Postmortem of the Rochester Capitation Experiment

Rochester mental health providers and planners are convinced that capitation is an effective financing mechanism that allows care to be tailored to the needs of the individual and that can drive development of needed services. Some of the problems encountered involved the stability of the financing mechanism, new assumption of costs not previously borne by mental health dollars, the appropriateness of stop-loss mechanisms, methods of incorporating Medicaid and Medicare funds, and definition of capitation rate groups as well as parameters for movement in and out of groups.

Many of the contractual and administrative obstacles would be ameliorated if mechanisms were available at higher levels of government to allow for capitation financing and incorporation of other financing and reimbursement sources. The clinical benefits of capitation in Rochester were most demonstrable in the development of systems of care targeted to persons with serious and persistent mental illness and the transfer of care to the community for most of these persons. Whether capitation programs provide incentives for underserving enrollees was not really adequately tested in this demonstration project, as the capitation rates were generally adequate to support the needed care.

The question has been asked whether we would implement another capitation program if given the opportunity. The answer is a resounding "You bet!"