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Improving risk equalization using information on physiotherapy diagnoses

Author

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  • Frank Eijkenaar

    (Erasmus University Rotterdam)

  • René C. J. A. Vliet

    (Erasmus University Rotterdam)

Abstract

Background Worldwide, risk-equalization (RE) models in competitive health insurance markets have evolved from simple demographic models to sophisticated models containing diagnosis and pharmacy-based indicators of health. However, these models still have important imperfections; adding information on (diagnoses of) physiotherapy treatment may further improve RE-models. Therefore, a new risk-adjuster based on physiotherapy costs in the prior year was introduced in the Dutch RE-model of 2016. Methods Physiotherapy claims-data (2012) and administrative data on costs and risk-characteristics (2013) for 94% of the Dutch population (N = 15.8 million) are used to evaluate the current risk-adjuster based on physiotherapy costs and to assess the effects of replacing it by different modalities of a risk-adjuster based on physiotherapy diagnoses. Of the 89 diagnoses in the claims-data, 62 are dropped because they relate to temporary health problems. The 27 retained diagnoses are added to the Dutch model in 4 modalities: 27 separate risk-classes, 9 diagnosis-clusters based on main pathology category, 4 diagnosis-clusters based on residual costs, and the 4 clusters of modality 3 interacted with age. Results Although the cost-based risk-adjuster improves the model’s predictive power and removes the average undercompensation (€919) for enrollees with physiotherapy costs in the prior year, it is outperformed by all 4 diagnosis-based modalities. Of these modalities, modality 3 is preferred based on its simplicity and comparable predictive power. Conclusions Adding information on physiotherapy can further improve the performance of sophisticated RE-models. Regarding the Dutch model, a risk-adjuster containing 4 risk-classes for clustered diagnoses based on residual costs is the preferred modality.

Suggested Citation

  • Frank Eijkenaar & René C. J. A. Vliet, 2018. "Improving risk equalization using information on physiotherapy diagnoses," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(2), pages 203-211, March.
  • Handle: RePEc:spr:eujhec:v:19:y:2018:i:2:d:10.1007_s10198-017-0874-x
    DOI: 10.1007/s10198-017-0874-x
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    References listed on IDEAS

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    More about this item

    Keywords

    Health insurance; Risk equalization; Physiotherapy diagnoses; Claims data;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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