PS R&D presentation: 25-05-05 Risk-bearing page 1 Risk-bearing in the Dutch health insurance...

R&D presentation: 25-05-05Risk-bearing

page 1

Risk-bearingin the Dutch health insurance

Risk-bearingin the Dutch health insurance

Department of R&DAGIS Health Insurances

Arnold van der LeeHead of Research

Department of R&DAGIS Health Insurances

Arnold van der LeeHead of Research


page 2

Market share of AGIS •AGIS Sickness funds: 1.4 miljon insured

•AGIS private insurance: 0.2 miljon insured

• Inhabitants: 16 miljon

1. AGIS Health Insurances, R&D


page 3

Department of Research• Information and analyses of:

the insured persons, claims and insurance products not of the organizational costs

• cost containment analyses• health insurance financing system, risk-bearing• premium system, actuarial reserves• health care research

2 senior researcher

s

2 senior researcher

s

1. AGIS Health Insurances, R&D


page 4

2. Presentation

• The risk-bearing in the dutch health insurance

• Are the main purposes of the financing system met?

• Spin-off for contracting of care, pay for performance

Presentation: subjects


page 5

The main purposes of the financing system are:Stimulation of insurers to:• contract efficient providers• listen to the needs and wishes of the insurees

• insurees have equal access to good and affordable health insurance,

• level playing field for health insurance companies,

Important conditions are:

3. Financing system: risk-bearing


page 6

No charityNo charity


page 7


Goal government:• Only competition based on quality and

price of contracted care

Therefore there are strong restrictions on the insurers:

• Accept everybody• one package• one flat rate premium per insurer

Goal government:• Only competition based on quality and

price of contracted care

Therefore there are strong restrictions on the insurers:

• Accept everybody• one package• one flat rate premium per insurer


page 8

Therefore insurers need to be compensated for cost differences that they can’t influence, especially those caused by health status differences

• static dimension (compensate for existing losses and profits)

• dynamic dimension (also for future ones that will come because of the mobility of insurees)

Therefore insurers need to be compensated for cost differences that they can’t influence, especially those caused by health status differences

• static dimension (compensate for existing losses and profits)

• dynamic dimension (also for future ones that will come because of the mobility of insurees)

Because of the restriction to one flat rate premium: groups with predictable losses and profitsBecause of the restriction to one flat rate premium: groups with predictable losses and profits



Insured

Central Fund

Insurance company

Income-related premium

Risk adjusted capitation payments and risk sharing

Flat-rate premium

88 %

12 %


Standard insurance 50 %


page 10

Risk adjusted capitation payments and risk sharing

At the individual level:• part 1: capitation payments• part 2: high risk compensation

At the sickness fund level:• part 3: risk sharing



Part 1: Capitation paymentsPart 1: Capitation payments• Ideally, capitation payments should reflect cost

differences resulting from health status differences

• However, health status differences are measured only indirectly by:• age and gender• region and employment status

and more directly by:

• Farmacy and diagnostic cost groups

• Ideally, capitation payments should reflect cost differences resulting from health status differences

• However, health status differences are measured only indirectly by:• age and gender• region and employment status

and more directly by:

• Farmacy and diagnostic cost groups



• male, 20-24 years of age € 253employed, rural area

- € 25total payment: € 228

• male, 60-64 years of age € 954disabled, urban area + € 385total payment: € 1.339

Part 1: Capitation payments (2000)Part 1: Capitation payments (2000)



page 13

Pharmacy Costs Groups (PCG)

228 700

2.900

12.900

10.200

• Male, 20-24 years

• employed

• rural area

1 = € 1




page 14

PCG groepen: (ex-ante 2003)

national per insuree

no PCG 89,42% -260

cara 2,69% 926epilepsy 0,44% 1.187heart diseases 2,25% 2.014diseases of the stomach3,47% 2.363cancer 0,01% 11.305HIV/AIDS 0,04% 13.011




Step 2: High Risk Compensation Step 2: High Risk Compensation

• Risk-adjusters are not sufficient to reach the goal of the payment system

• Add: High risk sharing at the individual level

• Costs above € 12.500 threshold are risk-shared (for 90%)

• Risk-adjusters are not sufficient to reach the goal of the payment system

• Add: High risk sharing at the individual level

• Costs above € 12.500 threshold are risk-shared (for 90%)



Step 3: Risk sharing Step 3: Risk sharing

• Remaining distributional flaws are risk-shared at the aggregate sickness fund level

• Reduces incentives for both selection and efficiency

• Ministry of Health goal:– Maximum amount of risk for insurers– Minimum size of risk sharing

• Remaining distributional flaws are risk-shared at the aggregate sickness fund level

• Reduces incentives for both selection and efficiency

• Ministry of Health goal:– Maximum amount of risk for insurers– Minimum size of risk sharing



• What determines the amount of risk sharing?

• Theory: preferences of regulator with regard to selection and efficiency (PhD dissertation Erik van Barneveld)

• Practice: effects at level of sickness funds (agreement sickness funds and regulator)

• What determines the amount of risk sharing?

• Theory: preferences of regulator with regard to selection and efficiency (PhD dissertation Erik van Barneveld)

• Practice: effects at level of sickness funds (agreement sickness funds and regulator)




Restrictions at the sickness fund level determine the size of the risk sharing pool:Restrictions at the sickness fund level determine the size of the risk sharing pool:

•Band width given capitation payments•Band width given capitation payments

•Band width after risk sharing

[ ]criteria

•Band width after risk sharing

[ ]criteria




The amount of insurance risk has increased as a consequence of lower risk sharing:1990: 0%

1995: 3%

2000: 40%

2003: 43%

2005: near 50%, goal government 70% in 20??




• Ministry of Health wants to control costs

therefore

• Health insurers must contain costs

• Incentive for insurers: win or loose insured

• Ministry of Health wants to control costs

therefore

• Health insurers must contain costs

• Incentive for insurers: win or loose insured

Step 3: Risk sharing and relation with cost containment Step 3: Risk sharing and relation with cost containment



Are there instruments to contain costs?Are there instruments to contain costs?• In the past the sickness funds had no instruments to

contain costs

• differences in costs per insured are not related to differences in efficiency

• more risk can only be introduced with more instruments for sickness funds to contain costs

• some are introduced with the new standard insurance

• In the past the sickness funds had no instruments to contain costs

• differences in costs per insured are not related to differences in efficiency

• more risk can only be introduced with more instruments for sickness funds to contain costs

• some are introduced with the new standard insurance




page 22

Means of transport as seen by governmentMeans of transport as seen by government

How do we get there?How do we get there?


page 23

Means of transport as seen by insurersMeans of transport as seen by insurers

How do we get there?How do we get there?


What are the options of the sickness fund?What are the options of the sickness fund?

• Stimulation of efficient health care (positive effect)

• Mitigation of inefficient health care (positive effect)

• Cream skimming/quality skimping (negative effect)

• Stimulation of efficient health care (positive effect)

• Mitigation of inefficient health care (positive effect)

• Cream skimming/quality skimping (negative effect)




system requirements:system requirements:

• Maximizes incentives for cost containment

• minimize incentives for cream skimming

• fair compensation of the unequal distribution of risks

• Maximizes incentives for cost containment

• minimize incentives for cream skimming

• fair compensation of the unequal distribution of risks




Committee on enhancement of capitation model (WOR)

• Ministry of Health (chairman)• Health Insurance Council (CVZ) • Branch Organization (ZN) • Participation Health Care Insurers (a.o. AGIS) • Research institutes

Committee on enhancement of capitation model (WOR)

• Ministry of Health (chairman)• Health Insurance Council (CVZ) • Branch Organization (ZN) • Participation Health Care Insurers (a.o. AGIS) • Research institutes

Consensus model, technical approachConsensus model, technical approach

4. Development of the financing system


page 27

Development of the system: approach of AGIS

• participation in branche organisation at policy and technical levels

• participation in committee of Ministry of Health

• cooperation with expert group of prof. Van de Ven: PhD research project by Piet Stam: optimizing sick fund budget

• research projects e.g. results per region



page 28


• Before 1989 sickness funds were administrative organisations which executed the rules and regulations. They were fully compensated for all the claims they paid.

• In 1989 the first step to a new system was taken. The insured had to pay a flat-rate premium themselves.

• Yearly new elements were introduced and the risk-bearing for insurers increased

from administration to risk-bearing


page 29

System Changes:

• competition, • client orientation• free choice of “sickness funds”• insured may change sickfunds every year and

have to be accepted• selective contracting of providers• changes in coverage to and from AWBZ /

additonal health insurance• changes in groups that are compulsorily

covered



page 30


• Tremendous changes: “culture shock”

• very dynamic: rapid succession of changes

• unpredictable: changes are introduced and reversed

System Changes:


page 31

New developments:2005: Diagnoses Treatment Combination (DBC),

no-claim2006: system change to one insurance system

(risk-bearing from 9 milion to 16 milion insurees, change of definitions, higher reserves), better compensation for diabetes.

2007: Parts of Mental Health Care included.



page 32

Insurers see warnings and opportunitiesInsurers see warnings and opportunities


page 33

New developments:


• Government wants to increase the risk for insurers to 70%,

• but, the first years there is not enough data to base the capitation payments on,

• therefore less risk-bearing


page 34

The main purposes of the financing system are:Stimulation of insurers to:• contract efficient providers• listen to the needs and wishes of the insurees

• insurees have equal access to good and affordable health insurance,

• level playing field for health insurance companies,

Important conditions are:

5. Are the goals of the financing system met?startsstarts

YesYesBut...But...

StillStillBut...But...

Not yetNot yet


page 35

Problems with level playing field• Amsterdam and The Hague

• acknowledged by members WOR

uncompensated diseases• diabetes better compensation next year• many diseases lack specific medications or hospital

diagnoses for marker

5. Are the goals of the financing system met?


page 36

• Possible ways to react on remaining problems:• Risk-selection (avoiding groups of insurees, be attratice to

certain groups and unattractive to other groups)• Contract efficient care• improve financing model

• Risk-selection denies equal access to health insurance, and on a national level ecoomist tell us it has unwanted effects on the economy

• Agis chooses to help improve the financing model and chooses to contract efficient care

5. Are the goals of the financing system met?


page 37

6. Spin-off for contracting of care

• Knowledge about the risk-bearing is also usefull for contracting models with “pay for performance”.• In “pay for performance” the case-mix of the

population has to taken into account

• it also shows where the cost of care is higher than the national level• indicates where the care might be inefficient


page 38

Te dekken kosten

Effect Verevening/nacalculatie

Effect HKV

Effect FKG totaal

Effect FKG insuline

Effect Regio/rechtsgrond

Effect Lftd/geslacht

Budget obv aantal verzekerden

Door verdeelmodel gedekt

6. Spin-off for contracting of care2006, solved?2006, solved?

Yes?

Than more insurees with diabetes

and better contracting of care

pays off

Yes?

Than more insurees with diabetes

and better contracting of care

pays off


page 39

6. Spin-off for contracting of care

Is this caused by a few patients

with extreme high costs

or by inefficient care?

Is this caused by a few patients

with extreme high costs

or by inefficient care?


page 40

Agis hopes for and helps to get a level playing field Agis hopes for and helps to get a level playing field


page 41

Agis sees nice oppertunities Agis sees nice oppertunities We hope you enjoy Amersfoort We hope you enjoy Amersfoort

PS R&D presentation: 25-05-05 Risk-bearing page 1 Risk-bearing in the Dutch health insurance...

Documents

Transcript of PS R&D presentation: 25-05-05 Risk-bearing page 1 Risk-bearing in the Dutch health insurance...