Risk Adjustment in Health Care Markets: Concepts and Applications

Financing Health Care: New Ideas for a Changing Society

Volumn , Issue , 2008, Pages 177-222

  Ellis, Randall P ^a  

^a Boston University   (United States)

Author keywords

Country experience; Estimation issues; Health care markets; Risk adjustment

Indexed keywords

EID: 85018634278     PISSN: None     EISSN: None     Source Type: Book    
DOI: 10.1002/9783527611294.ch8     Document Type: Chapter

References (85)

1. Van de Ven, W., Ellis, R.P. (2000) Risk adjustment in competitive health plan markets. In: Culyer, A.J., Newhouse, J.P. (Eds.), Handbook of Health Economics. North Holland, Amsterdam.
2. Glazer, J., McGuire, T.G. (2006) Optimal risk adjustment. In: Jones, A.M. (Ed.) The Elgar Companion to Health Economics. Edward Elgar Publishing Co., Gloucester, UK.
3. Glazer, J., McGuire, T.G. (2007) Chapter 9 in this book.
4. Iezzoni, L.I. (2003) Risk adjustment for measuring health outcomes. 5th edn. Ann Arbor, MI: Academy Health HAP.
5. Kronick, R., Dreyfus, T. (1997) The Challenge of Risk Adjustment for People with Disabilities: Health-Based Payment for Medicaid Programs. Princeton, N.J. Center for Health Care Strategies.
6. Ash, A.S., Ellis, R.P., Pope, G.C., Ayanian, J.Z., Bates, D.W., Burstin, H., Iezzoni L.I., McKay, E., Yu, W. (2000) Using diagnoses to describe populations and predict costs. Health Care Fin. Rev., Spring 21(3), 7-28.
7. Hurley J., Hutchison B., Giacomini M., Birch S., Dorland J., Reid R., Pizzoferrato G. (1999) Policy Considerations in Implementing Capitation for Integrated Health Systems. Canadian Health Services Research Foundation, June.
8. Hutchison B., Hurley J., Reid R., Dorland J., Birch S., Giacomini M., Pizzoferrato G. (1999) Capitation Formulae for Integrated Health Systems: A Policy Synthesis. Canadian Health Services Research Foundation, June.
9. Thomas, J.W., Grazier, K.L., Ward K. (2004) Comparing accuracy of risk-adjustment methodologies used in economic profiling of physicians. Inquiry, 41, 218-231.
10. Keenan, P.S., Beewkes Buntin, M.J., McGuire, T.G., Newhouse, J.P. (2001) The prevalence of Formal Risk Adjustment. Inquiry, 38, 245-259.
11. Glazer, J., McGuire, T.G. (2001) Private employers don't need formal risk adjustment. Inquiry, 38, 260-269.
12. Glazer, J., McGuire, T.G. (2000) Optimal risk adjustment of health insurance premiums: an application to managed care. Am. Econ. Rev., 90(4), 1055-1071.
13. Jack, W. (2006) Optimal risk adjustment in a model with adverse selection and spatial competition. J. Health Econ., 25, 908-926.
14. Biglaiser, G., Ma, C.T.A. (2003) Price and quality competition under adverse selection: market organization and efficiency. RAND J. Econ., 34(2), 266-286.
15. Newhouse, J. (1996) Reimbursing health plans and health providers: efficiency in production versus selection. J. Econ. Lit., 34, 1236-1263.
16. Shen, Y., Ellis, R.P. (2002) Cost minimizing risk adjustment. J. Health Econ., 21, 515-530.
17. Kronick, R., Gilmer, T., Dreyfus, T., Lee, L. (2000) Improving health-based payment for Medicaid beneficiaries. CDPS Health Care Fin. Rev., 21, 29-64.
18. Ozminkowski, R.J., Smith, M.W., Coffey, R.M., Mark, T.L., Neslusan, C.A., Drabek, J. (2000) Private Payers Serving Individuals with Disabilities and Chronic Conditions. Report prepared under contract #HHS-100-95-0044 between the U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP). at http://aspe.hhs.gov/daltcp/reports/privpay.htm.
19. Frank, R., Glazer, J., McGuire, T.G. (2002) Measuring adverse selection in managed health care. J. Health Econ., 19, 829-854.
20. Ingber, M. (1998) The current state of risk adjustment technology for capitation. J. Ambul. Care Manage., 21, 1-28.
21. Newhouse, J. (2002) Pricing the Priceless: A Health Care Conundrum. MIT Press, Cambridge MA.
22. Centers for Medicare and Medicaid Services (CMS). (2006) Announcement of Calendar Year (CY) 2007 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies, April. Downloaded on August 23, 2006. http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/Downloads/Announcement2007.pdf.
23. Ellis, R.P., McGuire, T.G. (1986) Provider behavior under prospective reimbursement: cost sharing and supply. J. Health Econ., 5, 129-152.
24. Lee, L.F. (1983) Generalized econometric models with selectivity. Econometrica, 51, 507-512.
25. Terza, J.V. (2002) Alcohol abuse and employment: a second look. J. Appl. Econometrics, 17, 393-404.
26. Glied, S.A. (2000) Managed Care. In: Culyer, A.J., Newhouse, J.P. (Eds.), The Handbook of Health Economics. North Holland, Amsterdam.
27. Ma, C.-A. (2003) Managed care and shadow price. Health Econ. Lett., 7, 17-20.
28. Cumming, R.B., Knutson, D., Cameron, B.A., Derrick, B. (2002) A comparative analysis of claims-based methods of health risk assessment for commercial populations. Research study sponsored by the US Society of Actuaries. http://www.soa.org/ccm/cms-service/stream/asset?assetid=9215098&g11n.
29. Thomas, J.W., Grazier, K.L., Ward K. (2004) Economic profiling of primary care physicians: consistency among risk-adjusted measures. Health Serv. Res., 39, 985-1003.
30. P.-T. Léger (2007) Chapter 7 in this book.
31. Rice, N., Smith, P. (2001), Capitation and risk adjustment in health care financing: an international progress report. Millbank Q., 79, 81-113.
32. Glazer, J., McGuire, T.G. (2002) Setting health plan premiums to ensure efficient quality in health care: minimum variance optimal risk adjustment. J. Pub. Econ., 84, 153-175.
33. Charlson, M.E., Pompei, P., Ales, K.L., MacKenzie, C.R. (1987) A new method of classifying prognostic comorbidity in longitudinal studies: development and validation. J. Chron. Dis., 40, 373-383.
34. Ash, A.S., Porell, F., Gruenberg, L., et al. (1989) Adjusting Medicare capitation payments using prior hospitalization data. Health Care Fin. Rev., 10(4), 17-29.
35. Weiner, J.P., Starfield, B.H., Steinwachs, D.M., Mumford, L.M. (1991) Development and application of a population-oriented measure of ambulatory care case mix. Med. Care, 29, 453-472.
36. Von Korff, M., Wagner, E.H., Saunders, K. (1992) A chronic disease score from automated pharmacy data. J. Clin. Epidemiol., 45, 197-203.
37. Zhao, Y., Ellis, R.P., Ash, A.S., Calabrese, D., Ayanian, J. Z, Slaughter, J.P., Weyuker L., Bowen, B. (2001) Measuring population health risks using inpatient diagnoses and outpatient pharmacy data. Health Serv. Res., 26, 180-193.
38. Fishman, P.A., Goodman, M.J., Hornbrook, M.C., Meenan, R.T., Bachman, D.J., O'Keeffe-Rosetti, M.C. (2003) Risk adjustment using automated ambulatory pharmacy data: the RxRisk model. Med. Care, 41, 84-99.
39. Averill, R.F., Goldfield, N.I., Eisenhandler, J., Hughes, J.S., Shafir, B.V., Gannon, D.E., et al. (1999) Development and evaluation of clinical risk groups (CRGs). 3M Health Information Systems, Wallingford, CT.
40. Symmetry Health Data Systems, Inc. (2001). Episode risk groups: ERG user's guide. Phoenix, AZ: Symmetry Health Data Systems, Inc.
41. Pope, G.C., Ellis, R.P., Ash, A.S., Liu, C.F., Ayanian, J.Z., Bates, D.W., Burstin, H., Iezzoni, L.I., Ingber, M.J. (2000) Principal inpatient diagnostic cost group models for Medicare risk adjustment. Health Care Fin. Rev., 21, 93-118.
42. Ware, J.E., Gandek, B. (1998) Overview of the SF-36 Health Survey and the International Quality of Life Assessment (IQOLA) Project. J. Clin. Epidemiol., 51, 903-912.
43. Pope, G.C., Ellis, R.P., Ash, A.S., Ayanian, J.Z., Bates, D.W., Burstin, H., Iezzoni, L.I., Marcantonio, E., Wu, B. (2000) Diagnostic cost group hierarchical condition category models for Medicare risk adjustment. Final Report to Health Care Financing Administration, December.
44. Ellis, R.P., Pope, G.C., Iezzoni, L.I., Ayanian, J.Z., Bates, D.W., Burstin, H., Ash, A.S. (1996) Diagnosis-based risk adjustment for Medicare capitation payments. Health Care Fin. Rev., 12, 101-128.
45. Kronick, R.T., Dreyfus, T., Zhou, Z. (1996) Diagnostic risk adjustment for Medicaid: the disability payment system. Health Care Fin. Rev., 17, 7-33.
46. Hornbrook, M.C., Goodman, M.J., Fishman, P., Meenan, R., Greenlick, M.R. (1998) Development and estimation of a global risk adjustment model. Abstr. Book Assoc. Health Serv. Res. Meet., 15, 227.
47. Carter, G.M., Bell, R.B., Dubois, R.W., et al. (1997) A Clinically Detailed Risk Information System for Cost. DRU-1731-1-HCFA. RAND, Santa Monica, CA.
48. Manning, W.G., Newhouse, J.P., Duan, N., Keeler, E.B., Leibowitz, A. (1987) Health insurance and the demand for medical care: evidence from a randomized experiment. Am. Econ. Rev., 77, 251-277.
49. Duan, N., Manning, W.G., Morris, C.N., Newhouse, J.P. (1983). A comparison of alternative models for the demand for medical care. J. Bus. Econ. Statist., 1, 115-126.
50. Mullahy, J. (1998) Much ado about two: reconsidering retransformation and the two-part model in health econometrics. J. Health Econ., 17, 247-282.
51. Manning, W.G., Basu, A., Mullahy, J. (2005) Generalized modeling approaches to risk adjustment of skewed outcomes data. J. Health Econ., 24, 465-488.
52. Manning, W.G., Mullahy J. (2001) Estimating log models: To transform or not to transform? J. Health Econ., 20, 461-494.
53. Fishman, P., Sloan, K., Burgess, J., Jr., Zhou, C., Wang, L. (2006) Evaluating alternative risk assessment models: Evidence from the US Veteran Population, Group Health Center for Health Studies working paper, May, 2006, available at: http://www.centerforhealthstudies.org/ctrstaff/fishman.html.
54. Basu, A., Manning, W.G., Mullahy, J. (2004) Comparing alternative models: Log vs. Cox Proportional Hazard. Health Econ., 13, 749-765.
55. Ellis, R.P., McGuire, T.G. (2007) Predictability and predictiveness in health care spending. J. Health Econ., 26, 25-48.
56. Veazie, P.J., Manning, W.G., Kane, R.L. (2003) Improving risk adjustment for Medicare capitated reimbursement using nonlinear models. Med. Care, 41, 741-752.
57. Manning, W.G. (1998) The logged dependent variable, heteroskedasticity, and the retransformation problem. J. Health Econ., 17, 283-296.
58. Buntin, M.B., Zaslovsky, A.M. (2004) Too much ado about two-part models and transformation? Comparing methods of modeling Medicare expenditures. J. Health Econ., 23, 525-542.
59. Berlinguet, M., Preyra, C., Dean, S. (2005) Comparing the value of three main diagnosis based risk adjustment systems (DBRAS). Canadian Health Services Research Foundation (CHSRF) report. www.chsrf.ca/finalresearch/ogc/pdf/berlinguetfinal.pdf.
60. Wasem, J., Lauterbach, L.M., Schrader, W.F. (2006) Klassifikationsmodelle für Versicherte im morbiditätsorientierten Risikostrukturausgleich. (Classification models for risk adjustment in the morbidity-oriented risk structure reconciliation.) Wissenschaftliches Institut der AOK (WIdO). Downloaded on 8/17/2006 at http://wido.de/fileadmin/wido/downloads/pdfggw/widoggwaufs10205.pdf.
61. Alberta Health and Wellness (2003) Health and Wellness, http://www.health.gov.ab.ca/.
62. Chowdhury, T., Fatoo, H., Friesen, D., Yang, Q., Kramer, G. (2003) An evaluation of risk adjustment groupers in a publicly funded health system: A case study using Alberta data, Alberta Health and Wellness. iHEA Poster Presentation, June.
63. Canadian Institute for Health Information. (2005) The Status of Alternative Payment Programs for Physicians in Canada. http://dsppsd.pwgsc.gc.ca/Collection/H115-13-2003E.pdf.
64. Reid, R.J., MacWilliam, L., Verhulst, L., Roos, N., Atkinson, N. (2001) Performance of the ACG case-mix system in two Canadian Provinces. Med. Care, 39, 86-99.
65. Reid, R.J., Roos, N. P., MacWilliam, L., Frohlich, N., Black, C. (2002) Assessing population health care need using a claims-based ACG morbidity measure: A validation analysis in the Province of Manitoba. Health Serv. Res., 37, 1345-1364.
66. Lu, M., Moores, D.G., Reid, R., Woodhead-Lyons, S.C., Zhang, J.X. (2002) A Review of Capitation in Alberta: A Report to the APP Subcommittee of Alberta Health & Wellness and the Alberta Medical Association, pp. 1-77.
67. Brown, R., Bergeron, J.W., Clement, D.G. (1993) Do health maintenance organizations work for Medicare? Health Care Fin. Rev., 15, 7-24.
68. Cao, Z., McGuire, T.G. (2002) Service-level selection by HMOs in Medicare. J. Health Econ., 22, 915-931.
69. Dallek, G., Dennington, A. (2002) Physician withdrawals: a major source of instability in the Medicare+Choice program. The Commonwealth Fund, New York.
70. Medicare Payment Commission (1998) Report to the Congress: Medicare Payment Policy.
71. Pope, G.C., Adamache, K.W., Khandker, R.K., Walsh, E.G. (1998) Evaluating alternative risk adjusters for Medicare. Health Care Fin. Rev., 20, 109-129.
72. Kapur, K. (2005) Risk Adjustment Methods and their Relevance to Pay-or-Play Supplement E to the Report: Challenges and Alternatives for Employer Pay-or-Play Program Design: An Implementation and Alternative Scenario Analysis of California's Health Insurance Act of 2003 (SB 2). Report written for the California Health Care Foundation and the California Managed Risk Medical Insurance Board Project Team. www.ihps.org/pubs/2005 Apr IHPS SB2 ESup Risk Adj.pdf.
73. Cutler, D., Zeckhauser, R. (2000) The anatomy of health insurance. In: Handbook of Health Economics, Volume IA, Culyer, A., Newhouse, J.P. (Eds.), Elsevier, Amsterdam, pp. 563-643.
74. Rosenthal, M.B., Frank, R.G., Li, Z., Epstein, A.M. (2005) Early evidence with pay-for-performance: From concept to practice. JAMA, 294, 1788-1793.
75. Van de Ven, W.P.M.M., Beck, K., Buchner, F., et al. (2003) Risk adjustment and risk selection on the sickness fund insurance market in five European countries. Health Policy, 65, 75-98.
76. Van de Ven, W.P.M.M., van Vliet, R.C.J.A., Lamers, L.M. (2004) Health-adjusted premium subsidies in the Netherlands. Health Affairs, 23, 45-54.
77. Busse, R., Riesberg, A. (2004) Health care systems in transition: Germany. Copenhagen, WHO Regional Office for Europe on behalf of the European Observatory on Health Systems and Policies.
78. Fuerstenberg, T., Rochell, B., Roeder, N. (2007) Ambulatory and hospital care in the Federal Republic of Germany. Am. Heart Hosp. J., 5, 22-26.
79. Buchner, F., Wasem, J. (2003) Needs for further improvement: risk adjustment in the German health insurance system. Health Policy, 65, 21-35.
80. Alberta Health and Wellness (2005) 2005-2006 Regional Health Authority Global Funding, Methodology and funding manual, April.
81. Murgolo, M. (2002) MCBS highlights: comparison of Medicare Risk HMO and FFS enrollees. Health Care Fin. Rev., 24, 177-185.
82. McKillop, I., Pink, G.H., Johnson, L.M. (2001) The financial management of acute care in Canada: A review of funding, performance monitoring and reporting practices. Ottawa, Ontario: Canadian Institute for Health Information, 2001.
83. Shwartz, M., Ash, A.S., Pekoz, E. (2006) Risk adjustment and risk-adjusted provider profiles. Int. J. Healthcare Tech. Manage., 7, 15-42.
84. Eggleston, K. (2000) Risk selection and optimal health insurance-provider payment systems. J. Risk Insur., 67, 175-198.
85. Eggleston, K., Bir, A. (2007) Measuring selection incentives in managed care: evidence from the Massachusetts State Employee Health Insurance Program. J. Risk Insur. (in press).