Medicaid primary care services in New York State: partial capitation vs full capitation

Forty-nine states have applied to the Health Care Financing Administration for waivers to allow special program development for Medicaid recipients. In an effort to identify issues relevant to making the transition of its entire Medicaid population into a capitation model, New York State has encouraged the development of partial capitation and full capitation models. This paper is a critical description analysis of a 1-year experience, utilizing data provided by the New York State Department of Social Services.

Data collected by the New York State Department of Social Services were used to compare the costs for matched cohorts enrolled in partial capitation programs in which the primary care physician is paid a monthly fee to provide ambulatory primary care for Medicaid recipients; and full capitation programs in which a health maintenance organization (HMO) or a hospital-based prepaid health services program (PHSP) is paid a more encompassing monthly fee to provide a larger range of services, including inpatient, outpatient, and specialty care.

Partial capitation programs were reported to save the state 38% compared with a matched control group enrolled in traditional, fee-for-service Medicaid (P<.05), and offered greater savings than HMOs and PHSPs (P=NS). The HMOs and PHSPs saved the state 9.3% and 16.8%, respectively, compared with traditional enrollment. Quality measures and patient satisfaction for partial and full capitation programs were equivalent.

These data suggest that New York State primary care physicians who participated in programs that reimburse a prepaid monthly fee for outpatient primary care services achieved savings comparable to those of HMOs. A partial capitation primary care model may offer an affordable and more flexible alternative to full-service HMOs in caring for Medicaid recipients, especially in communities with limited HMO penetration.