CH 10 (WM) Flashcards
Outline the rationale for risk adjustment. [1.5]
The underlying risk profile of a population✓ affects the frequency of healthcare utilization✓, as well as the associated cost.✓
Risk adjustment is necessary to compare healthcare costs and outcomes on a like-for-like basis.✓✓
Suggest possible risk-adjustment factors for the budget allocations. [7]
- Demographic factors ✓✓ -> Age✓ , Gender✓, Race and ethnicity ✓
- SEC status✓✓ -> Educational Attainment,✓ Employment and Occupation✓, Housing✓, Health Insurance Coverage✓
- Urban/Rural Split✓✓
- Clinical Factors✓✓ > Chronic disease prevalence,✓ Hospital Admissions ✓
- Supply side factors✓✓
- Number of hospital beds ✓, Number of clinics✓, Specialist facilities✓
- Health-related behaviours and activities✓✓
- Tobacco Use✓, Alcohol Use✓, Sexual Practices ✓, Diet and Nutrition ✓
- Attitudes and perceptions✓✓
List the different applications of risk adjustment models. [1.5]
- Budgeting State
- Pricing/reserving
- Measuring efficiency
- Risk management
- Measuring HC outcomes
- Provider Profiling
Define the term “DRG”. [0.75]
Diagnosis related groups✓ are common clinical classification system✓s used to risk-adjust hospital costs✓.
Outline the use of risk adjustment models for the following purposes:
a) budgeting purposes
b) pricing/reserving
[1.25]
a) Many countries distribute hospital budgets according to the underlying demand of patients in districts measured by DRGs.✓✓
b) Risk-adjustment models can assist in quantifying the expected healthcare costs✓ of a new group of lives purchasing PMI✓, as well as the required levels of risk reserves✓.
Outline the use of risk adjustment models for the following purpose:
a) measuring efficiency [1]
Adjusting for patient case mix is necessary when comparing costs between providers✓✓, eg Hospital A may have a larger number of patients undergoing neurosurgery than Hospital B and therefore Hospital A is expected to have a higher average cost per admission✓✓.
Comparing facilitity efficiency is useful for? [1.5]
- price negotiations for purchasers and suppliers of healthcare
- network selection for insurance plans
- managing facilities efficiently
Outline the use of risk adjustment models for the following purpose:
Risk Management [4.5]
If the healthcare budget is exceeded, it is important to understand whether it is due to demand and/or supply factors✓✓.
For State hospital managers, it is very difficult to influence underlying demand factors✓✓, eg an increase in major significant trauma admissions✓, whereas if the type of patients remains consistent✓, an unexplained cost increase may be as a result of more expensive treatment patterns or operational inefficiencies✓✓.
In a legislative environment for health insurance with open enrolment and community rating✓✓, it is difficult for healthcare insurers to influence underlying policyholder demand factors through selection✓✓. After adjusting for the underlying change in demand✓ (ie risk adjusting cost increases)✓, insurers can identify the inflationary impact of changes in supply-side behaviour within an admission✓✓. Appropriate risk management strategies can then be devised to curtail cost increases✓✓.
Outline the use of risk adjustment models for the following purpose:
Measuring healthcare outcomes [3]
Measuring healthcare quality is important, because value is a function of both cost efficiency and quality.✓✓
Internationally, healthcare inflation has exceeded general inflation.✓✓ In this environment, many funders make purchasing decisions✓ and insurers design benefits✓ to channel patients to cost-efficient providers✓.
Numerous health outcome measures exist✓, all of which require risk adjustment for comparative purposes✓, eg cardiac catheterisation mortality rate, pneumonia re-admission rate or patient satisfaction scores✓✓✓.
Outline the use of risk adjustment models for the following purpose:
Provider Profiling [2]
In order to support sustainable healthcare✓, many healthcare insurers both locally and internationally✓ share information with doctors on their generated costs✓ compared to their peers✓ on a like-for-like basis✓ (ie on a risk-adjusted basis)✓.
This sharing of information increases awareness among doctors on the economic impact of their clinical decisions.✓✓
Course Notes - page 11, Worked Example. [6]
P.11
Describe the applications of risk adjustment for an insurance company writing medical expense business. [4]
Q&A 2.5
Solution 2.5
Risk-adjustment models can assist in quantifying the expected healthcare costs of a new group of lives purchasing PMI, …[1⁄2] … as well as the required levels of risk reserves. [1⁄2]
Risk adjustment may also be used when comparing costs between providers of medical facilities and services, …[1⁄2] … because it allows an adjustment to be made for the patient case mix.[1⁄4]
Comparing facility efficiency is useful for:
price negotiations for purchasers and suppliers of healthcare network selection for insurance plans managing facilities efficiently.
[1⁄2]
[1⁄4] [1⁄4] [1⁄4]
Risk adjustment can be used to help understand whether budget overruns are due to demand and/or supply factors.
[1⁄2]
While it is difficult for insurance companies to influence policyholder demand, they may be able to implement appropriate risk management strategies to deal with supply-side factors, eg by curtailing cost increases.
Risk adjustment can also be used to: ●
● help measure healthcare outcomes [1⁄2] [1⁄2]
share information on providers and hence increase the awareness among doctors on the impact of their clinical decisions.
[Maximum
What is the “cost weight” of a DRG? [1]
It is the multiplicative factor✓ of how much more expensive or cheaper the average cost of the DRG✓✓ is relative to the overall average cost of hospitalisations in the time period.✓
June 2018, Q3 [10]
(ASSA)
Exam Question
