Capitation in California--an analysis of at-risk financing of Medicaid services

Recent legislative changes have fostered the growth of a highly competitive health care market in California. In addition to selective hospital contracting for Medicaid (Medi-Cal) services, the California Medical Assistance Commission is attempting to initiate pilot projects to capitate Medi-Cal beneficiaries in selected geographic areas throughout the state. Selective contracting with county capitated organized health systems is also underway in Santa Barbara County, with plans for other counties on the drawing boards. This paper describes these capitated programs as well as addressing problems that may arise in this transition from a fee-for-service to a capitated Medi-Cal system. Specifically considered are issues related to underutilization, quality of care, implementation, eligibility and effects on existing patterns of care.