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Risk Assessment of Military Populations to Predict Health Care Cost and Utilization

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Risk Assessment of Military Populations to Predict Health Care Cost and Utilization November 2005 Risk Assessment of Military Populations to Predict Health Care Cost and Utilization Final Report Prepared for Thomas Williams, Ph.D. Center for Health Care Management Studies TRICARE Management Activity; HPA&E 5111 Leesburg Pike, Suite 510 Falls Church, VA 22041 Prepared by Arlene S. Ash, Ph.D., Boston University Nancy McCall, Sc.D., RTI International Participating Investigators Jenn Fonda, M.A., Boston University Amresh Hanchate, Boston University Jeanne Speckman, M.Sc., Boston University RTI International 1615 M Street, NW Washington, DC 20036 and Boston University School of Medicine 715 Albany Street Boston, MA 02118 RTI Project Number 08490.006 RTI Project Number 08490.006 Risk Assessment of Military Populations to Predict Health Care Cost and Utilization Final Report November 2005 Prepared for Thomas Williams, Ph.D. Center for Health Care Management Studies TRICARE Management Activity; HPA&E 5111 Leesburg Pike, Suite 510 Falls Church, VA 22041 Prepared by Arlene S. Ash,1 Ph.D., Boston University Nancy McCall, Sc.D., RTI International Participating Investigators Jenn Fonda, M.A., Boston University Amresh Hanchate, Boston University Jeanne Speckman, M.Sc., Boston University RTI International2 1615 M Street, NW Washington, DC 20036 and Boston University School of Medicine 715 Albany Street Boston, MA 02118 1 Dr. Ash is a developer of the Diagnostic Cost Group (DCG) models and a founder of the company (DxCG, Inc.) that maintains and licenses DCG models, one of the models evaluated in this project. Although the company has been sold, Dr. Ash continues to work one day a week for the company, as a senior scientist. Her primary affiliation, and the one through which she is involved in this project, is as a Research Professor at Boston University School of Medicine. 2 RTI International is a trade name of Research Triangle Institute. Table of Contents Chapter Page Executive Summary...................................................................................................................ES-1 1 Introduction...................................................................................................................................1-1 2 Background...................................................................................................................................2-1 2.1 The TRICARE Program......................................................................................................2-1 2.2 Overview of Risk Adjustment Models................................................................................2-3 2.2.1 The Johns Hopkins ACG Case-Mix System..........................................................2-4 2.2.2 Chronic Disease and Disability Payment System (CDPS).....................................2-5 2.2.3 Clinical Risk Groups (CRG) ..................................................................................2-5 2.2.4 Diagnostic Cost Groups (DCG) .............................................................................2-6 2.3 Selected Groups for Model Comparison.............................................................................2-6 2.4 Model Comparison Criteria.................................................................................................2-7 3 Data...............................................................................................................................................3-1 4 Analysis ........................................................................................................................................4-1 4.1 Study Population.................................................................................................................4-1 4.2 Fitting and Validation Samples...........................................................................................4-2 4.3 Calculating Cost..................................................................................................................4-2 4.4 Diagnostic Information .......................................................................................................4-3 4.5 Other New Variables...........................................................................................................4-3 4.5.1 Primary Care Manager: Military or Civilian..........................................................4-3 4.6 Model Implementation........................................................................................................4-4 5 Results...........................................................................................................................................5-1 5.1 Description of the Study Population and Cost Characteristics............................................5-1 5.1.1 Cost Characteristics................................................................................................5-1 5.1.2 Study Population....................................................................................................5-4 5.2 Comparing Models: Individual Measures of Predictive Accuracy .....................................5-5 5.3 Comparing Models: Predictive Ratios for Disease Cohorts..............................................5-15 5.4 Comparing Models: Prior Cost Groups.............................................................................5-17 5.5 Comparing Models: Grouped R-squared (R2)...................................................................5-19 6 Conclusions/Discussion ................................................................................................................6-1 7 References.....................................................................................................................................7-1 Final Report iii Appendixes A Bibliographical Materials.............................................................................................................A-1 B Extended Population Description Tables.....................................................................................B-1 C Data Extraction Materials ............................................................................................................C-1 D Data Processing—Overview and SAS Logs................................................................................D-1 E Selection of Medical Conditions for Grouped Prediction............................................................ E-1 F Extended Results.......................................................................................................................... F-1 iv Final Report List of Figures Number Page 5-1 Actual versus Predicted FY 2002 Costs by 43 “Central” 2-Percentile Groups of FY 2001 Actual (All) Cost ............................................................................................................5-19 List of Tables Number Page ES-1 Overall Measures of Predictive Accuracy ....................................................................................... 2 4-1 Key Analytical Variables................................................................................................................. 4 5-1 Claim-level Costs by Data Source (N = 2.3 million)....................................................................... 2 5-2 Person-level Costs by Data Source (N = 2.3 million)...................................................................... 3 5-3 Person-level Costs by Service Setting (N = 2.3 million)................................................................. 4 5-4 Person-level Costs by Service Sector Utilization (N = 2.3 million)................................................ 4 5-5 Demographic Characteristics and Total Individual Cost of Fitted and Validation Samples in FY 2002 ................................................................................................................................................. 6 5-6 Overall Measures of Predictive Accuracy, by Model*.................................................................... 9 5-7 Predictive Ratio for Demographic and Service-Related Subgroups, by Model ............................ 11 5-8 Predictive Ratios for Disease-Based Cohorts, by Model............................................................... 16 5-9 Predictive Ratios for FY 2001 Cost-based Subgroups, by Model................................................. 18 5-10 Grouped R2 Values for Various Partitions of the Population ........................................................ 20 Final Report v Executive Summary The Military Health System is examining new approaches to financing the care of covered beneficiaries. Since population health care costs depend on illness burden (case-mix), efficient financing should recognize variations in the illness burden of populations seen by different providers. Several mature risk adjustment systems that extract illness burden profiles from computerized encounter records are now used by Medicare, Medicaid, the Veteran’s Health Administration, commercial insurers in the United States, and international stakeholders to understand and manage health care delivery systems. These systems are designed for “population-based” management; “units” are person-years of medical care, and the key outcome is the cost, for each person, of a year of care. The expected cost for a provider for a year is the sum of individual-level person-year estimates for the population served. We conducted side-by-side testing of a simple age-sex method similar to what is currently used in TRICARE Prime and four claims-based risk adjustment models: Adjusted
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