Monitoring and Evaluating Capitated Plans
The latest advances in Partner technology allow you to keep a close eye on your managed care plans. Accurate reading of Partner reports will enable you to predict an accurate forecast for your practice.
Here, we will review several different methods for monitoring and evaluating capitated plans. Some of these methods are financial and involve Partner, others are philosophical and require input from your staff and patients.
On a monthly or quarterly basis, you should review your capitated plans. The following steps are easy to follow, and, as suggested in our guide, "Choosing Your Insurance Companies," you can rely on other people to do most of the work so that all you have to do is review the results.
Here are the steps we recommend you follow on a regular basis:
- Review your goals
The 1995 Users' Conference chapter entitled, "Choosing Your Insurance Companies," explains the importance of setting goals for your practice and provides some pointers on how to go about this. You should now evaluate these goals and how each specific insurance plan has contributed to meeting those goals.
- Measure patient satisfaction:
- How often are patients coming in?
- What is the attitude of the patients covered under this plan?
If patients seem to be coming in too frequently, or if you are seeing too many patients on this plan for sick visits who are not really sick, then you need to find out why and correct that situation.
Our analysis of patient visit patterns show that patients will come in more frequently if the copayment is less than $15. This may be one reason that patients are coming in too frequently.
If patients demand to be seen, it may be because this is the third insurance plan they've been switched to in the past two years or they may have just been forced to absorb a large portion of the premium. Under these circumstances, we have seen many patients take their frustrations out on their providers rather than their employers. You may not want to remain involved with this plan unless the employer has made a long term commitment to making this plan work.
Many of the insurance companies have started to measure patient satisfaction by surveying your patients. The book Patient Satisfaction Pays (Brown, Nelson, Bronkesh, WoodAspen Publishers, Inc.1993) provides many suggestions for how you can do this on your own.
- Measure Staff Satisfaction
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- How easy is it to file claims?
- How much time must your staff spend acquiring authorization numbers and filing referrals?
Some offices have unknowingly had to hire an extra full-time employee just to administer a new insurance plan. PCC's essay entitled, Choosing Your Insurance Companies, shows you how to adjust your Income and Expense Statement to reflect such additions in overhead.
- Evaluate the utilization of this plan
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A cynical definition of a capitated plan is that you are being paid to "not see your patients." Whether you are cynical or not, it is important to know how frequently your patients visit your office:
- The Partner program, hmo, provides analysis of patient visits, by age group, for a specific insurance company or plan.
- The new Partner program, utilize, provides an in-depth examination of the utilization of your practice by the patients covered under a specific insurance company or plan. utilize will allow you to spot patients who are over- or under-utilizing your practice.
- utilize will generate two different reports, one that summarizes the total number of visits and dollars' worth of work done for each patient. The second report provides a detailed list of the various procedures performed for each patient.
- Evaluate the financial end of the plan
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- Is this plan working from a financial point of view?
The next section of this handout will go through the reports available in Partner that make it very easy to answer this question.
Partner Reports for Capitated Plans
Here are the steps you should follow to evaluate the financial side of a capitated plan using
Partner:
- Use the Insurance Company Activity Report (activity) to compare the work you've done with the money you've collected.
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**As you review this report, remember that money can come from several different sources:
- From the insurance company for the monthly capitation;
- From the insurance company for any fee-for-service procedures.
Here is a sample run of activity for an entire year. It is important to run activity for as much time as possible when evaluating capitated plans. This is because in one month you may appear to make a ton of money, while in the next month you may lose your shirt. This is what happens when you get involved with risk...
Insurance Company Activity Summary All Providers Generated on 01/30/97 for Transaction Dates From 01/01/96 to 12/31/96 Visits and Charges 
# Vis # Chg Chgs/Vis $ Charges $/Visit % ----------- ----------- ----------- ----------- ----------- ----------- Personal 2620 4307 1.64 139008.15 53.06 14.7 BCBS 1719 3065 1.78 98711.00 57.42 10.4 Medicaid 626 1085 1.73 38006.00 60.71 4.0 Cantor Alliance 432 687 1.59 20328.00 47.06 2.1 Community Health Plan 7 11 1.57 354.00 50.57 0.0 PruCare FFS 1795 3162 1.76 104552.00 58.25 11.0 PruCare - Capitation 3173 4965 1.56 222363.00 70.08 23.5 PruCare Clearing 15 15 1.00 169837.60 11322.51 17.9 Professional Risk Inc. 439 822 1.87 27453.00 62.54 2.9 Fly By Night Ins. 162 267 1.65 7513.00 46.38 0.1 Dowhan East Benefits 274 480 1.75 16445.00 60.02 1.7 American Health 313 494 1.58 14595.00 46.63 1.5 USHC 433 766 1.77 24959.00 57.64 2.6 Aetna 113 170 1.50 5988.00 52.99 0.1 Prudential Ins 93 175 1.88 5746.00 61.78 0.0 Anthem 621 1095 1.76 38085.00 61.33 4.0 Other 221 386 1.75 12700.00 57.47 1.3 ==== ==== ==== ==== ==== ==== 13056 21952 1.68 946643.75 72.51 100.0
Insurance Company Activity Summary All Providers Generated on 01/30/97 for Transaction Dates From 01/01/96 to 12/31/96 Payments and Adjustments Paymnts $ Pymnts % Adjusts $ Adjusts % ------ ------ ------ ------ ------ ------ Personal 4249 123018.95 18.0 463 10664.53 4.4 BC/BS 2808 57989.33 8.1 2212 39053.94 15.6 Medicaid 1473 31678.36 4.6 328 2740.29 1.2 Cantor Alliance 990 19892.66 2.9 148 1235.33 0.4 Community Health Plan 19 326.00 0.0 6 10.00 0.0 PruCare FFS 4535 89994.97 13.1 2322 14406.37 5.6 PruCare - Capitation 3617 53425.89 7.8 4394 163261.11 65.2 PruCare Clearing 15 169837.60 24.9 0 0.00 0.0 Professional Risk Inc. 1120 23455.16 3.4 588 3376.92 1.3 Fly By Night Ins. 368 6184.87 0.1 68 534.62 0.2 Dowhan East Benefits 536 17735.12 2.5 96 493.59 0.1 American Health 779 13724.68 1.9 340 1579.97 0.6 USHC 1100 21790.64 3.2 342 2685.56 1.2 METRAHEALTH (TRAVELERS) 264 5266.13 0.1 108 826.36 0.3 Aetna 252 4707.05 0.1 153 1272.64 0.5 Anthem 1428 33693.46 4.9 519 6126.35 2.4 Other 566 10978.08 1.6 206 1463.42 0.6 ==== ==== ==== ==== ==== ==== 24119 683758.95 100.0 12293 249731.00 100.0 Before we talk about capitated plans specifically, let me point out a few things about the activity report. It provides three key pieces of information:
- The Charges column represents the total charges billed to patients covered under that group of insurance companies during the specified date range. In this example, we are shown all of the charges billed during 1996. When you run activity, you can select any date range, from a few days to several years.
- The Payments column represents the money collected from accounts and insurance companies during the same date range. When you run this report for an entire year, most of the money in this column is for the work that appears in the Charges column. However, insurance companies being what they are, some of the receipts will be from previous years.
- The Adjustments column represents the money that your practice had to write-off because of a fee schedule, capitation plan, or due to bad debts. As with receipts, some of the adjustments are against revenue earned before the starting date of the report.
In this example, we shall be evaluating the PruCare Capitated plan. Two of the lines from each section of activity are of interest to us:
Visits and Charges # Vis # Chg Chgs/Vis $ Charges $/Visit % ------- ------- -------- -------- -------- ----- PruCare - Capitation 3173 4965 1.56 222363.00 70.08 23.5 PruCare Clearing 15 15 1.00 169837.60 11322.51 17.9
Payments and Adjustments Paymnts $ Pymnts % Adjusts $ Adjusts % ------- ------- ----- ------- ------- ----- PruCare - Capitation 3617 53425.89 7.8 4394 163261.11 65.2 PruCare Clearing 15 169837.60 24.9 0 0.00 0.0 The first line, PruCare - Capitation, represents the actual charges you posted for your PruCare capitated patients. The second section indicates the copayments and fee-for-service payments that you collected while you were doing that work. The adjustments represent the work that you did covered by capitation as well as any adjustments you had to post for fee-for-service procedures.
If your practice does a good job collecting copays and fee-for-service charges, your adjustments and payments should be nearly equal to your charges. In the example above, the office charged $222,363 and adjusted off $163,261, for a remaining balance of $59,102. Of this balance, $53,425 has been paid, for a 90% collection rate - not bad, but not incredible.
The PruCare - Clearing lines shows the activity associated with your monthly capitation payments. In this example, PruCare the overall payment rate for PruCare patients is very good! How do we know? Let's go through the math:
- The total actual charges are $222,363. This number is found in the $ Charges column on the PruCare - Capitated line. It represents the amount of work that you did and would have charged fee-for-service patients.
- The total payments that you received for your work are comprised of the payment figures for both PruCare - Capitation and PruCare - Clearing. In this instance, there were $53,425 of copays and fee-for-service payments (for labs or immunizations, for example) and $169,837 in capitation payments, for a total of $223,063.
- One way to evaluate the financial success of this plan is to compare the adjustment figure ($163,261) to the amount you actually collected for monthly ($169,837). In this instance, your office is one of the rare offices breaks even on its capitation! Here, you have received slightly more in capitation payments than you were asked to adjust off by PruCare. Time to celebrate!
- A more accurate way to measure your success with a plan is to compare the total charges ($222,363) to the total payments ($169,837 + $53,425 = $223,063). This will enable you to compare your capitated plans to your fee-for-service pay plans on a reimbursement level (it ignores any of the administrative costs).
In the instance above, the office has 100.3% collection rate ($223,063 / $222,363)...fantastic!
Although this is just a fictional exercise, it worked out pretty well. Our experience has shown that most fee-for-service plans will ask you to write-off at least 10% of your charges. Insurance companies seem to pick the 10% figure because they believe that you will have a hard time collecting 10% of the money owed to you by private pay patients. As a result, if you have less than a 10% remaining balance, you are probably ahead of the collection game (remember to compare the administrative costs!).
Below, please find a work sheet that summarizes our work:
EVALUATING A CAPITATED PLAN WITH ACTIVITY # Vis # Chg Chgs/Vis $ Charges $/Visit % ----- ----- ----- ----- ----- ----- PruCare - Capitation 3173 4965 1.56 222363.00 70.08 23.5 PruCare Clearing 15 15 1.00 169837.60 11322.51 17.9
Paymnts $ Pymnts % Adjusts $ Adjusts % ----- ----- ----- ----- ----- ----- PruCare - Capitation 3617 53425.89 7.8 4394 163261.11 65.2 PruCare Clearing 15 169837.60 24.9 00.00 0.0 Total Actual Charges $222,363.00 Copayments and FFS Payments $ 53,425.89 Capitation Payments $169,637.60 ----------- Total Payments $223,063.49 Adjustments (Capitation and FFS) $163,261.11 Adjustments vs Capitations: $163,261.11 (adjustments) - $169,837.60 (capitation payments) ------------ $ -6,576.49 (3.6% extra!) FFS vs Collections: $222,363.00 (total charges) - $223,063.49 (total payments) ----------- $ 700.49 (.3% extra!) - Use hmo to see how many patients you have in each age group and how frequently they visit your practice.
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Using a spreadsheet or the worksheet provided by PCC in "Making Money from Capitated Plans," project your capitation revenue for the patient base. Using the numbers from hmo and the cost per patient visit, project how much it will cost you to see these patients.
- For capitated plans, you should review your capitation payment very carefully each month.
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Watch out for unassigned patients (patients who have not selected a primary care provider but who still come to your office on a regular basis). Insurance companies have been collecting premiums from these patients but conveniently not paying you your capitation, even though you have been providing care to the patient.
Use Partner to track the patients on each plan and compare your list to that of the insurance company. The best tool for this effort is listins, which you should run with each capitation check. Here is a sample listins report from our beta release:
================================================================================ INSURANCE NAME: BCBS HMO $10 First Last Group Cert Change Age Provider Sex -------------------------------------------------------------------------------- Bam Bam Flinstone EASTERN456 RE23432S-1 + 15 Dr. Zhivag M Pebbles Flinstone EASTERN456 RE23432S-1 + 3 Dr. Doom F Stegasauru Flinstone EASTERN456 RE23432S-1 + 6 Nurse Chap M Tyranny Flinstone EASTERN456 RE23432S-1 + 98 None F Members Added: 4 Members Removed: 0 Total Number of Members at end of Date Range : 4 Summary of Members Added: Bam Bam Flinstone, Pebbles Flinstone, Stegasaurus Flinstone, Tyranny Flinstone
- Examine each insurance group in your practice for over- or under-utilization from a particular family or patient. Partner's program utilize can provide a quick overview for you:
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INSURANCE UTILIZATION from 01/01/97 to 01/31/97 Amount Visits Patient Name ---------- ------ ------------------------- $ 113.00 1 Fitzgerald, Karl $ 57.00 1 Stocker, Terri $ 55.00 1 Thompson, Andrew ---------- ------ $ 225.00 3 GRAND TOTAL 3 Patients with utilization over $ 50.00
Once you have identified patients who may be over-utilizing your practice, utilize can provide you with a more detailed analysis. If there appears to be a problem, share this information with your insurance company and educate the patient on the appropriate use of your office:
INSURANCE UTILIZATION from 01/01/97 to 01/031/97 Date Prov Diagnosis Procedure Amount -------- ------- --------------------- ------------------------ ---------- Fitzgerald, Karl (M 10/09/87) (9 yrs, 3 mos) 07/13/96 Pierce Pharyngitis Throat Culture $ 23.00 Pierce Pharyngitis Urine Culture $ 29.00 Pierce Pharyngitis Strep Screen $ 17.00 Pierce Pharyngitis OV Problem Focused $ 44.00 ---------- 1 Visits Totalling $ 113.00 ========== 1 Visits Totalling $ 113.00 There was 1 Patient with Utilization of at least $ 100.00As you can see, Partner can help you track down problem patients very easily!
Conclusion
On a monthly or quarterly basis, you should review the performance of your capitated plans. There are five steps in this process:
- Review your Goals
- Measure patient satisfaction
- Measure staff satisfaction
- Evaluate the utilization of this plan
- Evaluate the financial end of the plan
- evaluate the administrative difference
