Ch 10: Risk adjustment

Question 1

Why is risk adjustment in healthcare important

Answer 1

• Healthcare outcomes are expected to vary between individuals and populations.
  * Due to demographic characteristics, clinical factors, socio-economic factors, health-related behaviours and activities + attitudes and perceptions
• It is important to understand the impact of factors on healthcare outcomes and to adjust for these factors for comparative purposes and monitoring changes over time.
• Underlying risk profile of population affects the frequency and cost of healthcare utilisation.

Question 2

Considerations when choosing risk-adjustment method

Answer 2

• To what factors does the insured peril relate (e.g. mortality, morbidity, retrenchment)
• Time frame under consideration (during acute in-hospital admission, over a year)
• The population considered (in-hospital patients, insured lives…)
• Purpose (Pricing, contracting with providers, budgeting or monitoring)

Question 3

Applications of risk adjustment (6)

Answer 3

• Budgeting
  * State hospital budgets
• Pricing and reserving in health and care insurance
• Measuring efficiency for applications to:
  * Network selection
  * Managing facilities
  * Insurance plans
  * Price negotiations
• Risk management
  * Understand what factors lead to increased costs
• Measuring healthcare outcomes
  * Require risk adjustment for comparitive purposes
• Provider profiling