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Updated: Aug 12, 2026

Inverse Probability of Treatment Weighting (Propensity Score) using the Military Health System Data Repository and National Death Index
Published on: January 8, 2020
Abstract:
Medicare pays "at-risk" health maintenance organizations a prospective capitation amount that is established by the adjusted average per capita cost (AAPCC) formula for estimating the amount enrollees would have cost had they remained in the fee-for-service sector. Because the AAPCC accounts for a very small percentage of the variation in beneficiary costs, considerable research has been devoted to improving the formula. A way to improve the explained variance is to remove the most expensive beneficiaries from the AAPCC payment system and pay for them separately. This article examines one approach to a payment system that combines the AAPCC with an outlier payment mechanism.
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