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SANTA FE HEALTHCARE: Capitation and Risk Sharing

Copyright 2018 Foundation of the American College of Healthcare Executives. Not for sale.

Model with Questions, Student Version

This case requires students to examine the issues involved with payment allocation and risk sharing
within a Physician Hospital Organization (PHO). The model calculates the dollar distributions to each
provider category and the budgeted and actual total reimbursement for the PHO’s primary care
physicians, specialist physicians, and hospital. In addition, the model provides the calculations for two
illustrative risk pools.

The model consists of a complete base case analysis–no changes need to be made to the existing
MODEL-GENERATED DATA section. However, values in the INPUT DATA section of the student
spreadsheet have been replaced by zeros. Students must select appropriate input values and enter
them into the cells with values colored red. After this is done, any error cells will be corrected and
the base case solution will appear. The KEY OUTPUT section includes the most important output
from the MODEL-GENERATED DATA section.

INPUT DATA: KEY OUTPUT:

PMPM payment from the Plan $0 Total Budgeted Reimbursement
Primary care physicians:
Number of members 0 Premium allocation $0
Professional services risk pool 0
Allocation of premium dollar (%): Inpatient services risk pool 0
PHO administration / overhead 0.0% Total $0
Paid to within-system physicians: Specialist care physicians:
Primary care 0.0% Premium allocation $0
Specialists 0.0% Professional services risk pool 0
Ancillary services 0.0% Inpatient services risk pool 0
Administration / profit 0.0% Total $0
Paid to within-system hospital 0.0% Within-system hospital:
Paid for prescription drugs 0.0% Premium allocation $0
Paid to out-of-system providers 0.0% Inpatient services risk pool 0
Professional services risk pool 0.0% Total $0
Inpatient services risk pool 0.0%
Total premium dollar 0.0% Total Actual Reimbursement
Primary care physicians:
Distribution of professional services risk pool: Actual payment $0
Primary care physicians 0% Professional services risk pool 0
Specialist care physicians 0% Inpatient services risk pool 0
Total 0% Total $0
Specialist care physicians:
Distribution of inpatient services risk pool: Actual payment $0
Primary care physicians 0% Professional services risk pool 0
Specialist care physicians 0% Inpatient services risk pool 0
Hospital 0% Total $0
Total 0% Within-system hospital:
Actual payment $0
Sensitivity analysis: Inpatient services risk pool 0
Suppose actual payment differs from premium Total $0
allocation by the percentages below:
Specialists 0%
Hospital 0%

MODEL-GENERATED DATA:

Sensitivity analysis:

Allocation of Premium: Results if Actual Payment Differs from Premium Allocation
PHO administration / overhead $0 PHO administration / overhead $0
Paid to within-system physicians: Paid to within-system physicians:
Primary care 0 Primary care 0
Specialists 0 Specialists 0
Ancillary services 0 Ancillary services 0
Administration / profit 0 Administration / profit 0
Paid to within-system hospital 0 Paid to within-system hospital 0
Paid for prescription drugs 0 Paid for prescription drugs 0
Paid to out-of-system providers 0 Paid to out-of-system providers 0
Professional services risk pool 0 Professional services risk pool 0
Inpatient services risk pool 0 Inpatient services risk pool 0
Total premium dollar $0 Total revenue $0

Professional Services Risk Pool:
Budgeted payments for specialists $0
Actual payments for specialists $0
Variance from budget $0
Risk pool starting amount $0
Remainder in pool $0
Risk pool allocation
Primary care physicians $0
Specialists $0

Inpatient Services Risk Pool:
Budgeted payments for inpatient services $0
Actual payments for inpatient services $0
Variance from budget $0
Risk pool starting amount $0
Remainder in pool $0
Risk pool allocation
Primary care physicians $0
Specialists $0
Hospital $0

END