| Sumario: | Part of a special section on advances in financing managed care. The writers discuss two new diagnosis-oriented methodologies for setting risk-adjusted capitation rates for managed care plans contracting with Medicare. These risk-adjuster models predict the future medical expenses of aged Medicare enrollees based on demographic factors and diagnostic information, and they employ the ambulatory care group algorithm to classify ambulatory diagnoses. The models are far more accurate at predicting expenditures than is the adjusted average per capita cost payment method. It is concluded that these models have considerable potential to improve current methods of calculating risk-adjusted, capitated premiums for health maintenance organizations and other managed care organizations.
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