The rising cost of care
Various reports estimate the US healthcare expenditure at $3.6 trillion. In 2018, that represented 17.7% of the US GDP.¹ No other country spends more on healthcare as measured against GDP than the United States, and as we have seen these costs continue to rise with no end in sight.
Because of this, many private payers and the government have been looking at alternative payment methods (APM) to help drive value and to lower the economic burden to the system. One such APM is capitation. Capitation is a fixed dollar amount per patient over a set period, generally monthly. There are many factors that can be used to determine this fee, some common factors include:
- Local costs
- Average utilization of services
- Number of patients
- Services provided
As an example, let’s assume a primary care practice enters into a capitated agreement with a payer and 1000 of its members. The two parties agree to a fee of $25 per member per month (PMPM). The capitated components look like this:
- Advance flat fee payment of $25,000 monthly
- Delivery of a specific set of monthly services
- This applies to the agreed upon number of members whether they seek care or not
This is great. The practice gets paid in advance and they spend less time and money on administrative tasks. This looks fantastic in a perfect world, but we don’t live in a perfect world. According to the CDC, 6 in 10 Americans have a chronic disease, and 4 in 10 have two or more.² This is one of the leading drivers of our $3.6 trillion healthcare costs. Hopefully, the PMPM has been set at a rate that takes this into account. So, the practice is covered for chronic disease costs. Not so fast.
Let’s look at a diabetic patient in this practice. The CDC estimates that 1 in 10 Americans has diabetes.² Using the capitation numbers above, it is fair to assume 100 patients are diabetics in our example practice. Tests needed for diabetic patients include their A1c levels, foot exam, BP control, nephropathy screen, and a retinal eye exam. Most of these tests are point-of-care tests in the physician’s office, except for the diabetic eye exam. This explains the disparity between kidney disease monitoring and retinal eye exams. According to CMS, kidney disease monitoring exceeds 95% while the diabetic eye exam is only at 52%.⁴ Why is that? The diabetic eye exam is being referred out, and this can pose a barrier to care for many patients.
Retinal screening at point of care
Many diabetics will have undiagnosed eye disease until it is too late. Diabetic retinopathy is the leading cause of blindness among US adults. Costs to treat range from $50-$3,000 per month dependent on the level of pathology found.⁵ ⁶ The CDC estimates that 7.7 million (25%) diabetics have some level of retinopathy.⁷ Looking at our capitation example, it is imperative to bring retinal screening closer to the patient and into the primary care office to prevent unexpected high expenditures and support better practice referrals for all eye care practitioners.
If 12 (25%) of these patients have retinopathy the monthly cost of treatment that wasn’t considered in the original contracted PMPM, ranges from $600 for mild retinopathy to $24,000 for severe retinopathy. If one of these patients goes blind, direct medical costs can exceed $1 million dollars annually. As you can see, a handful of patients whose eye disease isn’t diagnosed early, can take away any or all the benefits of entering into a capitated agreement.
FQHC’s can be challenged with implementing retinal screening due to the capital cost commonly associated with the retinal camera. Many organizations will obtain grants to overcome this hurdle. On an operating basis, exam fees may be justified by available reimbursement, incentive programs for diabetes care quality, or impact on encounter rates through appeal with the broader scope of service being provided.
Interested in learning more?
Topcon Screen can help you treat these patients before it’s too late. Topcon Screen eliminates your barriers to performing this vital test: Cost of cameras, concern of impact on workflow, uncertainty of reimbursement.
For more details or a live conversation with one of our Topcon team members call 551-231-7412 or send us an online message.
John Bartolovich, CHFP
Manager, Healthcare Economics and Reimbursement
John works with Health Plans and Health Systems to improve HEDIS documentation while closing care gaps.
1. California Health Care Foundation website “2020 Edition – Health Care Costs 1010”, Accessed October 29, 2020, https://www.chcf.org/publication/2020-edition-health-care-costs-101/
2. Centers for Disease Control and Prevention website, “Infographics Chronic Diseases in America”, Accessed October 29, 2020, https://www.cdc.gov/chronicdisease/tools/infographics.htm
3. Centers for Disease Control and Prevention website, “National Diabetes Statistics Report, 2020”, Accessed October 29, 2020, https://www.cdc.gov/diabetes/data/statistics-report/index.html?CDC_AA_refVal=https%3A%2F%2Fwww.cdc.gov%2Fdiabetes%2Fdata%2Fstatistics%2Fstatistics-report.html
4. Centers for Medicare & Medicaid Services (CMS) standard analytical file “2018 Shared Savings Program ACO Interactive dataset”, Accessed December 23, 2019, https://data.cms.gov/Special-Programs-Initiatives-Medicare-Shared-Savin/2018-Shared-Savings-Program-SSP-Accountable-Care-O/v47u-yq84
5. Katie Jennings. “One Blockbuster Drug Explains A Lot About Our Out-Of-Control Healthcare Costs.” Business Insider, 6 June 2014, Accessed October 29, 2020, https://www.businessinsider.com/price-difference-lucentis-and-avastin-2014-6#:~:text=Ranibizumab%2C%20more%20commonly%20known%20by,costs%20around%20%2455%20per%20dose
6. Allison Tsai. “Treating Proliferative Retinopathy.” Diabetes forecast, May 2015, Accessed October 29, 2020, http://www.diabetesforecast.org/2015/may-jun/treating-proliferative.html#:~:text=The%20Timeline%3A%20Two%20or%20more,Midwest%20Eye%20Institute%20in%20Indianapolis
7. Centers for Disease Control and Prevention website, “Watch out for diabetic retinopathy”, Accessed October 29, 2020, https://www.cdc.gov/features/diabetic-retinopathy/index.html#:~:text=From%202010%20to%202050%2C%20the,to%20leak%20and%20distort%20vision
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