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Updated: Sep 16, 2025
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Published on: February 23, 2024
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Pharmacy cost groups for the German morbidity-based risk compensation scheme
Christian J A Schindler1, Benjamin Berndt2, Dennis Häckl2,3
1WIG2 Scientific Institute for Health Economics and Health System Research, Leipzig, Germany. christian.schindler@wig2.de.
Summary
Germany
Area of Science:
- Health economics
- Healthcare policy
- Medical informatics
Background:
- Germany's statutory health insurance (SHI) uses a diagnosis-based risk adjustment scheme.
- Concerns exist regarding the quality and manipulability of diagnostic coding.
- This study explores pharmaceutical data as an alternative or supplement.
Purpose of the Study:
- To evaluate a pharmacy-based risk adjustment model for German SHI.
- To assess its potential as an extension or alternative to the current diagnosis-based system.
- To analyze its impact on model performance and risk selection.
Main Methods:
- Adapted an existing pharmacy-based model to German conditions.
- Used claims data from approximately 4.5 million insured persons for a representative sample.
- Evaluated models using R², Cumming's Predictive Measure (CPM), and Mean Absolute Prediction Error (MAPE).
Main Results:
- A sample closely matched German SHI data.
- Replacing diagnostic data with pharmacy cost groups (PCGs) yielded comparable model quality but worsened under/overcompensation for vulnerable groups.
- Integrating PCGs into the existing model improved most performance measures.
Conclusions:
- Pharmacy-based models show significant potential for German risk compensation.
- Extending the current system with PCGs enhances statistical performance and morbidity measurement.
- This approach offers a viable strategy to mitigate diagnostic coding manipulation incentives.
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