Improving risk equalization using information on physiotherapy diagnoses
Background Worldwide, risk-equalization (RE) models in competitive health insurance markets have evolved from simple demographic models to sophisticated models containing diagnosis and pharmacy-based indicators of health. However, these models still have important imperfections; adding information on (diagnoses of) physiotherapy treatment may further improve RE-models. Therefore, a new risk-adjuster based on physiotherapy costs in the prior year was introduced in the Dutch RE-model of 2016.
Methods Physiotherapy claims-data (2012) and administrative data on costs and risk-characteristics (2013) for 94% of the Dutch population (N = 15.8 million) are used to evaluate the current risk-adjuster based on physiotherapy costs and to assess the effects of replacing it by different modalities of a risk-adjuster based on physiotherapy diagnoses. Of the 89 diagnoses in the claims-data, 62 are dropped because they relate to temporary health problems. The 27 retained diagnoses are added to the Dutch model in 4 modalities: 27 separate risk-classes, 9 diagnosis-clusters based on main pathology category, 4 diagnosis-clusters based on residual costs, and the 4 clusters of modality 3 interacted with age.
Results Although the cost-based risk-adjuster improves the model’s predictive power and removes the average undercompensation (€919) for enrollees with physiotherapy costs in the prior year, it is outperformed by all 4 diagnosis-based modalities. Of these modalities, modality 3 is preferred based on its simplicity and comparable predictive power.
Conclusions Adding information on physiotherapy can further improve the performance of sophisticated RE-models. Regarding the Dutch model, a risk-adjuster containing 4 risk-classes for clustered diagnoses based on residual costs is the preferred modality.
|Keywords||Health insurance, Risk equalization, Physiotherapy diagnoses, Claims data|
|JEL||Analysis of Health Care Markets (jel I11), Insurance; Insurance Companies (jel G22), Health Insurance, Public and Private (jel I13)|
|Persistent URL||dx.doi.org/10.1007/s10198-017-0874-x, hdl.handle.net/1765/95864|
|Journal||The European Journal of Health Economics|
|Note||The online version of this article (doi:10.1007/s10198-017-0874-x) contains supplementary material, which is available to authorized users.|
Eijkenaar, F, & van Vliet, R.C.J.A. (2017). Improving risk equalization using information on physiotherapy diagnoses. The European Journal of Health Economics, 1–9. doi:10.1007/s10198-017-0874-x