Chapter 10 - risk adjustment Flashcards
Acute clinical stability
Reflects a person’s physiological functioning as indicated by homeostatic measures which measures indicators of bodily function such as vital signs, serum electrolytes, heamotological findings and levels of consciousness or neurological functioning. This is needed to assess if patients face an imminent risk of death
Principal diagnosis
- the reason for which clinical treatment is sought
- measured in many countries by WHO’s International Classification of diseases
- there are thousands of ICD codes so it is common to use groupings of ICD codes as factors in health-adjusted models
Co-morbidities
- a clinical condition that exists simultaneously with, and usually independent of, another medical condition. Often these are chronic conditions.
Access to benefits/insurance option
Access to benefits/insurance is a critical factor in understanding the change in healthcare costs from one period to the next. It may seem that healthcare costs are decreasing over time but this may be due to policyholders being more likely to purchase cheaper insurance options with less comprehensive cover
Applications of risk adjustment
- budgeting
- measuring efficiency
- risk management
- measuring healthcare outcomes
- provider profiling
Budgeting
- many countries distribute hospital budgets according to the underlying demand of patients in districts measured by diagnosis-related groups.
- DRGs are common clinical classification systems used to risk-adjust hospital costs
- risk-adjustment models can assist in quantifying the expected healthcare costs of a new group of lives, as well as the required levels of risk reserves
- numerous health outcome measures exist all oh which require risk adjustment for comparative purposes.
Measuring efficiency
adjusting for patient case mix is necessary when comparing costs between providers.
comparing facility efficiency is useful for:
- price negotiations for purchasers and suppliers of healthcare
- network selection
- managing facilities efficiently
Risk management
- if the healthcare budget is exceeded, it is important to understand whether it is due to demand and/or supply factors
- if the type of patients remains consistent, an unexplained cost increase may be as the result of more expensive treatment patters or operational inefficiencies
- difficult for insurers to influence underlying policyholder demand factors through selection
- after adjusting for underlying change in demand, insurers can identify inflationary impact of changes in supply-side behaviour. Appropriate risk management strategies can then be devised to curtail cost increases
Measuring healthcare outcomes
- measuring healthcare quality is important because value is a function of both cost and quality
- insurers design benefits to channel patients to cost-effective providers
- numerous health outcome measures exist, all of which require risk adjustment for comparative purposes
Provider profiling
In order to support sustainable healthcare, many healthcare insurers share information with doctors on their generated costs compared to their peers on a risk-adjusted basis. This sharing of information increases awareness among doctors on the economic impact of their clinical decisions.
Calculating case mix index
A cost/case weight of DRG 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 hospital admissions in the time period.
case mix index = sum of admission cost weights/count of admissions
To compare cost efficiency fairly, the average cost per admission needs to be compared on a case mix adjusted basis. The average cost per admission therefore needs to be adjusted with the case mix index
Common risk adjustment factors can be divided into the following categories
- demographic
- clinical
- health-related behaviours and activities
- socio-economic
- attitudes and perception
