Chapter 10 Risk adjustment Flashcards
-Evaluate the nature of risk facing the insurer. -Describe the principal modelling techniques appropriate to health and care insurance.
What is risk adjustment? (3)
- an important part of any well-functioning healthcare system is being able to evaluate utuilisation, effectiveness and/or cost of healthcare given
- when peformign such evaluation, it is is essential to understand the underlying factors influencing demand factors.
- adjusting for these underlying demand factors is referred to as risk adjustment.
Risk adjustment: uses
Briefly list what risk adjustment is useful for (5)
- Budgeting
- Measuring efficiency
- Risk management
- Measuring healthcare outcomes
- Provider profiling
Risk adjustment uses: budgeting
Describe how risk adjustment may be used for budgeting (3)
- Many countries distribute hospital budgets according to underlying demand of patients in districts measure by diagnosis related groups.
- DRG are clinical classification systems used to risk-adjust hospital costs.
- Risk-adjustment models can be used to calculate actual/true expected cost of new group of lives purchasing PMI products for pricing or reserving
Risk adjustment uses: measuring efficiency
Describe how risk adjustment may be used for measuring effeciency (6)
Adjusting for patient mix is necessary when comparing provider costs, as costs may differ due to various factors
- eg when comparing two hospital costs…
- ….hopsital A may be getting more cases of neurosurgery than hospital B…
- hence, hospital B would have a higher average costs per admission
This is useful for
- price negotiations for purchasers/suppliers of healthcare
- network selection for insurance
- managing facilities efficiently
Risk adjustment uses: risk management
Describe how risk adjustment may be used for risk management (4)
- when a healthcare budget has been exceeded, it is important to determineif Supply and/or Demand factors have caused the potential excess
- appropriate risk management strategies can then be devised to curtail cost increases.
- for State hospitals, difficult to influence demand factors
- in open enrolment/community rating setting, difficult to influence demand through selection
when healthcare budget is exceeded it is important to know whether this is due to demand or supply side factors. -
Risk adjustment uses: measuring healthcare outcomes
Describe how risk adjustment may be used for measuring healthcare outcomes (3)
- measuring healthcare quality is important because value is both a function of cost efficiency and quality
- healthcare inflation has exceeded general inflation, thus want to channel patients to cost-efficient providers.
- risk adjustment is required for this comparison
Risk adjustment uses: provider profiling
Describe how risk adjustment may be used for provider profiling (3)
- in order to support sustainable healthcare insurers both locally and internationally share information with doctors on their generated costs compared to their peers on a like-for-like basis (i.e. risk adjusted basis).
- this information increases awareness amongst doctors on the economic impact of their clinical decisions.
Risk-adjustment approach: considerations
What should be factored in when considering the approach to take for a risk adjustment exercise? (3)
The approach to risk adjustment depends on the purpose of the risk adjustment exercise.
Approaches used may be:
- simple empirical risk adjustment/statistical modelling may be applied to the risk adjust data OR
- numerous off-the-shelf classification systems can be used for risk adjustment. data may be risk adjusted using these off-the-shelf software systems
- software packages typically require demographic info and clinical diagnosis
Risk factors: intro
What do we mean by a ‘risk adjustment factor’? (1)
What needs to be considered when deciding on the risk adjustment factors to use in a risk adjustment exercise
List the ‘categories’ according to which risk factors may be classified (5)
Risk adjustment factors are factors which can be applied to healthcare data when we want to perform a risk adjustment exercise
Cosiderations for risk adjustment factors
- The purpose of the risk adjustment excercise; pricing, contracting with new healthcare provider
- insured peril; eg if it is related to mortality, morbidity or retrenchment
- time frame under consideration; eg during acute in-hospital admission, next month or year?
- population being considered; eg in-hospital, paediatric patients, etc
Risk adjustment factors fall into the followign major categories
- demographic factors
- clinical factors
- health-related behaviours
- socio-economic factor
- -attitudes and perceptions
Risk adjustment factors: examples
List some examples of risk adjustment factors
demographic factors (3)
clinical factors (5)
health-related behaviours (5)
socio-economic factor (4)
attitudes and perceptions (3)
Demographic factors
- age
- gender/sex
- race
Clinical factors
- principal diagnosis
- severity of principal diagnosis
- mental health
- physical functional status
- acute physiological stability
Health related factors
- tobacco use
- alcohol use
- sexual practices
- diet and nutrition
- obesity
Socio economic factors
- educational attainment
- housing characteristics
- health insurance coverage
- cultural beliefs
Attitudes and perceptions
- overall health status
- religious behaviours
- references and expectations for health care services
Risk adjustment factor: age
In what way does this risk adjustment factor influence utuilisation, effectiveness and/or cost of healthcare given? (2)
- ability of human body to recover from illnesses reduces with age
- older patients have worse clinical outcomes
Risk adjustment factor: gender
In what way does this risk adjustment factor influence utuilisation, effectiveness and/or cost of healthcare given? (4)
- ertain clinical conditions are sex specific
- male - prostate cancer
- femaile - breast cancer
Risk factor: race
In what way does this risk adjustment factor influence utuilisation, effectiveness and/or cost of healthcare given? (2)
- 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.
Risk adjustment factor: acute clinical stability
In what way does this risk adjustment factor influence utuilisation, effectiveness and/or cost of healthcare given? (3)
- this relates to measures of a person’s physiological functioning using homeostatic measures:
- eg. heart rate, body temperature, blood pressure
- these measures of acute clinical stability are needed to check if a given patient is facing imminent risk of death, and will thus influence the chance that healthcare provided will help in the intended way
Risk adjustment factor: principal diagnosis
In what way does this risk adjustment factor influence utuilisation, effectiveness and/or cost of healthcare given? (3)
- it is often necessary to understand the extent and severity of a principal diagnosis
- eg type of bacterial or viral infection for a patient diagnosed with gastritis
- this can play a role on the utuilisation, effectiveness and/or cost of healthcare given
