Health Policy Manag.  2017 Jun;27(2):149-156. 10.4332/KJHPA.2017.27.2.149.

Prediction of Health Care Cost Using the Hierarchical Condition Category Risk Adjustment Model

• Han KM
• Ryu MK
• Chun KH

• KMID: 2388031
• DOI: http://doi.org/10.4332/KJHPA.2017.27.2.149

Abstract

BACKGROUND
This study was conducted to evaluate the performance of the Hierarchical Condition Category (HCC) model, identify potentially high-cost patients, and examine the effects of adding prior utilization to the risk model using Korean claims data.
METHODS
We incorporated 2 years of data from the National Health Insurance Services-National Sample Cohort. Five risk models were used to predict health expenditures: model 1 (age/sex groups), model 2 (the Center for Medicare and Medicaid Services-HCC with age/sex groups), model 3 (selected 54 HCCs with age/sex groups), model 4 (bed-days of care plus model 3), and model 5 (medication- days plus model 3). We evaluated model performance using R² at individual level, predictive positive value (PPV) of the top 5% of high-cost patients, and predictive ratio (PR) within subgroups.
RESULTS
The suitability of the model, including prior use, bed-days, and medication-days, was better than other models. R² values were 8%, 39%, 37%, 43%, and 57% with model 1, 2, 3, 4, and 5, respectively. After being removed the extreme values, the corresponding R² values were slightly improved in all models. PPVs were 16.4%, 25.2%, 25.1%, 33.8%, and 53.8%. Total expenditure was underpredicted for the highest expenditure group and overpredicted for the four other groups. PR had a tendency to decrease from younger group to older group in both female and male.
CONCLUSION
The risk adjustment models are important in plan payment, reimbursement, profiling, and research. Combined prior use and diagnostic data are more powerful to predict health costs and to identify high-cost patients.

Keyword

Risk adjustment; Risk equalization; Medicare; Health expenditures; Health care utilization

MeSH Terms

Cohort Studies
Delivery of Health Care*
Female
Health Care Costs*
Health Expenditures
Humans
Male
Medicaid
Medicare
National Health Programs
Patient Acceptance of Health Care
Risk Adjustment*