We had a meeting before the holidays with Chris Dawes, key staffer for the Senate Finance Committee, to talk about stimulus, health IT and physician payment reform. In terms of stimulus, they’re still thinking about how best to spend the dollars, but Dawes agrees with the College that some of the money needs to go to promote the business case for adoption and quality improvement, not just grants and loans. The trick is that not too many other physician organizations would agree with us on that.

In terms of payment reform, Dawes and his boss, and Liz Fowler (their boss is of course Sen. Baucus), are really frustrated with the difficulty of how to structure bundling payments to improve chronic disease management and promote value. Everybody agrees in quality incentive payments (based on either outcomes or adherence to guidelines), but reducing administrative bureaucracy through bundling or some other approach is easier said than done.

Here’s an interesting twist: Congressional policy people are starting to talk again about capitation or “capitation light” again. While 49 states might offer an obscene gesture at such a suggestion, the great (weird?) state of California still uses capitation to cover close to 10 million beneficiaries in HMO products. In that left-coast state, even many solo doctors in all specialties (including cardiology) participate in Independent Practice Associations (IPAs) under capitation. For many of my former colleagues at the California Medical Association, quality improvement incentive payments can be as much as $20,000 annually in some networks. The problems with capitation in the '90s were primarily two: First, the perverse incentive to provide less than needed care to maximize income was a horrific ethical dilemma; second, insurers gamed the system to maximize their profits and make capitation rates unacceptably low for frustrated doctors (unless they were in very large and powerful networks).

While a lot of doctors in California still talk dirty when they refer to capitation, one could hardly claim it isn’t working there to some extent. From the point of view of some pundits in Congress, some modified version of capitation, at least to cover expensive chronic disease, might work if it was coupled with quality of care measurements to ensure that patients were treated fairly and effectively. It is true that capitation in its first round of failed models in most jurisdictions had no such quality of care protection. So, gird your loins. We may be going back to the future.

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