As group practices begin to change from fee-for-service to managed care/capitated contracts, one of the major issues they will face is how to divide up the revenue from capitated contracts. Single specialty primary care groups traditionally have utilized a method that takes into account the panel size of covered lives for revenue distribution. Multispecialty group practices have different and more complicated issues that need to be dealt with. It is important that medical groups understand the implications of capitated contracting. Not only will compensation formulas need to be revised, but utilization management, management information and referrals systems will all need to be reviewed in light of changing payment methodologies. This article will review some of the decisions that need to be carefully considered before a multi-specialty medical group should sign a capitated contract.
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