IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_6507.html
   My bibliography  Save this paper

Plan Responses to Diagnosis-Based Payment: Evidence from Germany's Morbidity-Based Risk Adjustment

Author

Listed:
  • Sebastian Bauhoff
  • Lisa Fischer
  • Dirk Göpffarth
  • Amelie C. Wuppermann

Abstract

Many competitive health insurance markets adjust payments to participating health plans according to their enrollees’ risk – including based on diagnostic information. We investigate responses of German health plans to the introduction of morbidity-based risk adjustment in the Statutory Health Insurance in 2009, which triggers payments based on “validated” diagnoses by providers. Using the regulator’s data from office-based physicians, we estimate a difference-in-difference analysis of the change in the share and number of validated diagnoses for ICD codes that are inside or outside the risk adjustment but are otherwise similar. We find a differential increase in the share of validated diagnoses of 2.6 and 3.6 percentage points (3-4%) between 2008 and 2013. This increase appears to originate from both a shift from not-validated toward validated diagnoses and an increase in the number of such diagnoses. Overall, our results indicate that plans were successful in influencing physicians’ coding practices in a way that could lead to higher payments.

Suggested Citation

  • Sebastian Bauhoff & Lisa Fischer & Dirk Göpffarth & Amelie C. Wuppermann, 2017. "Plan Responses to Diagnosis-Based Payment: Evidence from Germany's Morbidity-Based Risk Adjustment," CESifo Working Paper Series 6507, CESifo.
    • Handle: RePEc:ces:ceswps:_6507
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo1_wp6507.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jurgita Januleviciute & Jan Erik Askildsen & Oddvar Kaarboe & Luigi Siciliani & Matt Sutton, 2016. "How do Hospitals Respond to Price Changes? Evidence from Norway," Health Economics, John Wiley & Sons, Ltd., vol. 25(5), pages 620-636, May.
    2. van Kleef, R.C. & van Vliet, R.C.J.A. & van Rooijen, E.M., 2014. "Diagnoses-based cost groups in the Dutch risk-equalization model: The effects of including outpatient diagnoses," Health Policy, Elsevier, vol. 115(1), pages 52-59.
    3. Jason Brown & Mark Duggan & Ilyana Kuziemko & William Woolston, 2014. "How Does Risk Selection Respond to Risk Adjustment? New Evidence from the Medicare Advantage Program," American Economic Review, American Economic Association, vol. 104(10), pages 3335-3364, October.
    4. Buchner, Florian & Goepffarth, Dirk & Wasem, Juergen, 2013. "The new risk adjustment formula in Germany: Implementation and first experiences," Health Policy, Elsevier, vol. 109(3), pages 253-262.
    5. Bauhoff, Sebastian, 2012. "Do health plans risk-select? An audit study on Germany's Social Health Insurance," Journal of Public Economics, Elsevier, vol. 96(9-10), pages 750-759.
    6. Leemore S. Dafny, 2005. "How Do Hospitals Respond to Price Changes?," American Economic Review, American Economic Association, vol. 95(5), pages 1525-1547, December.
    7. Nicola Brandt, 2008. "Moving Towards more Sustainable Healthcare Financing in Germany," OECD Economics Department Working Papers 612, OECD Publishing.
    8. Göpffarth, Dirk & Henke, Klaus-Dirk, 2013. "The German Central Health Fund—Recent developments in health care financing in Germany," Health Policy, Elsevier, vol. 109(3), pages 246-252.
    9. Silverman, Elaine & Skinner, Jonathan, 2004. "Medicare upcoding and hospital ownership," Journal of Health Economics, Elsevier, vol. 23(2), pages 369-389, March.
    10. Wuppermann, Amelie & Bauhoff, Sebastian & Grabka, Markus, 2014. "The Price Sensitivity of Health Plan Choice among Retirees: Evidence from the German Social Health Insurance," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100352, Verein für Socialpolitik / German Economic Association.
    11. Michael Geruso & Timothy Layton, 2020. "Upcoding: Evidence from Medicare on Squishy Risk Adjustment," Journal of Political Economy, University of Chicago Press, vol. 128(3), pages 984-1026.
    12. Hendrik Schmitz & Nicolas R. Ziebarth, 2017. "Does Price Framing Affect the Consumer Price Sensitivity of Health Plan Choice?," Journal of Human Resources, University of Wisconsin Press, vol. 52(1), pages 88-127.
    13. Pedro Barros & Gisele Braun, 2017. "Upcoding in a National Health Service: the evidence from Portugal," Health Economics, John Wiley & Sons, Ltd., vol. 26(5), pages 600-618, May.
    14. Wuppermann, Amelie C. & Bauhoff, Sebastian & Grabka, Markus M., 2014. "The Price Sensitivity of Health Plan Choice: Evidence from Retirees in the German Social Health Insurance," Discussion Papers in Economics 21080, University of Munich, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Richard C. van Kleef & René C. J. A. van Vliet, 2022. "How to deal with persistently low/high spenders in health plan payment systems?," Health Economics, John Wiley & Sons, Ltd., vol. 31(5), pages 784-805, May.
    2. Chien, Ling-Chen & Chou, Yiing-Jenq & Huang, Yu-Chin & Shen, Yi-Jung & Huang, Nicole, 2020. "Reducing low value services in surgical inpatients in Taiwan: Does diagnosis-related group payment work?," Health Policy, Elsevier, vol. 124(1), pages 89-96.
    3. Marica Iommi & Savannah Bergquist & Gianluca Fiorentini & Francesco Paolucci, 2022. "Comparing risk adjustment estimation methods under data availability constraints," Health Economics, John Wiley & Sons, Ltd., vol. 31(7), pages 1368-1380, July.
    4. Danny Wende, 2019. "Spatial risk adjustment between health insurances: using GWR in risk adjustment models to conserve incentives for service optimisation and reduce MAUP," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(7), pages 1079-1091, September.
    5. Jürges, Hendrik & Kopetsch, Thomas, 2021. "Prenatal exposure to the German food crisis 1944–1948 and health after 65 years," Economics & Human Biology, Elsevier, vol. 40(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pilny, Adam & Wübker, Ansgar & Ziebarth, Nicolas R., 2017. "Introducing risk adjustment and free health plan choice in employer-based health insurance: Evidence from Germany," Journal of Health Economics, Elsevier, vol. 56(C), pages 330-351.
    2. Cook, Amanda & Averett, Susan, 2020. "Do hospitals respond to changing incentive structures? Evidence from Medicare’s 2007 DRG restructuring," Journal of Health Economics, Elsevier, vol. 73(C).
    3. Lai, Yi & Fu, Hongqiao & Li, Ling & Yip, Winnie, 2022. "Hospital response to a case-based payment scheme under regional global budget: The case of Guangzhou in China," Social Science & Medicine, Elsevier, vol. 292(C).
    4. Reif, Simon & Wichert, Sebastian & Wuppermann, Amelie, 2018. "Is it good to be too light? Birth weight thresholds in hospital reimbursement systems," Journal of Health Economics, Elsevier, vol. 59(C), pages 1-25.
    5. Heike Hennig‐Schmidt & Hendrik Jürges & Daniel Wiesen, 2019. "Dishonesty in health care practice: A behavioral experiment on upcoding in neonatology," Health Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 319-338, March.
    6. Eunhae Shin, 2019. "Hospital responses to price shocks under the prospective payment system," Health Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 245-260, February.
    7. Mona Groß & Hendrik Jürges & Daniel Wiesen, 2021. "The effects of audits and fines on upcoding in neonatology," Health Economics, John Wiley & Sons, Ltd., vol. 30(8), pages 1978-1986, August.
    8. Gautam Gowrisankaran & Keith A. Joiner & Jianjing Lin, 2016. "How do Hospitals Respond to Payment Incentives?," NBER Working Papers 22873, National Bureau of Economic Research, Inc.
    9. Michele Fioretti & Hongming Wang, 2019. "Subsidizing Inequality: Performance Pay and Risk Selection in Medicare," SciencePo Working papers Main hal-03393070, HAL.
    10. Carine Milcent, 2019. "From downcoding to upcoding: DRG based payment in hospitals," Working Papers halshs-02317416, HAL.
    11. Carine Milcent, 2019. "From downcoding to upcoding: DRG based payment in hospitals [Du downcoding au upcoding : Le paiement par DRG dans les hôpitaux]," PSE Working Papers halshs-03966671, HAL.
    12. Carine Milcent, 2021. "From downcoding to upcoding: DRG based payment in hospitals," International Journal of Health Economics and Management, Springer, vol. 21(1), pages 1-26, March.
    13. A. James O'Malley & Thomas A. Bubolz & Jonathan S. Skinner, 2021. "The Diffusion of Health Care Fraud: A Network Analysis," NBER Working Papers 28560, National Bureau of Economic Research, Inc.
    14. Martin Gaynor & Kate Ho & Robert J. Town, 2015. "The Industrial Organization of Health-Care Markets," Journal of Economic Literature, American Economic Association, vol. 53(2), pages 235-284, June.
    15. Bunnings, C,; & Schmitz, H,; & Tauchmann, H,; & Ziebarth, N.R,;, 2015. "How Health Plan Enrollees Value Prices Relative to Supplemental Benefits and Service Quality," Health, Econometrics and Data Group (HEDG) Working Papers 15/02, HEDG, c/o Department of Economics, University of York.
    16. Naoki Aizawa & You Suk Kim, 2015. "Advertising and Risk Selection in Health Insurance Markets," Finance and Economics Discussion Series 2015-101, Board of Governors of the Federal Reserve System (U.S.).
    17. repec:hal:spmain:info:hdl:2441/4bg68glinb8r8roh0akvprtu9u is not listed on IDEAS
    18. Christian Bünnings & Hendrik Schmitz & Harald Tauchmann & Nicolas R. Ziebarth, 2015. "How Health Plan Enrollees Value Prices Relative to Supplemental Benefits and Service Quality," Ruhr Economic Papers 0545, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    19. Sacarny, Adam, 2018. "Adoption and learning across hospitals: The case of a revenue-generating practice," Journal of Health Economics, Elsevier, vol. 60(C), pages 142-164.
    20. Bäuml, Matthias & Dette, Tilman & Pollmann, Michael, 2022. "Price and income effects of hospital reimbursements," Journal of Health Economics, Elsevier, vol. 81(C).
    21. repec:hal:wpspec:info:hdl:2441/4bg68glinb8r8roh0akvprtu9u is not listed on IDEAS
    22. Tamara Bischof & Christian P.R. Schmid, 2018. "Consumer price sensitivity and health plan choice in a regulated competition setting," Health Economics, John Wiley & Sons, Ltd., vol. 27(9), pages 1366-1379, September.

    More about this item

    Keywords

    health plan payment; risk adjustment; managed competition; diagnostic coding; German Statutory Health Insurance;
    All these keywords.

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_6507. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.