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Adjusting capitation rates using objective health measures and prior utilization
Health Care Financing Review
|January 4, 1990
Summary
Adding health status and prior healthcare utilization adjusters significantly improves predictions of annual medical costs for non-elderly adults. Prior utilization proved a stronger predictor than health status alone.
Area of Science:
- Health economics
- Medical cost prediction
- Healthcare utilization analysis
Background:
- Current adjusted average per capita cost formulas may not accurately reflect individual healthcare spending.
- Need for improved predictive models for healthcare expenditures.
Purpose of the Study:
- To evaluate the predictive accuracy of health status and prior utilization adjusters for annual medical expenditures.
- To compare the effectiveness of individual and combined adjusters.
Main Methods:
- Statistical analysis of medical expenditures in a non-elderly adult population.
- Assessment of variance explained by health status adjusters.
- Assessment of variance explained by prior utilization adjusters.
- Evaluation of combined health status and prior utilization adjusters.
Main Results:
- Health status adjusters explained 20-30% of predictable variance in medical expenditures.
- Prior utilization adjusters explained over 40% of predictable variance.
- Combined adjusters explained approximately 60% of predictable variance.
Conclusions:
- Prior utilization is a strong predictor of future medical costs.
- Combining health status and prior utilization offers substantial predictive improvement.
- Incorporating utilization measures is recommended until superior health status predictors are available.
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