When California providers share in the risk through a capitation payment model, better value and health outcomes are achieved than with a fee-for-service model, according to a new report from the Integrated Healthcare Association (IHA).
The association released the third edition of its California Regional Health Care Cost & Quality Atlas, a statewide source for comparative healthcare performance information. In its third release, the Atlas now includes over two dozen standardized measures of clinical quality, utilization and total cost of care such as preventive screenings, care for chronic conditions, member cost sharing, and hospital readmissions.
The results revealed that capitation is associated with better quality performance. Clinical quality was higher on average in 2017 for commercially insured members cared for by providers sharing financial risk (paid capitation), as compared to providers not sharing financial risk (paid fee-for-service).
More specifically, preventive screening rates for providers with full financial risk was 11 percentage points higher than providers not sharing risk. The report’s authors believe that if all patients in California were cared for by providers sharing risk, 60,000 more women would have been screened for breast cancer and hundreds of cases might have been found earlier when cancer is more treatable, while 1,500 fewer patients would have received a dangerous combination of drugs opioids and benzodiazepines when cared for by providers sharing risk.
The data also showed that capitation is associated with lower costs to the healthcare system and patients. Financial risk sharing was associated with up to 3.5 percent lower total cost of care, a trend that also held true for pharmacy costs and patient cost sharing. Pharmacy costs were up to 13 percent lower for providers sharing risk, and on average, patients cared for by risk-sharing providers paid $268 per year out of pocket for medical services as compared to $672 per year for those who were not. This difference was even higher for patients with chronic conditions.
What’s more, the prevalence of financial risk sharing varies across the state, with much more risk sharing in Southern California. Forty-five percent of the commercially insured population in Southern California were cared for by providers sharing risk, compared to only 18 percent in Central California and 24 percent in Northern California.
The Atlas emerged out of initial planning done by IHA and the California Health and Human Services (CHHS) Agency, and is supported by the California Health Care Foundation (CHCF), which works to improve the health care system so it works for all Californians.
“We've been pursuing full-risk contracts with health plans for decades, because we know that providing care coordination, population health and focusing on prevention results in healthier patients who avoid using expensive health resources such as hospitalizations,” Stacey Hrountas, CEO, Sharp Rees-Stealy Medical Centers, said in a statement, adding that the Atlas provides the evidence for health plans, employers and legislators to support the growth of HMO and MA plans for the best value and a healthier population.
