SAN FRANCISCO – Critics of global capitation say it represents too much risk for providers.

But four panelists at the 5th Annual Pay for Performance Summit held here in March say they have had success with this reimbursement method.

HealthCare Partners Medical Group and Affiliated Physicians, a southern California-based practice, assumes full risk, receiving a Per Member Per Month (PMPM) payment in exchange for clinical and financial responsibility for all of a patient’s care.

Global capitation “can only be successful if it’s done in a coordinated fashion,” said Donald Rebhun, MD, HealthCare Partners’ regional
medical director.

Rebhun said global capitation can “spawn ingenuity” if the healthcare industry adopts a comprehensive, systematic approach.

“We believe that by accepting all financial risk, you can redirect the dollars to prevention and education,” he said.
Global capitation must be based on current cost with annual inflation increases, appropriate numbers to spread the risk, appropriate compensation with the alignment of incentives and appropriate funding, Rebhun said. He said use management, good medical leadership, the proper administration and contracts in place for all professionals are also required.

“We don’t think bundled payments will be the solution,” said Donald Balfour, MD, president and medical director for Sharp Rees-Stealy Medical Group (SRSMG) in San Diego. “The real answer is capitation.”
More than 70 percent of SRSMG’s revenues are generated by capitation.

The San Diego practice and Sharp HealthCare have an arrangement in which both parties accept capitation for assignment members and follow an established common risk matrix for all plans. They have aligned incentives in a global payment arrangement, creating a “right care at the right time in the right place” standard, Balfour said.

Jay Want, MD, president and CEO of Physician Health Partners in the Denver area, said capitation requires huge amounts of data and analysis, which could be achieved through the implementation of an electronic health record system and data registry.

Rebhun said EHRs, e-prescribing and data mining for optimization of care are key elements for coordinated care under global capitation.

Successful capitation requires strong physician organization leadership, Want said. “When you’re responsible for the money, innovation occurs.”

Blue Cross Blue Shield of Massachusetts’ version of global capitation is called the Alternative Quality Contract, a global, risk-adjusted, fixed payment per patient, with annual increases adjusted for inflation, and pay for performance, according to Dana Gelb Safran, senior vice president for performance measurement and improvement for BCBSMA’s Health Care Services Division.

The five-year contract is unique in that physicians and hospitals are contracted together as a system. They are accountable for cost and quality across the full continuum of care, and are given data and information to identify waste and savings in the system.