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Supplementing managed competition

W Higgins1

  • 1Department of Public Health, Western Kentucky University, Bowling Green 42101.

Inquiry : a Journal of Medical Care Organization, Provision and Financing
|January 1, 1994
PubMed
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A new reimbursement system, competitive prospective payment and capitation (CPPC), can support managed competition in rural areas. This health care reform model enforces expenditure targets and promotes provider efficiency.

Area of Science:

  • Health economics
  • Healthcare policy
  • Health services research

Background:

  • President Clinton's health care reform proposed managed competition within global expenditure targets.
  • Managed competition may face challenges in nonurban areas due to limited provider leverage.

Purpose of the Study:

  • To describe a novel reimbursement system, competitive prospective payment and capitation (CPPC).
  • To evaluate the CPPC system's potential to supplement or replace managed competition in less populous areas.
  • To assess the CPPC system's compatibility with existing healthcare reform proposals.

Main Methods:

  • The paper outlines a reimbursement system based on competitive prospective payment and capitation.
  • The system is designed to enforce expenditure targets and encourage network formation.

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  • Incentives for efficiency within the proposed system are described.

    • Main Results:

    • The CPPC system can enforce expenditure targets effectively.
    • It encourages the formation of capitated provider networks.
    • The system creates strong incentives for healthcare efficiency.

    Conclusions:

    • The CPPC system offers a viable alternative or supplement to managed competition, particularly in nonurban settings.
    • It aligns with the goals of healthcare reform by controlling costs and improving efficiency.
    • The model supports the formation of integrated care networks through capitation.