities. MemorialCare offers 10 imaging centers, nine ambulatory care
centers, 13 dialysis centers, and 12 urgent care facilities across its network.
The organization also leverages partnerships for services like dialysis and
sends emergency department patients to skilled nursing facilities, rather than
hospitals, when possible.
Capitation Lessons Learned
According to Schafer, organizations pursuing commercial risk need:
- Data analytics for modeling and understanding cost trends, stratifying risk, and
identifying patients for care management, chronic disease management, and
- Robust infrastructure for care management and coordination, special clinics
(e.g. discharge, intensive outpatient care, high-risk, diabetes), provider
contracting, and network management
- Information at the point of care for adjusting risk and addressing gaps in
prevention, chronic disease management, and overall care
- Strong, aligned physician leadership, representing specialties and primary care,
to implement panels, conduct risk adjustments, manage quality initiatives, and
tackle variations in care
AMGA: Your Partner for Value-Based Care. Contact
Bill Baron, 703.838.0033 ext. 336 to take
the next step.