Most practices still chafing under capitation
December 1, 1999 2 minutes read
Most practices still chafing under capitation
However, analysts predict rise in provider rates
Squeezed by managed care organizations that are pressed by their own financial strains, fewer providers are making money from their capitation contracts, reports the 1999 Capitation Survey by the Health Intelligence Network (HIN), a Wall Township, NJ-based research group.
"The survey’s findings reflect the ongoing tightening of the risk contracting market, as health plans have attempted to stem recent financial problems in part by ratcheting down capitation rates," says HIN spokesman David Schwartz.
The good news is that many analysts say the free fall in capitation rates may have bottomed out and may rebound as HMOs start to pass along a taste of the 8% to 10% premium hikes they are now demanding from employers.
For instance, about two-thirds of survey respondents reported higher capitation rates over the past year. The average 1999 increase has been about 4%.
Among the report’s other major findings:
• Average commercial primary care rates fell 9%, falling from $12.22 per member per month to $11.07.
• The percentage of providers reporting profits under capitation declined from 42% to 34%. In 1997, 52% reported profits.
• Specialties that saw their capitation rates increase over the past year included chiropractic, dermatology, allergy, and behavioral health-related providers.
• Specialties where capitation rates fell included cardiology, radiology, infectious diseases, rheumatology, endocrinology, emergency medicine, and home health.
"There’s no doubt, risk contracting is getting tougher," Schwartz says. "The good news is, rates appear to have bottomed out in many areas, and providers should start to see their share of the premium hikes in next year’s contracts."
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