Including a measure of health status in Medicare's health maintenance organization capitation formula: reliability issues.

Medicare's formula for determining capitation levels for risk-based HMOs, the Adjusted Average Per Capita Cost (AAPCC), has been criticized as a poor basis for establishing payments. Among new adjusting factors suggested for the formula is a measure of beneficiaries' functional health status. The ability of such a measure to improve predictions of Medicare costs has been demonstrated in several studies. In addition to possessing predictive validity, a measure considered for inclusion in the AAPCC must also be reliable. In this paper, the authors examine a measure of functional health status for intrarater reliability or, equivalently, stability over time. A sample of 1,616 Medicare beneficiaries was surveyed twice--in late 1982 and in January 1984. Using a five-point scale, functional health status scores were calculated for each of the beneficiaries at two points in time. For 68.4% of the sample, functional health scores were unchanged over the year, and second-year scores were within one point of first-year scores for 94.3% of the sample. Based on the intraclass correlation coefficient, the scores on this functional health scale demonstrated substantial to "almost perfect" agreement over the 1-year period.