reports

Measuring health status for risk adjusting capitation payments

Hamilton, NJ, USA: Center for Health Care Strategies.

Center for Health Care Strategies, Hamilton, NJ, USA

In this report we describe six health status grouping systems (“groupers”) and compare their application to two populations using two statistical models designed for prospectively risk adjusting capitation payments. Prospective risk adjustment is a tool implemented in recent years to encourage managed care plans to enroll all individuals, whether they are sick or well. We apply the six groupers to three sets of data: two pairs of years of data on Washington State Medicaid SSI enrollees (1994–95 and 1992–93), and two years of data on Washington Medicaid non-SSI enrollees (1992–93). This report builds on previous research by adding more groupers to the comparison, and by adding a population that includes non-disabled low-income individuals (the non-SSI population). The groupers examined include the Disability Payment System (DPS), Ambulatory Care Groups version 3 (ACG v.3), Ambulatory Care Groups version 4 (ACG v.4), Diagnostic Cost Groups (DCGs), Hierarchical Coexisting Conditions (HCCs), and Clinical Risk Groups (CRGs). The groupers vary in their approach to classifying diagnostic, procedure, and demographic information from health plan enrollees, and the purposes for which they were developed. This report describes how each grouper treats the data (i.e., the basis by which they assign people to specific health status groups) and how well they predict next-year utilization.