Experts agree that the 1990s’ capitation agreements were not adjusted for the risk of the population, leaving some winners and some losers in risk sharing without any correlation to how well providers did their job. Typically, payers counted on controlling costs by contracting with provider organizations in capitation models.
Today, they need better ways to identify variance in the underlying morbidity of the populations they serve or they might not be getting an accurate picture of the capitated population and its risk proposition.
Robert M. Damler, principal and consulting actuary for Milliman, says failing to adjust for age and intensity in the capitation model, and simply using an average of the total population and calculating a value at the beginning of the year, could have a significant impact on risk sharing. While most experts agree that no risk-adjustment methodology is perfect, the process could become a key to driving the payer’s bottom line.
“Some groups look profitable, but when you adjust for the underlying morbidity, they may actually be creating an issue,” Damler says.
For more perspective on how this time it may be different, check out this paper.