Prevention and Dynamic Risk Adjustment
Risk adjustment deters selection and helps to assure fair and efficient payments among health insurers or capitated provider groups. However, since conventional risk adjustment allocates funds among insurers or regions according to current population health status, it does not reward — indeed, it penalizes — provider preventive efforts that improve population health. This prevention penalty of risk adjustment will become increasingly salient as inter-related trends converge — aging societies, chronic disease epidemics, use of market-based incentives and wider adoption of conventional risk adjustment. We develop a theoretical model of selection and prevention demonstrating this problem with conventional risk adjustment and suggesting a simple alternative that restores incentives for optimal prevention. Dynamic risk adjustment combines conventional risk adjustment with pay-for-performance for prevention.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||Mar 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.bu.edu/econ/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Marchand, Maurice & Sato, Motohiro & Schokkaert, Erik, 2003. " Prior Health Expenditures and Risk Sharing with Insurers Competing on Quality," RAND Journal of Economics, The RAND Corporation, vol. 34(4), pages 647-69, Winter.
- Barros Pedro P & Martinez-Giralt Xavier, 2003. "Preventive Health Care and Payment Systems," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(1), pages 1-23, August.
- Nolan Miller & Karen Eggleston & Richard Zeckhauser, 2006.
"Provider choice of quality and surplus,"
International Journal of Health Care Finance and Economics,
Springer, vol. 6(2), pages 103-117, June.
- Karen Eggleston & Nolan Miller & Richard Zeckhauser, 2003. "Provider Choice of Quality and Surplus," Discussion Papers Series, Department of Economics, Tufts University 0308, Department of Economics, Tufts University.
- Anupa Bir & Karen Eggleston, 2006.
"Measuring Selection Incentives in Managed Care: Evidence from the Massachusetts State Employee Insurance Program,"
Discussion Papers Series, Department of Economics, Tufts University
0605, Department of Economics, Tufts University.
- Karen Eggleston & Anupa Bir, 2009. "Measuring Selection Incentives in Managed Care: Evidence From the Massachusetts State Employee Insurance Program," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 76(1), pages 159-175.
- Frederik T. Schut & Wynand P. M. M. Van de Ven, 2005. "Rationing and competition in the Dutch health-care system," Health Economics, John Wiley & Sons, Ltd., vol. 14(S1), pages S59-S74.
- Croxson, B. & Propper, C. & Perkins, A., 2001. "Do doctors respond to financial incentives? UK family doctors and the GP fundholder scheme," Journal of Public Economics, Elsevier, vol. 79(2), pages 375-398, February.
- Glazer, Jacob & McGuire, Thomas G., 2006. "Optimal quality reporting in markets for health plans," Journal of Health Economics, Elsevier, vol. 25(2), pages 295-310, March.
- Shen, Yujing & Ellis, Randall P., 2002.
"Cost-minimizing risk adjustment,"
Journal of Health Economics,
Elsevier, vol. 21(3), pages 515-530, May.
- Robert Nuscheler & Thomas Knaus, 2005. "Risk selection in the German public health insurance system," Health Economics, John Wiley & Sons, Ltd., vol. 14(12), pages 1253-1271.
- Elaine Yuen & Daniel Louis & Paolo Loreto & Joseph Gonnella, 2003. "Modeling risk-adjusted capitation rates for Umbria, Italy," The European Journal of Health Economics, Springer, vol. 4(4), pages 304-312, December.
- Kathryn Antioch & Michael Walsh, 2004. "The risk-adjusted vision beyond casemix (DRG) funding in Australia," The European Journal of Health Economics, Springer, vol. 5(2), pages 115-115, May.
- Thomas G. McGuire & Jacob Glazer, 2000. "Optimal Risk Adjustment in Markets with Adverse Selection: An Application to Managed Care," American Economic Review, American Economic Association, vol. 90(4), pages 1055-1071, September.
- Eggleston, Karen, 2005. "Multitasking and mixed systems for provider payment," Journal of Health Economics, Elsevier, vol. 24(1), pages 211-223, January.
- Randall S. Stafford & Donglin Li & Roger B. Davis & Lisa I. Iezzoni, 2004. "Modelling the Ability of Risk Adjusters to Reduce Adverse Selection in Managed Care," Applied Health Economics and Health Policy, Springer Healthcare | Adis, vol. 3(2), pages 107-114.
- David M. Cutler, 2002. "Equality, Efficiency, and Market Fundamentals: The Dynamics of International Medical-Care Reform," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 881-906, September.
- Van de ven, Wynand P.M.M. & Ellis, Randall P., 2000. "Risk adjustment in competitive health plan markets," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 14, pages 755-845 Elsevier.
- Erik Schokkaert & Geert Dhaene & Carine Van De Voorde, 1998. "Risk adjustment and the trade-off between efficiency and risk selection: an application of the theory of fair compensation," Health Economics, John Wiley & Sons, Ltd., vol. 7(5), pages 465-480.
- Chalkley, M. & Malcomson, J.M., 1995.
"Contracting for health services when patient demand does not reflect quality,"
Discussion Paper Series In Economics And Econometrics
9514, Economics Division, School of Social Sciences, University of Southampton.
- Chalkley, Martin & Malcomson, James M., 1998. "Contracting for health services when patient demand does not reflect quality," Journal of Health Economics, Elsevier, vol. 17(1), pages 1-19, January.
- Yujing Shen & Randall P. Ellis, 2002. "How profitable is risk selection? A comparison of four risk adjustment models," Health Economics, John Wiley & Sons, Ltd., vol. 11(2), pages 165-174.
- Frank, Richard G. & Glazer, Jacob & McGuire, Thomas G., 2000. "Measuring adverse selection in managed health care," Journal of Health Economics, Elsevier, vol. 19(6), pages 829-854, November.
- Byrne, Margaret M. & Thompson, Peter, 2001. "Screening and preventable illness," Journal of Health Economics, Elsevier, vol. 20(6), pages 1077-1088, November.
- Kathryn Antioch & Michael Walsh, 2004. "The risk-adjusted vision beyond casemix (DRG) funding in Australia," The European Journal of Health Economics, Springer, vol. 5(2), pages 95-109, May.
- Selden, Thomas M, 1998. "Risk Adjustment for Health Insurance: Theory and Implications," Journal of Risk and Uncertainty, Springer, vol. 17(2), pages 167-79, November.
- Burgess Jr., James F. & Christiansen, Cindy L. & Michalak, Sarah E. & Morris, Carl N., 2000. "Medical profiling: improving standards and risk adjustments using hierarchical models," Journal of Health Economics, Elsevier, vol. 19(3), pages 291-309, May.
- Schokkaert, Erik & Van de Voorde, Carine, 2004.
"Risk selection and the specification of the conventional risk adjustment formula,"
Journal of Health Economics,
Elsevier, vol. 23(6), pages 1237-1259, November.
- Erik SCHOKKAERT & Carine VAN DE VOORDE, 2000. "Risk Selection and the Specification of the Conventional Risk Adjustment Formula," Center for Economic Studies - Discussion papers ces0011, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
- Mingshan Lu, 1999. "Separating the True Effect from Gaming in Incentive-Based Contracts in Health Care," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(3), pages 383-431, 09.
- Avi Dor, 2004. "Optimal Price Rules, Administered Prices and Suboptimal Prevention: Evidence from a Medicare Program," Journal of Regulatory Economics, Springer, vol. 25(1), pages 81-104, January.
- Altman, Daniel & Cutler, David M & Zeckhauser, Richard J, 1998. "Adverse Selection and Adverse Retention," American Economic Review, American Economic Association, vol. 88(2), pages 122-26, May.
- Barros, Pedro Pita, 2003. "Cream-skimming, incentives for efficiency and payment system," Journal of Health Economics, Elsevier, vol. 22(3), pages 419-443, May.
When requesting a correction, please mention this item's handle: RePEc:bos:wpaper:wp2007-023. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gillian Gurish)
If references are entirely missing, you can add them using this form.