Voluntary Partial Capitation: The Community Nursing Organization Medicare Demonstration

In a recently concluded Medicare demon-stration, Community Nursing Organizations(CNOs) received capitated payment to pro-vide a subset of Medicare services through anursing case management delivery system.Demonstration participation was volun-tary, both for CNOs and recruited benefi-ciaries, raising several challenging issuesassociated with selection. We investigateprovider and beneficiary selection, as wellas Medicare costs, using multiple evalua-tion methodologies. We find that CNOenrollment is associated with increasedpayment by Medicare for CNO-covered ser-vices. Results showing CNO enrollees to bemore costly to Medicare for non-CNO ser-vices are consistent with cost shifting, butcould also be accounted for by biasedprovider selection into the demonstration.