Emerging Practices in Medicaid Primary Care Case Management Programs. Capitation


The BBA's definition of a PCCM provider31 does not exclude providers who are capitated for providing services, thus creating a new class of capitated PCCM programs. HCFA(now known as CMS), however, also considers PCPs in capitated PCCM programs to be either PHPs or MCOs (depending on the package of capitated services) and regulates them as such.

Among the case-study states only Oklahoma pays PCPs using capitation. The capitation rates ($15.90 for TANF and $23.26 for ABD) cover primary, preventive, and case management services (including lab and X-ray services). Oklahoma Medicaid representatives reported taking this approach for two reasons.

  • They believe paying a capitation for primary, preventive, and case management services emphasizes the medical home concept; and
  • The state legislature mandated the use of capitated models to assure greater budget predictability. Creating a capitated PCCM was a means of achieving that goal in areas where sufficient MCO participation might not occur.

At first, some providers expressed concern with a capitated approach. The Medicaid agency, therefore, piloted the program for a few months in three counties. Providers in those counties successfully managed the primary and preventive services under the budget imposed by the capitation. Word of this success encouraged other providers to join the program.

Oklahoma also requires PCPs to serve those with complex needs, such as the aged and those with disabilities. Providers were concerned about taking on the additional risk of serving those populations under a capitated arrangement. The Medicaid agency successfully allayed those concerns by instituting a bridge payment under which the agency agreed to pay any difference in cost between the capitation payment and the cost, in the fee-for-service system, of serving those with complex needs. This payment was retroactively calculated based on the fee-for-service cost of all capitated services (as reported in encounter data) actually provided to the member.

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