Jove
Visualize
Contact Us
JoVE
x logofacebook logolinkedin logoyoutube logo
ABOUT JoVE
OverviewLeadershipBlogJoVE Help Center
AUTHORS
Publishing ProcessEditorial BoardScope & PoliciesPeer ReviewFAQSubmit
LIBRARIANS
TestimonialsSubscriptionsAccessResourcesLibrary Advisory BoardFAQ
RESEARCH
JoVE JournalMethods CollectionsJoVE Encyclopedia of ExperimentsArchive
EDUCATION
JoVE CoreJoVE BusinessJoVE Science EducationJoVE Lab ManualFaculty Resource CenterFaculty Site
Terms & Conditions of Use
Privacy Policy
Policies

Related Experiment Videos

Capitation payments based on prior hospitalizations

R C van Vliet1, W P van de Ven

  • 1Department of Health Policy and Management, Erasmus University, The Netherlands.

Health Economics
|July 1, 1993
PubMed
Summary

Capitation models for health insurers can be improved. Using diagnostic and cost data significantly reduces insurer risk selection and financial losses, enhancing healthcare cost containment.

Related Concept Videos

You might also read

Related Articles

Articles linked to this work by shared authors, journal, and citation graph.

Sort by
Same author

Risk sharing between competing health plans and sponsors.

Health affairs (Project Hope)·2001
Same author

Costs in the last year of life in The Netherlands.

Inquiry : a journal of medical care organization, provision and financing·2001
Same author

Risk sharing as a supplement to imperfect capitation: a tradeoff between selection and efficiency.

Journal of health economics·2001
Same author

Access to coverage for high-risks in a competitive individual health insurance market: via premium rate restrictions or risk-adjusted premium subsidies?

Journal of health economics·2000
Same author

Deductibles in health insurance: can the actuarially fair premium reduction exceed the deductible?

Health policy (Amsterdam, Netherlands)·2000
Same author

Ignoring small predictable profits and losses: a new approach for measuring incentives for cream skimming.

Health care management science·2000

Area of Science:

  • Health economics
  • Healthcare financing
  • Insurance risk management

Background:

  • Capitation payments are increasingly used for healthcare insurers globally.
  • Current capitation models often fail to accurately predict healthcare costs, leading to risk selection and financial instability.
  • Accurate cost prediction is crucial for effective competition and fair pricing in healthcare insurance.

Purpose of the Study:

  • To evaluate alternative capitation models for healthcare insurers.
  • To assess the impact of diagnostic and prior cost data on capitation accuracy.
  • To mitigate risk selection and financial losses in capitated healthcare systems.

Main Methods:

  • Analysis of Dutch microdata for approximately 200,000 individuals.
  • Development and simulation of various capitation models.
  • Inclusion of diagnostic information from prior hospitalizations and previous healthcare costs.

Main Results:

  • Crude capitation models based on age, sex, and residence are inaccurate predictors of healthcare costs.
  • Alternative models incorporating diagnostic and prior cost data substantially reduce prediction errors.
  • Improved models mitigate risks of adverse selection and windfall profits/losses for insurers.

Conclusions:

  • Diagnostic and prior cost data significantly enhance the accuracy of capitation models.
  • These improved models can substantially mitigate risk selection and financial volatility for insurers.
  • Findings are applicable to various capitation systems, including those for insurers, providers, and Health Maintenance Organizations (HMOs).

Related Experiment Videos