ClickCare Café

Burn Down Capitated, Managed, and Accountable Care?

Posted by Lawrence Kerr on Mon, Mar 09, 2015 @ 07:00 AM


Last weekend, I visited Philadelphia to see my daughter. As I walked along one cobblestone street, I noticed a metal plaque with four interlinking hands on some of the oldest homes. It was familiar to me, and in reminding myself of the history of these placards, I realized something fundamental about the changes in medicine.

But let me back up. In fact, let me back up to Benjamin Franklin in 1752. In response to the horrific fires in the young city of Philadelphia, Benjamin Franklin put together a “contibutionship” to take care of rebuilding after the fires. Modeled after a London firm, policyholders of this contributionship formed a mutual insurance company to share burdens in the case of fire. A contributionship member placed a medallion or plaque on the house. When a fire occurred, the paid firemen raced to the scene and put the fire out. If there was no medallion, they watched the property burn. Of course, risk was managed: there could be no trees on the property of the houses with medallions.

Capitated care, managed care, accountable care are all built on the same principle. Benefits (care) are given, but risk is shared by everyone involved. The only difference is that there are a lot more middlemen and statisticians in the healthcare system. And rather than each member paying directly, the member pays taxes or a premium to the government or insurance company.

Management of that care involves finding a better way to decrease costs. Instead of requiring no trees on the property, healthcare management focuses on efficiencies and expensive outcomes. iClickCare focuses on both the quality and savings of coordinated and collaborative care. Everyone “at risk” -- institutions, providers and patients themselves -- can contribute to the outcome by safe handoffs, time saved, and decreasing waste.

The nearly unspoken caveat is that everyone must behave differently. Not only the providers need to change, the patients need to do so as well. An excellent commentary on that piece by Christensen, Flier and Vijayaraghavan is here.

So as these concepts become even more crucial for us all to move towards sharing the burden of disease, managing risk, decreasing costs, and providing good care, these are the definitions that will be crucial:

  • Capitated care:  By the head. The payment for insurance to care for a member for a fixed fee per year.
  • Managed Care:  Adding tools such as approvals for procedures, a panel of physicians, and occasionally rationing of services. Remember the rule about trees in the contributionship? HMOs have those kinds of provisions.
  • Accountable Care Organization:  An organization which pays by capitation or fee for service, but adds penalties and rewards based on quality measures from the Centers for Medicare and Medicaid Services.
  • Managed Medicaid:  A healthcare payment system by states which enrolls the poverty stricken in a capitated plan. Payments to providers can be fee for service or capitated.
  • Prepaid Health Plans:  Same as above. Prepaid group practices developed from 1930 through 1960.
  • HMO (Health Maintenance Organization):  A prepaid health plan but based on the Health Maintenance Organization Act of 1973. Payment for services is only made within the network of the plan after referral from a primary care provider.
  • PPO (Preferred Provider Organization):  A prepaid heath plan in which the patient is able to make self referral within and without of the network of the plan.
  • EPO (Exclusive Provider Organization):  A hybrid of HMO and PPO. The patient selects the provider without a primary care referral, but the care must be exclusively within the network of the plan.
  • BPCI (Bundled Payments for Care Improvement):  Not prepaid, but retroactively paid services to groups of providers to force alignment of incentives. A managed care program with retroactive payments instead of prospective payments. 

When all is said and done, though, medicine should come down to a partnership with the provider and the patient. The doctor, the nurse, the aide and the therapist are a team with the patient and for the patient. Any system will only work when it is also really bought into by the patient. For as Benjamin Franklin said when referencing fighting fires: “an ounce of prevention is worth a pound of cure."


Tools like iClickCare can support a Managed Care system by improving the way that coordination and collaboration happen. See how iClickCare can work for your organization with a free 2-week trial:

Try the iClickCare 14-day evaluation

Tags: coordinated care, accountable care, managed care, capitated care

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