The document discusses risk adjustment in Germany's statutory health insurance system. It provides background on Germany's health care system, the evolution and reasons for introducing risk adjustment, and an overview of the current risk adjustment system implemented in 2009. The system uses diagnoses from inpatient and outpatient care to classify individuals into age-sex and morbidity risk groups. Payments to sickness funds are risk-adjusted based on the expected costs of the individuals enrolled. The model is recalibrated annually.

1. Risk adjustment in Germany
Dr. Dirk Göpffarth, German Federal Insurance Agency
Risk Adjustment Conference 2011
London, 29 June 2011
6. Juli 2011 Bundesversicherungsamt · Friedrich-Ebert-Allee 38 · 53113 Bonn
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2. I.
Health Care System in Germany
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3. Statutory Health Insurance in Germany:
Coverage
• 70 million covered (out of a population of 80
million)
• coverage mandatory for employees up to an
income threshold of € 4.125 per month
• coverage voluntary for high-income
employees, self-employed and civil servants
if they were covered by the SHI beforehand
• otherwise these groups can opt for private
health insurance (risk assessment)
• special rules for farmers
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4. Statutory Health Insurance in Germany:
Benefits
• 95 % of benefits mandated
• broad coverage of all “medically necessary”
benefits, including office-based physicians’
treatment (including specialists), dental
care, prescription drugs, hospital treatment,
sickness payments, (within limits)
physiotherapy etc.
• co-payments: generally 10 % (minimum 5 €,
maximum 10 €), for office-based physicians
10 Euro every quarter
• provision otherwise free at point of service
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5. Statutory Health Insurance in Germany:
Carriers
• currently approx. 147 sickness funds
– 1991: more than 1.200 sickness funds
– 2008: 206 sickness funds
• Organisation: incorporated bodies of public
law with self-administration
• Different “kinds” of funds: local funds,
company funds, guild funds, substitute funds,
special systems for miners, seamen, farmers
• since 1996: free choice of sickness fund
• since 2007: merger of funds of different
“kinds” possible
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6. Role of Central Health Fund
in Financing Health Care
Tax Subsidies Contributions
€ 15.5 bn € 159.0 bn
Central Health
Fund Additional Premia
€ 0.7 bn
Risk-adjusted
payments
Sickness Funds
Physicians Hospitals Drugs Other
€ 28.5 bn € 57.4 bn € 30.0 bn € 45.2 bn
2010 figures
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7. Some Facts on the
German Federal Insurance Agency (BVA)
• Supervisory authority for ‘federal’ social
insurance institutions (sickness funds,
pension funds, employers’ liability insurance,
long term care insurance)
• Audit office for ‘federal’ sickness funds
• ‘Administrative tasks: Central Health Fund,
Risk adjustment, licensing Disease-
Management-Programs
• 540 staff, head office in Bonn
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8. II.
Risk Adjustment in Germany
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9. Evolvement of Risk Adjustment in Germany
Age Age Age
Gender Gender Gender
Disability to Disability to Disability to
work work work
Enrolement Morbidity
in Disease
Management
Risk Pool
1994 2003 2009
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10. Reasons for Introducing Risk Adjustment
in 1994
• Before 1996, most insured were allocated to
a fund, only white-collar workers could opt for
substitute fund
• Expenditure for pensioners was pooled
⇒Pooling led to low incentives for cost control
⇒Restriction of choice became politically
untenable, large differences in contribution
rates
⇒Legal challenges
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11. Reasons for Reforming Risk Adjustment
in 2001
• Functionality of competition
Sickness funds tried to attract young and healthy
switchers
• Incentives for providing care for chronically ill
⇒Short term: Disease Management Programs
and Risk Pool
⇒Long term: Introduction of morbidity-based
risk adjustment by 2007
Later political compromise: Postponement to 2009
and restriction to 80 disease states
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12. Overview over the risk adjustment system
implemented in Germany
approx. 4.000 diagnoses
classification model
Risk adjustors
plausibility checks
• definition of eligibility
80 disease states
Inpatient
diseases criteria • 40 Age-Sex-Groups
disease filter
and
outpatient • severity validation • 6 groups for disability-
diagnoses of to-work-status
• chronic
ICD-10-GM diagnoses
• cost-intensive eg. with • 128 hierarchical
drug data morbidity groups
• cost threshold
Pharmaceutical
agents
ATC-Codes
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13. Eligibility criteria:
Not every diagnosis leads to a payment
• All outpatient diagnoses have to be validated
by a second diagnoses of the same disease
in a different quarter of the year
• DxGroups implying a necessary in-patient
treatment (eg. acute myocardial infarct)
cannot be triggered by outpatient diagnosis
• DxGroups with necessary drug treatment (eg.
Diabetes mellitus Typ 1) have to be validated
by use of corresponding pharmaceutical
agents
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14. Calculation of monthly payments
Age-Gender- Disability-to- Hierarchical Morbidity Groups
Groups work-Groups
25 Hierarchies
Female
0y 166 €
1-5 y -131 € Diabetes Ophthalmic
... ... Female
Lump 40-44y -120 € <45 y 273 €
HMG015 HMG020 HMG222
170 € 159 € 62 €
sum ... ...
45-54 y 171 €
90-94y -35 €
payment + + 55-64 y 88 € + HMG016 ... HMG223
95y+ -72 €
Male 161 € 54 €
Male
203 € 0y 223 € <45 y 223 €
45-54 y 151 € HMG017 HMG224
1-5 y -119 € 103 € xxx €
... ... 55-64 y 105 €
40-44y -140 € HMG019
... ... 48 €
90-94y -39 €
95y+ -54 €
100% 100% 2% 66%
eligibility
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15. Annual revision of the model
•Recalibration •High cost groups / splits by pharmaceuticals
of weights
•Revision of HIV/AIDS Metabolic Diseases Haemophilia
with antiretroviral with full factor
hierarchies therapy
with ERT/SRT
replacement
25.124 €
1.481 € 18.935 €
•Revision of
eligibility HIV/AIDS Haemophilia
Metabolic Diseases
criteria w/o antiretroviral w/o full factor
with Somatropin
therapy replacement
1.504 €
233 € men: 1.333 €
•Revision of women: 226 €
modalities
Metabolic Diseases
without ERT/SRT
•Consultation 456 €
process
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16. III.
First Experiences with the new formula
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17. Individual Level Measures
• Coefficient of determination (R2)
R2 MAPE
New formula (2009) 19,6 % 1.953
Prior formula with risk pool 52,3 % 2.019
Prior formula w/o risk pool 5,8 % 2.226
• R2 for 2011 model about 25 %
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18. Predictive Ratio (Predicted payments to observed payments)
Group Level Measures
180%
160%
New Formula (2009)
140% Prior Formula with Risk Pool
Prior Formula without Risk Pool
120%
100%
80%
60%
40%
20%
0%
0: no HMG 1: one HMG 2: two HMG 3: three HMG 4: four or more
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19. Sickness Fund Level Measures
(New Formula)
130%
125% less than 30.000 insured
30.000 through 1.000.000 insured
120%
more than 1.000.000 insured
115%
Predictive Ratio
110%
105%
100%
95%
y = -0,0461x + 1,048
90%
R2 = 14,9 %
85%
80%
0,6 0,7 0,8 0,9 1,0 1,1 1,2 1,3 1,4 1,5
Case Mix Index
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20. Sickness Fund Level Measures
(Old Formula)
130%
125% less than 30.000 insured
30.000 through 1.000.000 insured
120%
more than 1.000.000 insured
115%
Predictive Ratio
110%
105%
100%
95%
90%
y = -0,1142x + 1,1184
85% R2 = 26,6 %
80%
0,6 0,7 0,8 0,9 1,0 1,1 1,2 1,3 1,4 1,5
Case Mix Index
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21. Problems with the New Risk Adjustment
Formula
• People without diagnosis data (living abroad
or choosing cost reimbursement)
– Legislation for “carve outs”
• Payments for high cost cases
• Predictability of payments
• Upcoding / Gaming
• “Big bang” introduction together with Central
Health Fund, Additional Premia and
Insolvency Rules
– First insolvency of a fund in July 2011
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22. III.
Prospects of Risk Adjustment in Germany
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23. Prospects for Risk Adjustment in Germany
• Coalition Agreement: Reduce morbidity-
based risk adjustment, but so far no
legislation
• Continuing Improvement of the model and of
the data basis
• Discussion of introducing regional factors
• But no discussion of extending the scope of
the model (80 disease states) or bringing in
new adjustors (procedures or performance
measures)
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24. Thank you for your attention
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