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Capitation payment for pharmacy services. II. Impact on costs
Medical Care
|August 1, 1984
Summary
The expanded capitation drug program increased total costs by 9% but lowered drug costs by 3%. Refinements are needed for this healthcare financing innovation to be widely adopted.
Area of Science:
- Health economics
- Pharmaceutical policy
Background:
- Capitation models offer an alternative to fee-for-service (FFS) reimbursement in healthcare.
- Understanding the cost implications of capitation in drug programs is crucial for policy decisions.
Purpose of the Study:
- To analyze the cost components of an expanded capitation drug program compared to FFS.
- To identify factors contributing to cost discrepancies and suggest program modifications.
Main Methods:
- Cost analysis of four areas: total program costs, drug costs, escrow account distribution, and administrative costs.
- Comparison of capitation model costs against traditional FFS reimbursement.
Main Results:
- Total program costs were 9% higher under capitation.
- Drug costs were 3% lower under capitation.
- Administrative costs were substantial, with significant one-time development expenses.
Conclusions:
- The current capitation drug program model requires significant refinement before wider implementation.
- Potential modifications include targeting specific patient populations, introducing partial financial risk for pharmacists, and adjusting capitation rate calculations.