Chapter 10 Risk adjustment

Question 1

What is risk adjustment?

Answer 1

• evaluation of utilisation levels and and/or cost is essential to understand the underlying factors influencing demand factors.
• Adjusting for these underlying demand factors is referred to as risk adjustment.

Question 2

Choosing risk-adjustment method requires what considerations?

Answer 2

• Is the insured peril related to mortality, morbidity or retrenchment?
• What is the time frame under consideration eg during acute in-hospital admission, next month or year?
• What population is being considered? eg in-hospital, paediatric patients, etc
• What is the purpose eg pricing, contracting with healthcare provider

Question 3

Example of risk factors?

Answer 3

demographics

• age
• gender/sex
• race

clinical factors

• principal diagnosis
• severity of principal diagnosis
• mental health
• physical functional status
• acute physiological stability

health related

• tobacco use
• alcohol use
• sexual practices
• diet & nutrition
• obesity

Socio economic factors

• educational attainment
• housing characteristics
• health insurance coverage
• cultural beliefs

Attitudes & perceptions

• overall health status
• religious behaviours
• references and expectations for health care services

Question 4

Risk factors can be classified into

Answer 4

• demographics
• clinical factors
• health-related behaviours
• socio-economic factors
• attitudes and perceptions

Question 5

Risk factor: age

Answer 5

-ability of human body to recover from illnesses reduces with age.

Question 6

Risk factor: gender

Answer 6

• Certain clinical conditions are sex specific.
• male - prostate cancer
• femaile breast cancer

Question 7

Risk factor: race

Answer 7

• well-documented differences exist in disease prevalence by race.
• once adjusted for socio-economic factors, disparities in healthcare between different enthic groups are greatly reduced,but still not elimininated.

Question 8

Risk factor: acute clinical stability

Answer 8

• measure a person’s physiological functioning using homeostatic measures:
• heart rate, body temperature
• blood pressure
• this is needed to check if patient is facing imminent risk of death.

Question 9

Risk factor: principal diagnosis

Answer 9

-It is often necessary to understand the extent & severity of a principal diagnosis eg type of bacterial or viral infection for a patient diagnosed with gastritis.

Question 10

Risk factor: Co-morbidities

Answer 10

• refers to a clinical condition which exists simultaneously with another condition, usually independently of another medical condition.
• eg diabetes and a heart condition.

Question 11

Risk factor: Functional status

Answer 11

• often referes to observable basic activities of daily living(ADL) and instrumental ADLs.
• ADL egs: feeding,washing, toileting
• instrumental ADLs : shopping, cooking

Question 12

Risk factors:Socio-economic status

Answer 12

• Studies have shown that it is important to adjust for socio-economic factors when comparing healthcare outcomes.
• poor living standard and nutrition contribute to morbidity risk.
• doctors may keep patients with lower socio-economic status in hospitals longer they believe home conditions are not conducive for recuperation.

Question 13

Risk factors: Lifestyle factors

Answer 13

• many lifestyle factors influence morbidity: eg alcohol use, smoking, use of illicit drugs.
• these can be closely linked with chronic conditions.

Question 14

Access to benefits/insurance option

Answer 14

• access to benefit /insurance option is a critical factor in understanding the change in healthcare costs from one time period to the next.
• it may seem healthcare costs are decreasing over time but it means policyholders just chose cheaper insurance options with less comprehensive cover.

Question 15

Risk adjustment is useful for ?

Answer 15

• budgeting
• measuring efficiency
• risk management
• measuring healthcare options
• provider profiling

Question 16

Budgeting

Answer 16

• Many countries distribute hospital budgets according to underlying demand of patients in districts measured by diagnosis related groups.
• DRG are clinical classification systems used to risk-adjust hospital costs.
• Risk-adjustment models can be used to calculate expected cost of new group of lives purchasing PMI products

Question 17

Measuring efficiency

Answer 17

• Adjusting for patient mix is necessary when comparing two hospital costs.
• Hopsital A may be getting more cases of neurosurgery than B hence higher average costs per admission.
• Comparing facility efficiency is useful for:
• price negotiations for purchasers
• network selection
• managing facilities efficiently

Question 18

Risk management

Answer 18

• when healthcare budget is exceeded it is important to know whether this is due to demand or supply side factors.
• Appropriate risk management strategies can then be devised to curtail cost increases.

Question 19

Measuring healthcare outcomes

Answer 19

-Measuring healthcare quality is important because value is both a function of cost efficiency and quality.

Question 20

Provider profiling

Answer 20

• in order to support sustainable healthcare insurers both locally and internationally share information with doctors on their generated costs compared to their peers on like-for-like basis (i.e. risk adjusted).
• this information increases awareness amongst doctors on the economic impact of their clinical decisions.

Question 21

Common population classification systems

Answer 21

• numerous off-the-shelf classification systems can be used for risk adjustment.
• software packages typically require demographic info and clinical diagnosis.

Question 22

Case mix index formula

Answer 22

=Sum of admission cost weighs/count of admissions