Blended capitation and incentives: Fee codes inside and outside the capitated basket

Area of Science:

• Health Economics
• Medical Practice Management
• Healthcare Policy

Background:

• Blended physician payment models combine fee-for-service (FFS) and capitation to mitigate risks of pure payment structures.
• Limited evidence exists on physician responses and service shifts within blended payment models.

Purpose of the Study:

• To analyze primary care physicians' service provision changes when transitioning from FFS to a blended capitation-FFS payment model.
• To investigate shifts in service delivery across payment categories within group practices under new payment incentives.

Main Methods:

• Empirical analysis of a switch from FFS to a blended capitation-FFS model for primary care physicians in group practice.
• Examination of changes in service provision for both rostering and non-rostering physicians.

Main Results:

• Rostering physicians decreased capitated services by 9-14% and increased FFS services by 10-22%.
• Other physicians within the rostering group reduced capitated services with no net FFS change.
• Physicians outside the rostering group decreased both capitated and FFS services.

Conclusions:

• Physician behavior adapts to blended payment models, with a notable shift from capitated to FFS services among primary care providers.
• The findings suggest that blended models can influence service utilization patterns and provider behavior within group practices.
• Patient concentration with a single provider may be a consequence of capitation elements in blended payment systems.