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Managed Care & Persons with Disabilities & Chronic Illnesses
Developing Appropriate Capitation Rates
Richard Kronick, Ph.D., Professor, Department of Family and Preventive Medicine, University of California at San Diego,
and Co-lnvestigator, Medicaid Working Group, Boston, MA.
Dr. Kronick began this session by discussing ways in which moving from unadjusted capitation rates to a health-based
payment system (his preferred term, rather than "risk-adjusted capitation payments") could promote positive results, such as:
- Plan innovation.
- Consumer choice.
- Plans being willing to advertise, rather than hide, their success in caring for high-cost
payment system can also help to avoid negative behavior by plans, such as risk avoidance.
Dr. Kronick discussed criteria for assessing alternative
health-based payment systems, including:
- Ease of implementation.
- Resistance to gaming.
- Incentives for efficiency.
- Accuracy of payments.
- Clinical coherence.
He then assessed different risk adjustment methods or factors against these criteria, including:
- Demographic variables.
- Health status measures.
- Prior expenditure levels
Dr. Kronick concluded by describing several diagnostic classification
systems, including the Disability Payment System (DPS) that he was involved in developing, and discussing the current
status of the use of health-based payment systems across the States.
Kronick R, Dreyfus T, Lee L, Zhou Z. Diagnostic Risk Adjustment for Medicaid:
The Disability Payment System. Health Care Financing Review 17(3): 7-33.
Kronick R, Dreyfus T. The Challenge of Risk Adjustment for People with Disabilities: Health-Based
Payment for Medicaid Programs. A Guide for State Medicaid Programs, Providers and Consumers. (October 1997):i-v.
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