Risk adjustment for health care financing in chronic disease

What are we missing by failing to account for disease severity?

Theodore A. Omachi, Steven E. Gregorich, Mark D. Eisner, Renee A. Penaloza, Irina V. Tolstykh, Edward H. Yelin, Carlos Iribarren, Adams Dudley, Paul D. Blanc

Research output: Contribution to journalArticle

6 Citations (Scopus)

Abstract

BACKGROUND:: Adjustment for differing risks among patients is usually incorporated into newer payment approaches, and current risk models rely on age, sex, and diagnosis codes. It is unknown the extent to which controlling additionally for disease severity improves cost prediction. Failure to adjust for within-disease variation may create incentives to avoid sicker patients. We address this issue among patients with chronic obstructive pulmonary disease (COPD). METHODS:: Cost and clinical data were collected prospectively from 1202 COPD patients at Kaiser Permanente. Baseline analysis included age, sex, and diagnosis codes (using the Diagnostic Cost Group Relative Risk Score) in a general linear model predicting total medical costs in the following year. We determined whether adding COPD severity measures - forced expiratory volume in 1 second, 6-Minute Walk Test, dyspnea score, body mass index, and BODE Index (composite of the other 4 measures) - improved predictions. Separately, we examined household income as a cost predictor. RESULTS:: Mean costs were $12,334/y. Controlling for Relative Risk Score, each 1/2 SD worsening in COPD severity factor was associated with $629 to $1135 in increased annual costs (all P<0.01). The lowest stratum of forced expiratory volume in 1 second (<30% normal) predicted $4098 (95% confidence interval, $576-$8773) additional costs. Household income predicted excess costs when added to the baseline model (P=0.038), but this became nonsignificant when also incorporating the BODE Index. CONCLUSIONS:: Disease severity measures explain significant cost variations beyond current risk models, and adding them to such models appears important to fairly compensate organizations that accept responsibility for sicker COPD patients. Appropriately controlling for disease severity also accounts for costs otherwise associated with lower socioeconomic status.

Original languageEnglish (US)
Pages (from-to)740-747
Number of pages8
JournalMedical care
Volume51
Issue number8
DOIs
StatePublished - Aug 1 2013
Externally publishedYes

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Healthcare Financing
Risk Adjustment
Chronic Disease
Delivery of Health Care
Costs and Cost Analysis
Chronic Obstructive Pulmonary Disease
Forced Expiratory Volume
Social Class
Dyspnea
Motivation
Linear Models
Body Mass Index

Keywords

  • chronic disease
  • COPD
  • financing
  • health care costs
  • health care markets
  • health care reform
  • risk adjustment
  • socioeconomic factors

Cite this

Omachi, T. A., Gregorich, S. E., Eisner, M. D., Penaloza, R. A., Tolstykh, I. V., Yelin, E. H., ... Blanc, P. D. (2013). Risk adjustment for health care financing in chronic disease: What are we missing by failing to account for disease severity? Medical care, 51(8), 740-747. https://doi.org/10.1097/MLR.0b013e318298082f

Risk adjustment for health care financing in chronic disease : What are we missing by failing to account for disease severity? / Omachi, Theodore A.; Gregorich, Steven E.; Eisner, Mark D.; Penaloza, Renee A.; Tolstykh, Irina V.; Yelin, Edward H.; Iribarren, Carlos; Dudley, Adams; Blanc, Paul D.

In: Medical care, Vol. 51, No. 8, 01.08.2013, p. 740-747.

Research output: Contribution to journalArticle

Omachi, TA, Gregorich, SE, Eisner, MD, Penaloza, RA, Tolstykh, IV, Yelin, EH, Iribarren, C, Dudley, A & Blanc, PD 2013, 'Risk adjustment for health care financing in chronic disease: What are we missing by failing to account for disease severity?', Medical care, vol. 51, no. 8, pp. 740-747. https://doi.org/10.1097/MLR.0b013e318298082f
Omachi, Theodore A. ; Gregorich, Steven E. ; Eisner, Mark D. ; Penaloza, Renee A. ; Tolstykh, Irina V. ; Yelin, Edward H. ; Iribarren, Carlos ; Dudley, Adams ; Blanc, Paul D. / Risk adjustment for health care financing in chronic disease : What are we missing by failing to account for disease severity?. In: Medical care. 2013 ; Vol. 51, No. 8. pp. 740-747.
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AU - Tolstykh, Irina V.

AU - Yelin, Edward H.

AU - Iribarren, Carlos

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