Capitation and Risk Adjustment in Health Care Financing: An International Progress Report (original) (raw)
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Exposing the true risks of capitation financed healthcare
Journal of Healthcare Risk Management, 2011
Many healthcare finance mechanisms involve transferring uncertain costs to healthcare providers in lieu of fixed payments or global capitation. Global capitation violates basic principles of risk management through insurance. Risk-theoretic analysis of capitation shows that risk disaggregation forces efficient providers to become inefficient insurers. Risk-assuming providers face lower profitability and increased exposure to operating losses, and must reduce patient benefits. Global capitation causes inefficiency, increases healthcare costs, and threatens patient-provider relationships. INTRODUCON Among their recommendations for building more efficient healthcare finance systems, Arrow et al. suggested as the first one "different payment mechanisms, such as bundled or global payments and capitation."(1) Similar insurance risk transfers occur in the prospective payment systems, diagnosis-related groups, global payment programs, and episode-based payment programs. In this article, all insurance risk transfer mechanisms are referred to generically as global capitation (also known as professional caregiver insurance risk). Efforts to compare global capitation and fee-for-service models are difficult because they rarely exist apart in otherwise identical settings. Confounding variables in different sites and spillover effects in the same sites leave most research inconclusive at best.(2-6) This article addresses the inefficiency of global capitation by comparing the operating characteristics of small and large insurers. Global capitation usually involves large risk-transferring entities (e.g., managed care organizations, insurers, Medicare, or Medicaid) passing insurance risks to many smaller insurance risk-assuming provider organizations, such as physician practices, hospitals, long-term care facilities, or home health agencies.(7-15) Hence, the viability of global capitation hinges on whether large and small insurers are equally profitable, are subject to equal risks of operating losses, and share equal probabilities of insolvency. Comparing performance The harms that global capitation cause are always most severe at the level of a single provider and a single financial evaluation period. The smaller the insurer or the shorter the evaluation period, the more inefficient it becomes. Small
Approaches to capitation and risk adjustment in health care: an international survey
1999
This report is a survey of current capitation methods in health care finance in developed countries. It was commissioned as part of the fundamental review by UK Ministers of the formula used to allocate health care finance to local areas in England, being carried out under the auspices of the Advisory Committee on Resource Allocation (ACRA). The study was commissioned
Equity in the finance of health care: Some international comparisons
Journal of Health Economics, 1992
This paper presents the results of a ten-country comparative study of health care financing systems and their progressivity characteristics. It distinguishes between the tax-financed systems of Denmark, Portugal and the U.K., the social insurance systems of France, the Netherlands and Spain, and the predominantly private systems of Switzerland and the U.S. It concludes that tax-financed systems tend to be proportional or mildly progressive, that social insurance systems are regressive and that private systems are even more regressive. Out-of-pocket payments are in most countries an especially regressive means of raising health care revenues.
A descriptive framework for country-level analysis of health care financing arrangements
Health Policy, 2001
Health financing policies are marked by confusion between policy tools and policy objectives, especially in low and middle income countries. This paper attempts to address this problem by providing a conceptual framework that is driven by the normative objective of enhancing the 'insurance function' (access to needed care without financial impoverishment) of health care systems. The framework is proposed as a tool for descriptive analysis of the key functions, policies, and interactions within an existing health care system, and equally as a tool to assist the identification and preliminary assessment of policy options. The aim is to help to clarify the policy levers that are available to enhance the insurance function for the population as efficiently as possible, given the 'starting point' of a country's existing institutional and organizational arrangements. Analysis of health care financing systems using this framework highlights the interactions of various policies and the need for a coherent package of coordinated reforms, rather than a focus on particular organizational forms of 'health insurance'. The content of each main health care system function (revenue collection, pooling of funds, purchasing of services, provision of services) and the market structure with which the implementation of each is organized are found to be particularly important, as are policies with respect to the benefit package and user fees.
HEALTH CARE FINANCING: THEORETICAL PREDICTIONS OF METHODS AND RELEVANT EMPIRICAL EVIDENCE
Every society has had its conventional system of health care for centuries. These systems help to maintain the health of individuals and of society at large. The major sources of financing health care are -1. Government funding, 2. Private sector funding, 3. Insurance, 4. Community financing, 5. Mixed system public-private funding. Throughout the world different countries allocate a different proportion of public sector revenue in the health services. However, a good number of countries are facing difficulties in allocating enough funds to the public health sector. Cost recovery schemes have been identified as a way to mobilize extra funds and to offset the constraints on public health sector spending. Capacity to pay for health care depends upon affordability and desire to pay. Those who can afford better services and cannot wait a long time to receive care at the institutions providing free services will likely go to private institutions for care. To cater those patients, government policy intervention is a must to accelerate expansion of the private sector health care facilities. Again, if cost recovery is the issue at the Public sector, quality of care delivered has to be improved and a lot of thought to be applied on the issue of the health care of the vulnerable groups in the society. The revenue thus collected is to be retained at the site of collection to be used for local health improvement, otherwise, if it goes to the general revenue pool, the health sector wouldn't be benefited as it has to compete with other sectors for its share of the National Budget. Whatever may be the way of financing, government has to be involved in all the way for the welfare of the people. Countries could greatly benefit from policy oriented research on effects of fees, cost estimation, insurance planning, and comparative cost-effectiveness of alternative health intervention.
THE EFFECT OF CAPITATION PAYMENT ON THE NATIONAL HEALTH
With the movement toward universal health coverage gaining momentum, the global health research community has made significant efforts to advance knowledge about the effect of various schemes to expand population coverage. The effect on efficiency, quality, and gaps in service utilization of reforms to provider payment methods are less well studied and understood.
Series editors' introduction
European national policy makers broadly agree on the core objectives that their health care systems should pursue. The list is strikingly straightforward: universal access for all citizens, effective care for better health outcomes, efficient use of resources, high-quality services and responsiveness to patient concerns. It is a formula that resonates across the political spectrum and which, in various, sometimes inventive configurations, has played a role in most recent European national election campaigns.
Health care financing reform : a socio-economic perspective
This paper reviews some of the recent literature and experiences in healthcare reform in the light of the peculiarities of human nature. The review suggests that successful healthcare financing reform boils down to working out a cost/risk-sharing formula between government and citizens that can effectively preserve the incentives for efficient utilization of healthcare resources and for preventive care, while limiting the financial risk of citizens. The paper will also address issues arising from aging and redistributive concerns, as well as political and administrative feasibility.
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Health, Nutrition and Population (HNP) Discussion Paper This series is produced by the Health, Nutrition, and Population Family (HNP) of the World Bank's Human Development Network (HNP Discussion Paper). The papers in this series aim to provide a vehicle for publishing preliminary and unpolished results on HNP topics to encourage discussion and debate. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations or to members of its Board of Executive Directors or the countries they represent. Citation and the use of material presented in this series should take into account this provisional character. For free copies of papers in this series please contact the individual authors whose name appears on the paper. Enquiries about the series and submissions should be made directly to the Editor in Chief. Submissions should have been previously reviewed and cleared by the sponsoring department which will bear the cost of publication. No additional reviews will be undertaken after submission. The sponsoring department and authors bear full responsibility for the quality of the technical contents and presentation of material in the series. Since the material will be published as presented, authors should submit an electronic copy in a predefined format as well as three camera-ready hard copies (copied front to back exactly as the author would like the final publication to appear). Rough drafts that do not meet minimum presentational standards may be returned to authors for more work before being accepted.