High Levels of Capitation Payments Needed to Shift Primary Care Toward Proactive Team and Nonvisit Care

Sanjay Basu, Russell S Phillips, Zirui Song, Asaf Bitton, Bruce E Landon

Capitated payments in the form of fixed monthly payments to cover all of the costs associated with delivering primary care could encourage primary care practices to transform the way they deliver care. Using a microsimulation model incorporating data from 969 US practices, we sought to understand whether shifting to team- and non-visit-based care is financially sustainable for practices under traditional fee-for-service, capitated payment, or a mix of the two. Practice revenues and costs were computed for fee-for-service payments and a range of capitated payments, before and after the substitution of team- and non-visit-based services for low-complexity in-person physician visits. The substitution produced financial losses for simulated practices under fee-for-service payment of $42,398 per full-time-equivalent physician per year; however, substitution produced financial gains under capitated payment in 95 percent of cases, if more than 63 percent of annual payments were capitated. Shifting to capitated payment might create an incentive for practices to increase their delivery of team- and non-visit-based primary care, if capitated payment levels were sufficiently high.