Are General Practices Adequately Funded to Serve High Proportions of High Need Patients?

Background: Capitation formulas take into account the characteristics of the population served as a way of estimating the funding required to meet varying levels of need. Capitation is a well-established method of funding health care in many different counties, especially in primary care. In Aotearoa New Zealand (ANZ), a capitation formula has been used since 2002 to fund all general practices. However, general practices who service greater numbers of people with complex health needs may not be funded adequately using the current formula if the characteristics used in the formula do not appropriately reflect the varying needs of those enrolled. We sought to quantify the levels of funding received by general practices who serve high proportions of high needs people, in order to assess if general practices are adequately funded to do so. Method: Ministry of Health enrolment data was used to inform the demographic spread of five hypothetical 5,000 patient practices consisting of: 30%, 50%, 70%, 90% and 100% high needs people. High needs were defined as those who fit one or more of these three criteria: Māori ethnicity; Pacific ethnicity; and people residing in an area of high socioeconomic deprivation. Annual first level services payments, High User Health Card, and additional funding streams including Very Low-Cost Access, Community Service Cards (CSC) and Fees-free for under 14s were taken from the Primary Health Organisation Services Agreement contract to calculate levels of income for all hypothetical practices. Results: Age is a strong determinant of capitation funding. Practice level funding does not increase in proportion to the level of needs of the populations served. VLCA funding is higher for the 70% high need then the 90% high need practice. CSC and Fees-free under 14s funding increase as the percentage of high needs people increase but not proportionally to the level of need. Conclusion: Use of age and sex as the main determinants for capitation funding shows evidence of structural discrimination within the health system. Funding schemes aimed at helping high needs populations do not always result in adequate funding for general practices to serve these communities well.