Using contact capitation to align payment incentives among specialists.

Contact capitation is a means of paying specialists based on the number of patients managed rather than on the number of services provided or procedures performed. Payments to physicians are disbursed from budgets, or risk pools, which are established by specialty and product line (e.g., commercial coverage, Medicare). Each specialist is credited with managing a patient for a specified time period (usually 12 months) following the patient's initial visit. To ensure payments are equitable to all physicians, regardless of specialty or subspecialty, the system may be adjusted by using different contact weights for certain diagnoses or procedures, creating subpools for selected subspecialties and/or procedures, establishing separate capitation rates for different age segments, and setting aside certain specialties as fee-for-service carve-outs. Contact capitation has advantages over traditional specialist capitation of removing physicians' financial incentives to overutilize and allowing for a broad physician specialty panel. Challenges to implementing contact capitation include getting physicians to alter habitual practice patterns and managing the system's administrative complexity.