Approaches to capitation and risk adjustment in health care: an international survey

This report is a survey of current capitation methods in health care finance in developed countries. It was commissioned as part of the fundamental review by UK Ministers of the formula used to allocate health care finance to local areas in England, being carried out under the auspices of the Advisory Committee on Resource Allocation (ACRA). The study was commissioned in February 1999 and completed in May 1999. It was informed by a review of published literature and an extensive network of contacts in government departments and academic institutions. A capitation can be defined as the amount of health service funds to be assigned to a person for the service in question, for the time period in question, subject to any national budget constraints. In effect, a capitation system puts a “price” on the head of every citizen. Capitations are usually varied according to an individual’s personal and social characteristics, using a process known as risk adjustment. In most nations, the intention is that the risk-adjusted capitation should represent an unbiased estimate of the expected costs of the citizen to the health care plan over the chosen time period (typically one year). There is an element of capitation funding in the health care systems of almost all developed countries. Capitation is seen as an important mechanism for securing both equity and efficiency objectives. The review examined capitation schemes in 19 countries and concentrated on major strategic risk adjustment schemes implemented at the national or regional level. It identified two broad approaches to setting capitations, which we term matrix methods and index methods. The fundamental difficulties affecting both approaches are a lack of suitable data and the problem of disentangling needs effects from supply effects on health care utilization. Almost all schemes rely on analysis of empirical data, and various analytic methods have been used for setting capitations. Numerous need and cost factors have been used in setting capitations. However, the choice has usually been determined more by data availability than a compelling link to health care expenditure needs. The review concluded that there were elements of many schemes that may be of relevance to the review of methods currently used in England, and which deserve further investigation. However, until improvements in data availability are in place, it is difficult to envisage major enhancements to methods currently in use.capitation

Risk and the GP budget holder

For most individuals, the use made of health care in a given year is determined principally by unpredictable random incidents. Of course, some individuals have a predictably higher predisposition to illness than others. However, the general consensus is that only a fraction of individual variability in health care costs can be predicted. The purpose of this paper is to explore the implications of this inherent randomness for budget setting for GP purchasers. The paper argues that variability in utilization in the NHS is very high; that no formula will ever completely capture that variability, even for large populations; that the problem of variability is likely to be very acute for a GP practice; and that health authorities and GP budget holders will therefore need to adopt a range of strategies to manage the variability.fundholding

Geology and logistics issues in a densely populated area

The recent exploration of hydrocarbon source rocks in Europe and indeed in the rest of the world has looked to the US for guidance on the shale attri- butes, the new techniques, the effects of exploration on the environment and new regulations required for successful and safe exploitation. But this has been a steep learning curve even for major oil companies, which were slow to respond to the early success in the Barnett Shale. They have bought and taken over companies in order to gain expertise in the US basins and can now apply this to the rest of the world. It seems likely that exploration will only be as easy as in the US in those countries near the bottom of the population density list and those where investment in nuclear and renewable energy has been or is lower. The incentive of a high gas price and security of supply will however drive exploration in the higher density populated countries. Peter Voser, CEO of Royal Dutch Shell plc, has stated that ‘We underestimate what [shale gas] could do to the world in the next 10 to 20 years. It’s a big deal and necessary – globally.’ Gerhard Roiss, chief executive of Austrian oil and gas company OMV AG, is quoted as saying that ‘While Europeans worry about the potentially negative environmental aspects of exploiting shale gas, OMV has a simple message: Shale gas is a necessary part of a sustainable European energy mix. Not to embrace shale gas risks the future competitiveness of European industry’. Already cheap gas in the US is regenerating their energy intensive industries and providing chemical feedstocks. The US has also used shale gas to displace coal in their energy mix, thereby probably reducing their carbon dioxide emissions

Medi-Cal and Opportunities for Health Tech in Home-Based Medical Care

For people living with complex health needs, the usual model of going to the clinic or hospital for care does not always work well. Home-based medical care programs have been designed to fill this gap, providing better care to people living with multiple chronic conditions, functional limitations, and often social risk factors who have difficulty accessing care in traditional settings.This group, which includes seniors as well as younger people living with physical, mental, or developmental disabilities, is large. The state's Medicaid program, Medi-Cal, plays an outsized role in covering their care. Although Medi-Cal covers one in three Californians, it covers more than 50% of those living with a disability. In fact, there are 2.3 million seniors and people with disabilities covered by Medi-Cal, who represent roughly one in three Medi-Cal enrollees.Growing demand from consumers and their caregivers and a favorable policy environment create an opportunity for entrepreneurs and safety-net plans and providers to work together to improve access to these innovative models. This report explores opportunities for innovation, challenges, current policies, and implications for innovators. For this landscape report, the author interviewed a range of stakeholders to understand their perspectives and approaches to home-based medical care in an effort to showcase different models in California's health ecosystem.Readers should note this landscape overview is not intended to be exhaustive, nor is it an endorsement of the companies included. Finally, because solutions landscapes can evolve quickly, this brief may not fully reflect the current market

Further evidence on the link between health care spending and health outcomes in England

This report describes results from research funded by the Health Foundation under its Quest for Quality and Improved Performance (QQuIP) initiative. It builds on our earlier report for the Health Foundation – The link between health care spending and health outcomes: evidence from English programme budgeting data – that took advantage of the availability of a major new dataset to examine the relationship between health care expenditure and mortality rates for two disease categories (cancer and circulation problems) across 300 English Primary Care Trusts. Our results are useful from a number of perspectives. Scientifically, they confirm our previous findings that health care has an important impact on health across a range of conditions, suggesting that those results were robust across programmes of care and across years. From a policy perspective, these results can help set priorities by informing resource allocation across a larger number of programmes of care. They also add further evidence to help NICE decide whether its current QALY threshold is at the right level.

Droplet evaporation losses during sprinkler irrigation: an overview

A detailed understanding regarding the evaporation losses in sprinkler irrigation is important for developing as well as adopting appropriate water conservation strategies. To explain this phenomenon many theoretical and experimental studies have been conducted since the 1950‟s. Notwithstanding all these efforts, the contribution of droplet evaporation to the total evaporation losses during sprinkler irrigation is still a controversial issue in the irrigation community. There is a substantial difference among researchers regarding the magnitudes of the different components of the total evaporation in sprinkler irrigation especially droplet evaporation losses. Field studies reported that the droplet evaporation losses ranged from 2 – 45%, whereas theoretical studies indicated that it is less than 1%. This is due largely to the limitations of the traditional measurement methods. However, it is likely that these limitations can be overcome and accurate measurements obtained using the eddy covariance (ECV) technique

The link between health care spending and health outcomes for the new English Primary Care Trusts

English programme budgeting data have yielded major new insights into the link between health care spending and health outcomes. This paper updates two recent studies that have used programme budgeting data for 295 Primary Care Trusts (PCTs) in England to examine the link between spending and outcomes for several programmes of care. We use the same economic model employed in the two previous studies. It focuses on a decision maker who must allocate a fixed budget across programmes of care so as to maximize social welfare given a health production function for each programme. Two equations – a health outcome equation and an expenditure equation – are estimated for each programme (data permitting). The two previous studies employed expenditure data for 2004/05 and 2005/06 for 295 health authorities and found that in several care programmes – cancer, circulation problems, respiratory problems, gastro-intestinal problems, trauma burns and injury, and diabetes – expenditure had the anticipated negative effect on the mortality rate. Each health outcome equation was used to estimate the marginal cost of a life year saved. In 2006/07 the number of PCTs in England was reduced to 152, largely through a series of mergers. In addition, several changes were made to the methods employed to construct the programme budgeting data. This paper employs updated budgeting and mortality data for the new 152 PCTs to re-estimate health production and expenditure functions, and also presents updated estimates of the marginal cost of a life year saved in each programme. Although there are some differences, the results obtained are broadly similar to those presented in our two previous studies.

The Link Between Health Care Spending and Health Outcomes: Evidence from English Programme Budgeting Data

This report describes preliminary results from research funded by the Health Foundation under its Quest for Quality and Improved Performance (QQuIP) initiative.