Refining the Diagnostic Cost Group Model: A Proposed Modification to the AAPCC for HMO Reimbursement

摘要

Under prevailing legislation, Medicare payments to health maintenance organizations (HMOs) are based upon projected fee-for-service reimbursement levels of the resident counties of the beneficiary enrollees. The payment formula adjusts for age, sex, institutional status and welfare status and results in what has been termed the adjusted average per capita cost (AAPCC). The AAPCC has been criticized for not being an accurate predictor of future Medicare beneficiary costs. The project which the report describes used a diagnostic cost group (DCG) regression model to improve over the predictive power of the AAPCC. DCGs are formed on the basis of the expected future costs associated with primary diagnosis of prior hospitalization. The researchers report that this model was found to have considerably more predictive power than the AAPCC.