Impact Of Non-Traditional Variables In Health Care Risk Adjustment
Need help with a related project topic or New topic? Send Us Your Topic
DOWNLOAD THE COMPLETE PROJECT MATERIAL
Impact Of Non-Traditional Variables In Health Care Risk Adjustment
Chapter one
INTRODUCTION
1.1 Background of the Study
Since the publication of the Academy’s “Monograph Number One” with the title, “Health Risk Assessment and Health Risk Adjustment—Crucial Elements in Effective Health Care Reform” in May 1993, the business of risk adjustment has advanced significantly.
Less than ten years later, we had hospital inpatient diagnosis-based options, such as the Market Stabilisation Pool’s model for small group and individual coverage in New York State, along with required community rating. The PIP-DCG strategy for Medicare + Choice, which is also inpatient only, was shortly adopted.
Variables in risk adjustment models have incorporated demographic (age and gender) and clinical markers based on ICD-9 diagnosis codes and/or pharmacy codes such as the National Drug Codes (NDCs). Other variables, such as geography, Body Mass Index (BMI)
education, and wealth, have been identified in the literature as explaining variations in healthcare costs but have not yet been included in risk adjustment algorithms, owing to the fact that such variables are not commonly discovered in claims data.
If these atypical variables explain meaningful variation in cost beyond traditional risk adjustment models, issuers may be incentivised to pick specific members. If such incentives result in selection that has an impact on issuers’ financial performance, the risk adjustment program’s policy goals will be undercut.
Recognising the need of protecting risk adjustment programs from selection based on nontraditional variables, the Society of Actuaries’ Health Section funded a comprehensive investigation of the association between nontraditional variables and health expenditures.
This report covers the findings of the study. We used data from the Medical Expenditure Panel Survey (MEPS) for this study. Section 3.4 provides specific details about the data and preparation.
This data is unusual in that it combines a wide range of individual variables (from BMI to whether a person has problems enjoying hobbies) with healthcare claim information.
There are restrictions to using MEPS data, which are explored further in Section 4. The findings of this study show that it is critical to modify the classic risk adjustment model in order to identify atypical variables. The study introduces a new measure (Loss Ratio Advantage, or LRA) to assess the impact of a nontraditional variable on a risk adjustment program.
The report uses this metric to compare the importance of over thirty factors selected systematically from a list of over fifteen hundred variables characterising diverse characteristics of the general population.
The atypical factors were broadly classified as
(1) demographic,
(2) economic,
(3) lifestyle,
(4) psychological self-assessment (how a person thinks about their mental health), and
(5) physical self-assessment.
1.2 Statement of the Problem
Risk adjustment of any form is necessarily imperfect; yet, the complexity and sophistication of risk adjustment models has grown dramatically in recent decades. The Affordable Care Act (ACA) will require risk adjustment for non-grandfathered commercial small group and individual coverage both inside and outside Exchanges.
Using a methodical and rigorous methodology, the researcher investigated a vast list of non-traditional health cost drivers, selected the most important ones, and tested their impact on bottom-line medical costs when incorporated into the usual risk adjustment model.
1.3 Objectives of the Study
1. To investigate the link between nontraditional characteristics and health-care risk adjustment in Nigeria.
4. Determine the impact of non-traditional variables on healthcare risk adjustment in Nigeria.
1.4 Research questions.
1. Is there a link between nontraditional characteristics and health-care risk adjustment in Nigeria?
4. Do non-traditional variables have a substantial impact on healthcare risk adjustment in Nigeria?
1.5 Research Hypotheses
Ho: There is no link between non-traditional variables and health-care risk adjustment in Nigeria.
Hi: There is a relationship between non-traditional variables and healthcare risk adjustment in Nigeria.
Ho: Non-traditional variables have no substantial influence on health-care risk adjustment in Nigeria.
Hi: Non-traditional variables have a substantial impact on healthcare risk adjustment in Nigeria.
1.6 Significance of the Study
The Affordable Care Act (ACA) includes a risk adjustment mechanism in commercial small group and individual markets to further the policy goals of premium stabilisation, mitigating incentives for healthcare coverage policy issuers (issuers) to avoid unhealthy members, and eliminating any advantages or disadvantages for plans within healthcare exchanges compared to plans outside of such exchanges.
The relevance of risk adjustment to these policy goals cannot be overstated, and details such as the factors included in the risk assessment formula influence the program’s success in reaching these objectives.
1.7 Scope of the Study
The paper examines the impact of non-traditional variables on health care risk adjustment in Nigeria, with the University of Uyo Teaching Hospital (UTH) in the Uyo Local Government Area of Akwa Ibom state serving as a case study.
1.8 Study Limitations
This study has some limitations, particularly in the area of data gathering. Other considerations that would limit the scope of the investigation include financial constraints and the amount of time available to complete the study.
1.9 Definition of Terms
Health care is the organised provision of medical services to people or communities.
Non-traditional: Not adhering to or in accord with tradition.
Risk adjustment is a notion that refines an investment’s return by determining how much risk is involved in generating that return.
Need help with a related project topic or New topic? Send Us Your Topic
DOWNLOAD THE COMPLETE PROJECT MATERIAL