Evaluation of the equity of age-sex adjusted primary care capitation payments in Ontario, Canada.

OBJECTIVE: Several innovative primary care models have recently been introduced in Ontario, Canada. Two of these models are funded primarily through age-sex based capitation. There is concern that adjusting capitation rates for age and sex alone does not take into account the increased morbidity burden and health care needs that are associated with lower socioeconomic status. This study assesses the extent to which the current age-sex capitation rates in Ontario reflect health care needs of patients across socioeconomic status by comparing Ontario's age-sex adjusted capitation remuneration rate index with relative expected health care resource use by socioeconomic status (SES).
METHODS: This study used administrative data collected by the Ontario Ministry of Health and Long-Term Care. The study sample was those patients who were enrolled to a FHN continuously from September 1, 2005 to August 31, 2006. Standardized expected health care utilization was calculated based on morbidity burden using The Johns Hopkins Adjusted Clinical Groups (ACG) Case-mix System and compared with standardized capitation rates across and within neighbourhood income quintiles.
RESULTS: Among those in the lowest income group expected utilization was much higher than the age-sex capitation rates, while the opposite was true for those in the highest income group.
CONCLUSIONS: The findings suggests that under the physician reimbursement system used in Family Health Networks in Ontario, physicians are under-compensated for the health care needs of low income patients and over-compensated for the needs of high income patients. Adjusting capitation rates for morbidity burden in addition to age and sex may reduce incentives to preferentially enrol patients with higher socioeconomic status.