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Capitation is at the Door; Will You Be The One Who Knocks?

Philip Betbeze, for HealthLeaders Media, November 22, 2013

Narrow Network Exchange Product
The same system is currently submitting a bid at the request of a statewide Blue Cross health plan that represents 50,000 lives or so. This would be a narrow-network-type arrangement through the health insurance exchange under which the health system is expected to compete with other systems under a per-member, per-month payment system. The winning bidder and the health plan would share both upside and downside risk, but given the fact that there are a lot of unknowns with this population consisting of many previously uninsured individuals, the system sees the plan as potentially high risk.

Not so high risk as to preclude competing for the contract, however. Again, capitation is at the heart of both plans, but despite the risk, the health system is competing for the contract in order to gain valuable experience at the management of population health.

Capped, and Tied to MLR
Another health system in the Northeast will get the chance to see how it does with the health of 200,000 covered lives as it begins a risk deal that caps both upside gains and downside losses tied to the medical loss ratio.

The health system can't lose more than $30 million on the plan, but can't make more than that either. It's a three-year deal where the caps move based on the MLR, but it represents a big risk for a system used to receiving fee-for-service payment for the majority of its commercial contracts.

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