Risk-adjusted capitation payments: developing a diagnostic cost groups classification for the Dutch situation

Area of Science:

• Health economics
• Healthcare policy
• Medical informatics

Background:

• Market-oriented health care reforms are prevalent globally.
• These reforms often involve consumer choice among competing health plans financed by capitation payments.
• Dutch sickness funds use demographic factors for risk-adjusted capitation payments since 1993.

Purpose of the Study:

• To develop a Diagnostic Costs Groups (DCG) classification using Dutch cost data.
• To assess the impact of including diagnostic information from prior hospitalizations on capitation models.
• To investigate the handling of high discretion diagnoses in risk adjustment.

Main Methods:

• Developed a DCG classification based on Dutch sickness fund member cost data.
• Analyzed the effect of including diagnostic information from prior hospitalizations.
• Evaluated the predictive accuracy of the DCG model with and without high discretion diagnoses.

Main Results:

• Extending demographic capitation models with prior hospitalization data (DCGs) improves predictive accuracy.
• Grouping high discretion diagnoses together with non-admitted individuals slightly reduced model accuracy.
• Diagnostic information from prior hospitalizations shows promise for enhancing capitation formulas.

Conclusions:

• Adequate risk adjustment is crucial for the success of market-oriented healthcare reforms.
• Diagnostic Costs Groups (DCGs) derived from prior hospitalizations offer a promising method for improving risk adjustment in capitation payments.
• Careful consideration of high discretion diagnoses is necessary when implementing DCG models.