Elsevier

Health Policy

Volume 109, Issue 3, March 2013, Pages 253-262
Health Policy

The new risk adjustment formula in Germany: Implementation and first experiences

https://doi.org/10.1016/j.healthpol.2012.12.001Get rights and content

Abstract

In Germany risk adjustment is a core element of the regulatory framework of competition between sickness funds. It shall create a level playing field between funds with very heterogeneous risk structures. Prior to 2009 risk adjustment was mainly by a demographic model. In 2009 morbidity based risk adjustment was introduced, embedded in a broader reform of the statutory health insurance system. The new formula covers 80 “severe” or “costly and chronic” diseases structured in a system of hierarchical groups.

The performance of the new system was evaluated by the Advisory Board of Scientific Experts on Risk Adjustment to the Federal Insurance Office. The evaluation is based on the data of the first year 2009. Individual level as well as group level performance improved considerably comparing to the old model. Also predictive accuracy on the sickness funds level improved. The evaluation analyzed coding and prescription patterns in a joint point analyses. No changes of coding behavior which can be ascribed to the introduction of the new system were found.

Some issues for further improvement were identified: A systematic underpayment for higher age groups is observed due to not annualizing the costs of the deceased. Systematic underpayment for multi-morbidity and systematic over-payment for those without any medical conditions can also be observed, although the level of over-/underpayment was clearly reduced compared to the old model.

Introduction

Germany's social health insurance system is built on competing non-profit public health insurers called “sickness funds”. Risk adjustment between these funds (Risikostrukturausgleich; RSA) is a core element of the regulatory framework in order to create a level playing field. Originally, RSA was based mainly on basic socio-demographic factors. But these have been identified as being insufficient to discourage risk selection by sickness funds [1], [2]. Accordingly, morbidity – as measured by recorded diagnoses and prescriptions – was introduced as an additional set of risk adjusters coming into effect in 2009. The new formula was established within a broader reform of financing social health insurance [3].

In this paper we focus on first experiences with the new risk adjustment scheme: How well does it perform in comparison to the old model? Did it achieve the goals policy makers had? What are its strengths, what its weaknesses? Therefore, in Section 4 we present results based on an evaluation commissioned end of 2010 by the Federal Ministry of Health to the Advisory Board of Scientific Experts on Risk Adjustment. Before, we describe the changing framework of financing social health insurance in Germany, in which the new risk adjustment model is embedded (Section 2) and we present the new risk adjustment model in more detail (in Section 3). The paper finishes with a discussion and conclusions (Section 5).

Section snippets

The changing framework of financing social health insurance in Germany

Almost 90% of the population have their primary coverage with one of the 135 competing “sickness funds” (status 2012), non-profit organizations incorporated under public law. A substitutive private health insurance system exists for the remaining 10% of the population, which is beyond the scope of this paper, as it does not take in part in risk adjustment [4]. Since 1996 virtually every member of the sickness funds system can switch regularly (open enrolment). There is a minimum retention

Selection of 80 diseases

According to law, the selected 50–80 diseases have to be either “severe” or “costly and chronic”. For each selected disease, average per capita expenditure of the concerned in the year following the diagnosis has to exceed 1.5 times the average per capita expenditure of all insured (cost threshold).

The selection process was proposed by an Advisory Board of Scientific Experts on Risk Adjustment [13] and modified by the Federal Insurance Office in some essential points. For the empirical analysis

First experiences of the new risk adjustment mechanism

The results of the final settlement for 2009 have been subject to an evaluation by the Advisory Board of Scientific Experts on Risk Adjustment [17]. The main result was: accuracy of payments has significantly improved compared to the prior risk adjustment scheme, but some problems remain.

Discussion and conclusions

This paper reports on the reform of risk adjustment in the German social health insurance system: In 2009 a set of morbidity-based risk adjusters for 80 diseases was added to the pre-existing demographic risk adjusters. At the same time, DMP enrolment was deleted as risk adjuster, and the retrospective high-cost pool was abolished.

The main goal of improving risk adjustment was to establish a level playing field for the competing sickness funds: Their financial position should not depend on

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