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Risk-Adjusted Capitation Payments: How Well Do Principal Inpatient Diagnosis-Based Models Work in the German Situation? Results From a Large Data Set


Author Info

  • Behrend, Corinne
  • Buchner, Florian
  • Happich, Michael
  • Holle, Rolf
  • Reitmeir, Peter
  • Wasem, Jürgen


The Risk Adjustment Reform Act of 2001 mandates that a health-status-based risk adjustment mechanism has to be implemented in Germany's Statutory Health Insurance system by January 1, 2007. German parliament decided this as with the existing demographic risk adjustment model, that means there is cream skimming and sickness funds hesitate to engage in managing care for the chronical ill. Four approaches were used to test the feasibility of incorporating use of diagnosis as a proxy measure for health status in a German risk adjustment formula. The first two models used standard demographic and socio-demographic variables. The other two models are separately incorporating a simple binary indicator for hospitilization and Hierarchical Coexisting Conditions (HCCs: DxCG® Risk Adjustment Software Release 6.1) using inpatient diagnosis. Age and gender grouping accounted for 3.2% of the variation in total expenditures for concurrent as well as prospective models. The current German risk adjusters age, sex, and invalidity status account for 5.1% and 4.5% of the variance in the concurrent and prospective models respectively. There are substantial increases in explanatory power, however, when HCCs are added. Age, gender, invalidity status and HCC covariates explain about 37% of the variations of the total expenditures in a concurrent model and roughly 12% of the variations of total expenditures in a prospective model. For high-risk (cost) groups, substantial underprediction remains; conversely, for the low-risk group, represented by enrolees who did not show any health care expense in the base year, all of the models over-predict expenditure. --

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Bibliographic Info

Paper provided by University of Duisburg-Essen, Faculty for Economics and Business Administration in its series IBES Diskussionsbeiträge with number 134.

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Date of creation: 2004
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Handle: RePEc:zbw:udewwd:134

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Keywords: Risk Adjustment; HCCs; Germany;

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  1. Buchner, Florian & Wasem, Jurgen, 2003. "Needs for further improvement: risk adjustment in the German health insurance system," Health Policy, Elsevier, vol. 65(1), pages 21-35, July.
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Cited by:
  1. Dirk Goepffarth, 2007. "Theorie und Praxis des Risikostrukturausgleichs," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 227(5+6), pages 485-501, December.
  2. Greß, Stefan, 2004. "Competition in Social Health Insurance: A Three-Country Comparison," IBES Diskussionsbeiträge 135, University of Duisburg-Essen, Faculty for Economics and Business Administration.
  3. Manuel García-Goñi & Pere Ibern & José María Inoriza, 2009. "Hybrid risk adjustment for pharmaceutical benefits," Economics Working Papers 1139, Department of Economics and Business, Universitat Pompeu Fabra.
  4. Manuel García-Goñi & Pere Ibern & José María Inoriza, 2009. "Hybrid risk adjustment for pharmaceutical benefits," Working Papers, Research Center on Health and Economics 1139, Department of Economics and Business, Universitat Pompeu Fabra.
  5. Manuel García-Goñi & Pere Ibern & José Inoriza, 2009. "Hybrid risk adjustment for pharmaceutical benefits," The European Journal of Health Economics, Springer, vol. 10(3), pages 299-308, July.


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