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BMC Health Services Research
Published in: BMC Health Services Research 1/2023

Open Access 01-12-2023 | Research article

Comparison of diagnosis-based risk adjustment methods for episode-based costs to apply in efficiency measurement

Authors: Juyoung Kim, Minsu Ock, In-Hwan Oh, Min-Woo Jo, Yoon Kim, Moo-Song Lee, Sang-il Lee

Published in: BMC Health Services Research | Issue 1/2023

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Abstract

Background

The recent rising health spending intrigued efficiency and cost-based performance measures. However, mortality risk adjustment methods are still under consideration in cost estimation, though methods specific to cost estimate have been developed. Therefore, we aimed to compare the performance of diagnosis-based risk adjustment methods based on the episode-based cost to utilize in efficiency measurement.

Methods

We used the Health Insurance Review and Assessment Service–National Patient Sample as the data source. A separate linear regression model was constructed within each Major Diagnostic Category (MDC). Individual models included explanatory (demographics, insurance type, institutional type, Adjacent Diagnosis Related Group [ADRG], diagnosis-based risk adjustment methods) and response variables (episode-based costs). The following risk adjustment methods were used: Refined Diagnosis Related Group (RDRG), Charlson Comorbidity Index (CCI), National Health Insurance Service Hierarchical Condition Categories (NHIS-HCC), and Department of Health and Human Service-HCC (HHS-HCC). The model accuracy was compared using R-squared (R2), mean absolute error, and predictive ratio. For external validity, we used the 2017 dataset.

Results

The model including RDRG improved the mean adjusted R2 from 40.8% to 45.8% compared to the adjacent DRG. RDRG was inferior to both HCCs (RDRG adjusted R2 45.8%, NHIS-HCC adjusted R2 46.3%, HHS-HCC adjusted R2 45.9%) but superior to CCI (adjusted R2 42.7%). Model performance varied depending on the MDC groups. While both HCCs had the highest explanatory power in 12 MDCs, including MDC P (Newborns), RDRG showed the highest adjusted R2 in 6 MDCs, such as MDC O (pregnancy, childbirth, and puerperium). The overall mean absolute errors were the lowest in the model with RDRG ($1,099). The predictive ratios showed similar patterns among the models regardless of the  subgroups according to age, sex, insurance type, institutional type, and the upper and lower 10th percentiles of actual costs. External validity also showed a similar pattern in the model performance.

Conclusions

Our research showed that either NHIS-HCC or HHS-HCC can be useful in adjusting comorbidities for episode-based costs in the process of efficiency measurement.
Appendix
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Metadata
Title
Comparison of diagnosis-based risk adjustment methods for episode-based costs to apply in efficiency measurement
Authors
Juyoung Kim
Minsu Ock
In-Hwan Oh
Min-Woo Jo
Yoon Kim
Moo-Song Lee
Sang-il Lee
Publication date
01-12-2023
Publisher
BioMed Central
Published in
BMC Health Services Research / Issue 1/2023
Electronic ISSN: 1472-6963
DOI
https://doi.org/10.1186/s12913-023-10282-4

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