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papers

How profitable is risk selection? A comparison of four risk adjustment models

Published: March 1, 2002
Category: Papers
Authors: Ellis RP, Shen Y
Country: United States
Language: null
Type: Care Management
Settings: Academic, Hospital

Health Econ 11:165-174.

Department of Health Services, Boston University School of Public Health, Boston, MA, USA

To mitigate selection triggered by capitation payments, risk-adjustment models bring capitation payments closer on average to individuals’ expected expenditure. We examine the maximum potential profit that plans could hypothetically gain by using their own private information to select low-cost enrollees when payments are made using four commonly used risk adjustment models. Simulations using a privately insured sample suggest that risk selection profits remain substantial. The magnitude of potential profit varies according to the risk adjustment model and the private information plans can employ to identify profitable enrollees.

PMID: 11921314

Capitation,Cost Burden Evaluation,Payment,Predicative Risk Modeling,United States,Actuarial Analysis,Age Factors,Data Collection,Gender,Health Services Research,Income/statistics & numerical data,Sex Factors

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