Estimated Capitated Payment Breakeven Rate for a Mid-Sized Pediatric Practice

A recent study has estimated the capitated payment breakeven rate for a mid-sized pediatric practice.
A recent study has estimated the capitated payment breakeven rate for a mid-sized pediatric practice.

HealthDay News -- According to a study published in Pediatrics on July 29, 2016, the capitated payment breakeven per-member per-month (PMPM) rate was $24.10 for a mid-sized pediatric practice.

Steven A. Farmer, MD, PhD, from the Duke-Margolis Center for Health Policy in Washington, DC, and colleagues supplemented a literature review and data from more than 200 practices with interviews of practice administrators, physicians, and payers to construct an income statement for a hypothetical pediatric fee-for-service practice. To calculate the breakeven capitated rate, the practice was transitioned to full capitation, holding all practice parameters constant. The impact of panel size, overhead, physician salary, and staffing ratios was assessed on the breakeven PMPM rate.

The researchers found that the calculated breakeven PMPM was $24.10; 80% of practices broke even with a PMPM of $35.00 when an economic simulation allowed core practice parameters to vary across a broad range. When the staffing ratio increased by 25 and 38%, the breakeven PMPM increased by 12% ($3.00) and 23% ($5.50), respectively. Even with the primary care medical home staffing ratios, the practice was viable when rates from a real-world payer were applied.

"Practices are more likely to succeed in capitated models if pediatricians understand how these models alter practice finances," the authors write.

Reference

Farmer SA, Shalowitz J, George M, et al. Fully Capitated Payment Breakeven Rate for a Mid-Size Pediatric Practice. Pediatrics. 2016;138(2). doi: 10.1542/peds.2015-4367.

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