Is Medicare Advantage risk adjustment fair? And if not, what should we do about it?

While most patients in Medicare use the traditional fee-for-service route, a growing percentage of Medicare beneficiaries are relying on managed care plans through Medicare Advantage.  Medicare Advantage provides beneficiaries with additional choice and also serves as a competitive alternative to traditional Medicare.  In theory, Medicare should just allocate a beneficiary’s funding to a managed care…

What are regression trees?

Regression trees are a way to partition your explanatory variables to (potentially) better predict an outcome of interest.  Regression trees start with a an outcome (let’s call it y) and a vector of explanatory variables (X).   Simple Example For instance, let y be health care spending, X=(X1,X2) where X1 is the patient’s age and X2 is the patient’s…

Risk Adjustment: Overfitting the Model

When creating risk adjustment models to predict health care spending, many researchers aim to maximize the goodness-of-fit of the model.  Maximize the goodness of fit, however, can produce the problem of overfitting. Overfitting occurs when a model describes random error or noise instead of the underlying relationship. Overfitting generally occurs when a model is excessively…

Measuring Patient Case Mix in Medicare

How does Medicare measure patient case mix?  For the most part, Medicare uses the Hierarchical Condition Category (HCC) model.  A recent CMS presentation describes the HCC model in more detail.  Today I review where CMS applies the HCC model, provide an overview of the HCC methodology, briefly describe its performance, and give some background on…

Risk Scores and provider size

At a recent AcademyHealth presentation, Cheryl Damberg discussed her research to design a P4P program for implementation for Integrated Healthcare Association (IHA).  One thing I noticed about the presentation was that smaller provider groups had patients with lower risk scores (i.e., healthier patients).  Is it really the case that small providers treat much healthier patients?…