R C van Kleef1, R C J A van Vliet2, E M van Rooijen2. 1. Erasmus University Rotterdam, Institute of Health Policy and Management, The Netherlands. Electronic address: vankleef@bmg.eur.nl. 2. Erasmus University Rotterdam, Institute of Health Policy and Management, The Netherlands.
Abstract
BACKGROUND: The Dutch basic health-insurance scheme for curative care includes a risk equalization model (RE-model) to compensate competing health insurers for the predictable high costs of people in poor health. Since 2004, this RE-model includes the so-called Diagnoses-based Cost Groups (DCGs) as a risk adjuster. Until 2013, these DCGs have been mainly based on diagnoses from inpatient hospital treatment. OBJECTIVES: This paper examines (1) to what extent the Dutch RE-model can be improved by extending the inpatient DCGs with diagnoses from outpatient hospital treatment and (2) how to treat outpatient diagnoses relative to their corresponding inpatient diagnoses. METHOD: Based on individual-level administrative costs we estimate the Dutch RE-model with three different DCG modalities. Using individual-level survey information from a prior year we examine the outcomes of these modalities for different groups of people in poor health. CONCLUSIONS: We find that extending DCGs with outpatient diagnoses has hardly any effect on the R-squared of the RE-model, but reduces the undercompensation for people with a chronic condition by about 8%. With respect to incentives, it may be preferable to make no distinction between corresponding inpatient and outpatient diagnoses in the DCG-classification, although this will be at the expense of the predictive accuracy of the RE-model.
BACKGROUND: The Dutch basic health-insurance scheme for curative care includes a risk equalization model (RE-model) to compensate competing health insurers for the predictable high costs of people in poor health. Since 2004, this RE-model includes the so-called Diagnoses-based Cost Groups (DCGs) as a risk adjuster. Until 2013, these DCGs have been mainly based on diagnoses from inpatient hospital treatment. OBJECTIVES: This paper examines (1) to what extent the Dutch RE-model can be improved by extending the inpatient DCGs with diagnoses from outpatient hospital treatment and (2) how to treat outpatient diagnoses relative to their corresponding inpatient diagnoses. METHOD: Based on individual-level administrative costs we estimate the Dutch RE-model with three different DCG modalities. Using individual-level survey information from a prior year we examine the outcomes of these modalities for different groups of people in poor health. CONCLUSIONS: We find that extending DCGs with outpatient diagnoses has hardly any effect on the R-squared of the RE-model, but reduces the undercompensation for people with a chronic condition by about 8%. With respect to incentives, it may be preferable to make no distinction between corresponding inpatient and outpatient diagnoses in the DCG-classification, although this will be at the expense of the predictive accuracy of the RE-model.