Extreme under and overcompensation in morbidity-based health plan payments: The case of Switzerland. Issue 1 (January 2020)

• Record Type: Journal Article
• Authors: Kauer, Lukas; McGuire, Thomas G.; Beck, Konstantin
• Is Part Of: Health policy. Volume 124:Issue 1(2020)
• Page Start: 61
• Page End: 68
• Publication Date: 2020-01
• Subjects: I11 -- I13 -- G22; Health insurance -- Risk adjustment -- Risk equalization -- Risk selection -- Payment fit; Medical education -- Periodicals; Medical policy -- Periodicals; Delivery of Health Care -- Periodicals; Education, Medical -- Periodicals; Health Education -- Periodicals; Health Planning -- Periodicals; Public Policy -- Periodicals; Enseignement médical -- Périodiques; Politique sanitaire -- Périodiques; Medical education; Medical policy; Periodicals; Electronic journals; Electronic journals; 362.1
• DOI: 10.1016/j.healthpol.2019.11.008
• Languages: English
• ISSNs: 0168-8510

Abstract

Highlights: Refinement of risk adjustment involves trade-off between reduced undercompensation and increased overcompensation. Persistence in under and overcompensations may open new avenue for risk selection. We characterize the health conditions of highly over and undercompensated enrollees. The highly overcompensated are not low spenders. The highly undercompensated account for a massively disproportionate share of unexplained variance. Abstract: In 2020, the Swiss insurer payment model will include a set of sophisticated morbidity indicators in the form of Pharmaceutical Cost Groups (PCGs), added to a payment model currently largely based on age, gender, and a crude morbidity indicator. Adding powerful risk adjustors reduces underpayment for previously highly underpaid groups but creates a new group of the highly overpaid. We characterize the diseases and patterns of health care spending in most extremely under and overpaid in the new Swiss payment model. We define extremely under and overpaid to be those in the top and bottom 1 and .1 percentiles of the distribution of spending less payment, respectively. The under and overpaid share some of the same health conditions, among them kidney disease. The highly underpaid account for a massively disproportionate share of the unexplained variance in the new payment model. Membership in the tails of the distribution of spending residuals after risk adjustment is persistent, implying that the highly over and underpaid merit special attention in design of insurer payment models.