CHRONIC DISEASE, FUNCTIONAL HEALTH-STATUS, AND DEMOGRAPHICS - A MULTIDIMENSIONAL APPROACH TO RISK ADJUSTMENT

Objective. The goal of this study was to develop unbiased risk-assessm ent models to be used for paying health plans on the basis of enrollee health status and use propensity. We explored the risk structure of a dult employed HMO members using self-reported morbidities, functional status, perceived health status, and demographic characteristics. Data Sources/Study Setting. Data were collected on a random sample of memb ers of a large, federally qualified, prepaid group practice, hospital- based HMO located in the Pacific Northwest. Study Design. Multivariate linear nonparametric techniques were used to estimate risk weights on demographic, morbidity, and health status factors at the individual l evel. The dependent variable was annual real total health plan expense for covered services for the year following the survey. Repeated rand om split-sample validation techniques minimized outlier influences and avoided inappropriate distributional assumptions required by parametr ic techniques. Data Collection/Extraction Methods. A mail questionnair e containing an abbreviated medical history and the RAND-36 Health Sur vey was administered to a 5 percent sample of adult subscribers and th eir spouses in 1990 and 1991, with an overall 44 percent response rate . Utilization data were extracted from HMO automated information syste ms. Annual expenses were computed by weighting all utilization element s by standard unit costs for the HMO. Principal Findings. Prevalence o f such major chronic diseases as heart disease, diabetes, depression, and asthma improve prediction of future medical expense; functional he alth status and morbidities are each better than simple demographic fa ctors alone; functional and perceived health status as well as demogra phic characteristics and diagnoses together yield the best prediction performance and reduce opportunities for selection bias. We also found evidence of important interaction effects between functional/perceive d health status scales and disease classes. Conclusions. Self-reported morbidities and functional health status are useful risk measures for adults. Risk-assessment research should focus on combining clinical i nformation with social survey techniques to capitalize on the strength s of both approaches. Disease-specific functional health status scales should be developed and tested to capture the most information for pr ediction.