Capitated contracts never materialized
June 1, 1998
Capitated contracts never materialized
One issue from the recent past - how individual hospices or hospice networks would structure, negotiate, and price capitated agreements with managed care organizations - has never materialized, hospices report. The "1997 Managed Care Survey" by Fazzi Asso ciates in Northampton, MA, concludes that HMOs are rethinking both capitation and national provider contracts for home care, although they still prefer to contract with a regional network that covers their full service area instead of with individual providers. Capitated contracts for home care remain rare, the survey concludes. It is reasonable to assume that the incidence is even lower for hospice.
"A lot of insurers express interest in capitating contracts," says Paul Lee, a consultant who represents the 21-member Hospice Alliance of Ohio. "We come back to them and say, `How? Who has the data?'"
Gary Brace, FSA, an Atlanta-based consulting actuary with Milliman & Robertson, says he worked with one provider on structuring a capitated contract, but it is very hard to establish rates. "We know the death rates, but we're unable to establish the frequency or proportion of appropriate hospice candidates. It really fluctuates," he says. "It's hard for the system to identify the patient as hospice-appropriate, and hard for the patient to acknowledge the terminal illness."
What may be more common is to lump hospice in with other home-based care providers and then negotiate a capitated rate for all home-based services provided by this integrated entity. This direction shows prom ise for integrated home care systems to experiment with new models of end-of-life care that can meet the needs of terminally ill patients beyond the confines of a prognosis of having six months or less to live, suggests Brad Stuart, MD, medical director of VNA and Home Hospice of Northern California in Emeryville. Stuart's organization is already pursuing such an experiment with San Francisco Bay area medical groups (see related story in Hospice Management Advisor, October 1997, pp. 13-15).
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