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Survey: Not All Physicians Lose Under Capitation Contracts

The Doctor's Office, August 6, 2009

Skeptical physician groups often say poor risk contract financial performance is the reason they stay away from capitation. As a result, capitation is usually associated with physicians not getting paid enough, although the payment method remains popular in California and other pockets of the country. However, a recent study found that poor results are not as common as has generally been believed.

The 2008 Capitation and Risk Contracting Survey, released by the AMGA and ECG Management Consultants, found the following:

  • Whether risk contracts are financially attractive depends heavily on the dominance of payers or providers in the market
  • The ability to participate in risk contracting largely depends upon whether a health plan offers the option in a group market's area
  • Effective risk contract management requires significant investment in contract administration and oversight
  • Unfavorable contract terms are the single greatest barrier to risk contracting participation

The 2008 capitation survey was based on 2007 data and focused on medical group leaders. Seventy-five AMGA member organizations responded to the survey, which was divided into five topics: prevalence and scope, risk contract management, health plan characteristics and performance, physician acceptance, and barriers and limitations.

Of the 75 organizations that responded to the survey, 64% have participated in risk-bearing contracts in the past three to five years. Not surprisingly, western states had the largest percentage of risk-contracting participation by region (84%), and 67% of respondents have been involved in risk contracts for at least 11 years.

Thirty-six percent of participants reported that the revenue derived from risk contracts is greater than half of their organizations' total revenue, including 62% of respondents in western states. On the other end, 67% of respondents in the Northeast with risk-bearing contracts said risk contracts contribute to less than 10% of their total revenue.

Thirty-three percent of those with risk contracting own a health plan and are most likely to offer commercial HMO-point-of-service and Medicare Advantage plans.

More than half of respondents described their organizations' financial performance in risk contracts as above average or excellent in the past two years. Less than 10% cited poor financial performance.

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