Work detail

Improvement of risk adjustment for health insurance companies in the Czech Republic - compensation of costs of patients with renal failure

Author: Mgr. Magdalena Škodová
Year: 2020 - summer
Leaders: PhDr. Jana Votápková Ph.D.
Work type: Finance, Financial Markets and Banking
Language: English
Pages: 82
Awards and prizes:
Abstract: Risk adjustment models are used to predict health care costs of insurees and represent
an important part of mechanisms for redistribution of funds among insurance
companies. In the Czech Republic, pharmacy-based cost groups (PCGs) were
introduced into the risk adjustment model in 2018, reflecting the costs of chronic
diseases in addition to age and gender. The thesis reviews the model for the most
expensive chronic disease – renal failure. Using the sample of General Health Insurance
fund (GHI) insurees reported with typical health care consumption for kidney disease
in years 2015-2018, we tested the current model and subsequently modified the
classification criteria for PCG “renal failure”. The classification based on the number
of dialysis procedures proved to be much better indicator of costs than the currently
used consumption of typical drugs. The incorporation of dialysis-based approach into
the PCG model improved the explained variation from 26 % to 49 %, and the predictive
power increased substantially. The study suggests improvements of the Czech risk
adjustment model and proposes a fairer fund redistribution among insurance
companies, while no additional data collection is needed.


Česká Spořitelna


Patria Finance