reports

Performance of risk adjusted capitated systems in allocating a global budget

Baltimore, MD, USA: Johns Hopkins University (doctoral dissertation).

Johns Hopkins University, Baltimore, MD, USA

Rapidly rising health care costs in the United States have led some to consider the use of global budgets as a means of cost control. Global budgeting based on risk adjusted per-capita payments was included in President Clinton’s health care reform proposal as the method to allocate funds in a managed competition framework. Under a global budget, risk adjustment is a mechanism to compensate for differences in the expected costs of providing health care services across regions. Risk adjusted payments were proposed because they offer an opportunity to create incentives for efficient production while addressing the problem of equitableness in the distribution of resources (Robinson, 1993).
The purpose of this study was to evaluate the performance of several risk adjustment models when applied to the allocation of a global budget. Risk adjustment models used in this study included a demographic model and several models based on clinician-assigned patient morbidity. The study population of 924,274 individuals under age 65 was drawn from Department of Defense’s Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) population. The study population consisted of the non-catchment area population of the United States for fiscal years 1993 and 1994 excluding individuals residing in Department of Defense Region 9 (southern California), Region 10 (Northern California and Nevada), Region 12 (Hawaii), and Alaska.