Model for medical risk distribution among competing health plans

The Foundation's Changes in Health Care Financing and Organization program was designed to support research, demonstration, and evaluation projects examining major changes in health care financing.The purpose of this project is to develop and implement a payment system which reimburses health plans on the basis of the average health risk of their enrollees in order to encourage plans not to compete for enrollees on the basis of their health status. The system will be developed using data from the benefit program for Washington State employees and their dependents. The five specific goals are to: (1) design a new conceptual model to identify characteristics of employees and dependents related to health status and expected need for health care in the forthcoming eligibility period; (2) develop a new empirical health risk-assessment model that combines baseline measures of these risk factors to predict future health needs in a defined population; (3) generate adjustments to base vendor rates from the empirical model and implement this payment system for selected managed care plans; (4) evaluate the impact of the risk-adjusted payment system on vendor revenues, enrollment patterns, vendor decisions to contract with the state, and administrative costs; and (5) validate the model using available data from other populations to derive implications of the model for use by other health care purchasers in Washington State and elsewhere.

Grant Details

Amount Awarded $652,536.00

Awarded on: 10/15/1993

Time frame: 11/1/1993 - 7/31/1995

Grant Number: 23111


University of Washington School of Public Health

Box 357230
Seattle, 98195-7230


Carolyn W. Madden
Project Director