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Diagnoses-based cost groups in the Dutch risk-equalization model: the effects of including outpatient diagnoses
R C van Kleef1, R C J A van Vliet1, E M van Rooijen1
1Erasmus University Rotterdam, Institute of Health Policy and Management, The Netherlands.
Insights
Extending the Dutch Diagnoses-based Cost Groups (DCGs) with outpatient diagnoses minimally impacts the risk equalization model
Area of Science:
- Health Economics
- Healthcare Policy
- Medical Informatics
Background:
- The Dutch basic health insurance scheme uses a risk equalization model (RE-model) to manage costs associated with individuals with poor health.
- Diagnoses-based Cost Groups (DCGs), primarily based on inpatient diagnoses, have been integral to this RE-model since 2004.
Purpose of the Study:
- To assess the impact of incorporating outpatient diagnoses into the Dutch RE-model's DCGs.
- To determine optimal methods for integrating outpatient diagnoses relative to inpatient diagnoses within the DCG framework.
Main Methods:
- Estimation of the Dutch RE-model using three distinct DCG modalities based on individual-level administrative costs.
- Analysis of the outcomes of these modalities for various patient groups using prior-year individual-level survey data.
Main Results:
- Extending DCGs with outpatient diagnoses showed a negligible effect on the RE-model's R-squared value.
- Inclusion of outpatient diagnoses reduced undercompensation for individuals with chronic conditions by approximately 8%.
Conclusions:
- Incorporating outpatient diagnoses offers a modest improvement in equity for chronic conditions within the RE-model.
- Treating inpatient and outpatient diagnoses similarly in DCG classification may enhance incentives but slightly decrease predictive accuracy.
Background:
The Dutch basic health-insurance scheme for curative care includes a risk equalization model (RE-model) to compensate competing health insurers for the predictable high costs of people in poor health. Since 2004, this RE-model includes the so-called Diagnoses-based Cost Groups (DCGs) as a risk adjuster. Until 2013, these DCGs have been mainly based on diagnoses from inpatient hospital treatment.
Objectives:
This paper examines (1) to what extent the Dutch RE-model can be improved by extending the inpatient DCGs with diagnoses from outpatient hospital treatment and (2) how to treat outpatient diagnoses relative to their corresponding inpatient diagnoses.
Method:
Based on individual-level administrative costs we estimate the Dutch RE-model with three different DCG modalities. Using individual-level survey information from a prior year we examine the outcomes of these modalities for different groups of people in poor health.
Conclusions:
We find that extending DCGs with outpatient diagnoses has hardly any effect on the R-squared of the RE-model, but reduces the undercompensation for people with a chronic condition by about 8%. With respect to incentives, it may be preferable to make no distinction between corresponding inpatient and outpatient diagnoses in the DCG-classification, although this will be at the expense of the predictive accuracy of the RE-model.
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