[Congressional Record Volume 142, Number 62 (Tuesday, May 7, 1996)]
[Extensions of Remarks]
[Page E716]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     READING BETWEEN THE LINES: AMA EXPLAINS CAPITATION TO MEMBERS

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                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                          Tuesday, May 7, 1996

  Mr. STARK. Mr. Speaker, the rush is on to push all Americans--except 
the wealthy who can afford medical savings accounts--into managed care 
and capitated plans.
  What is capitation? The American Medical Association recently 
published a booklet entitled ``Capitation: The Physicians Guide.'' It 
is designed to help doctors understand capitation, how to negotiate a 
managed care contract, and survive in this new world of managed care.
  It is artfully worded, but reading between the lines is pretty easy. 
The following are quotes from the booklet:

       To be successful under capitation, you also have to change 
     the way you practice medicine. . . . When patients use fewer 
     services than anticipated in setting the Per Member, Per 
     Month (PMPM) payment, you get to retain unspent funds.
       Many capitation agreements also offer physicians the 
     opportunity to participate in risk pools, another opportunity 
     for financial gain. . . . thus risk pools provide physicians 
     with an opportunity to benefit financially from reduced 
     utilization of non-physician services.
       Capitation forces you to broaden your focus from 
     considering the health care needs of the individual patient 
     to considering the health care needs of the group.
       Capitation offers a strong financial incentive to provide 
     cost-effective care to all patients. Under fee-for-service, 
     providing more services translates into higher practice 
     revenue and thus higher income. But under capitation, 
     providing more services adds only to your costs. Improvements 
     you can make in your practice style that reduce utilization 
     and increase cost effectiveness increase your profitability.
       When primary care physicians accept capitation and are 
     subject to risk pools, they have an incentive to reduce all 
     types of utilization, including the use of specialists. . . . 
     Generally, primary care physicians reduce referrals by about 
     one-fourth when they are at risk for referred services.

  Mr. Speaker, the fee-for-service system where a doctor can make more 
by endlessly doing more is outdated and bankrupting us. It has to be 
changed. But be careful--managed care and capitation can kill you. Do 
you really want your doctor worrying more about his group than you, 
when you get sick? As a society, as a government we do not yet have 
good measures of how to judge quality, of how to know when someone is 
undertreating and underreferring patients. Managed care is happening 
very quickly, and we should not be further speeding up the movement 
into managed care until we have adequate consumer protections and 
quality measures in place.

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