Diagnosis-based risk adjustment for Medicare capitation payments
Ellis, Randall P. Pope, Gregory C. Iezzoni, Lisa I. Ayanian, John Z. Bates, David W. Burstin, Helen Ash, Arlene S.
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UMass Chan Affiliations
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Keywords
*Capitation Fee
Diagnosis-Related Groups
Disability Evaluation
Disabled Persons
Female
Health Care Costs
Health Maintenance Organizations
Humans
Male
Medicaid
Medicare
Models, Economic
Rate Setting and Review
Regression Analysis
Risk Management
United States
Biostatistics
Epidemiology
Health Services Research
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Abstract
Using 1991-92 data for a 5-percent Medicare sample, we develop, estimate, and evaluate risk-adjustment models that utilize diagnostic information from both inpatient and ambulatory claims to adjust payments for aged and disabled Medicare enrollees. Hierarchical coexisting conditions (HCC) models achieve greater explanatory power than diagnostic cost group (DCG) models by taking account of multiple coexisting medical conditions. Prospective models predict average costs of individuals with chronic conditions nearly as well as concurrent models. All models predict medical costs far more accurately than the current health maintenance organization (HMO) payment formula.
Source
Health Care Financ Rev. 1996 Spring;17(3):101-28. Re-published in: Managed Care: Advances in Financing, by Linda F. Wolf.