Physician's Capitation Trends-Brace for impact from Medicare reform

President Clinton's recently proposed Medicare reform plan could have a significant impact on medical groups — but experts are not exactly sure what that impact will be because so many of the plan's particulars are "still to come."

For instance, the administration wants to:

• Allow HCFA to negotiate alternative flexible administrative arrangements with providers and suppliers such as simplifying claims processing, reducing billing payment cycle time, and alternative claims and cost settlement processing.

The downside: These simplification measures would only benefit providers willing to offer price discounts to Medicare and demonstrate "better" performance and "higher" quality," notes an analysis of the proposal by the Medical Group Manage ment Association (MGMA) in Englewood, CO.

• Authorize bonus payments for large physician group practices. The question is whether the still-unknown accompanying paperwork burden will outweigh potential financial incentives.

• Create a Medicare preferred provider option (PPO).

The MGMA notes that the PPO proposal, while interesting, comes with more questions than answers. For instance, would only a segment of beneficiaries have the PPO option? Would this provision force providers to contract with managed care entities? Would this influence provider contracts with existing managed care PPOs?