Ellis, Randall P.Pope, Gregory C.Iezzoni, Lisa I.Ayanian, John Z.Bates, David W.Burstin, HelenAsh, Arlene S.2018-02-072018-02-071996RP Ellis, GC Pope, L Iezzoni, JZ Ayanian, DW Bates, H Burstin, AS Ash. 1996. "Diagnosis-based risk adjustment for Medicare capitation payments.." Health Care Financ Rev, Volume 17, Issue 3, pp. 101 - 128.0195-8631https://hdl.handle.net/2144/26892Using 1991-92 data for a 5-percent Medicare sample, we develop, estimate, and evaluate risk-adjustment models that utilize diagnostic information from both inpatient and ambulatory claims to adjust payments for aged and disabled Medicare enrollees. Hierarchical coexisting conditions (HCC) models achieve greater explanatory power than diagnostic cost group (DCG) models by taking account of multiple coexisting medical conditions. Prospective models predict average costs of individuals with chronic conditions nearly as well as concurrent models. All models predict medical costs far more accurately than the current health maintenance organization (HMO) payment formula.101 - 128This article is in the public domain and may be reproduced or copied without permission; however, citation to source is appreciated.Science & technologyLife sciences & biomedicineHealth care sciences & servicesHealth policy & servicesHospitalizationCapitation feeDiagnosis-related groupsDisability evaluationDisabled personsFemaleHealth care costsHealth maintenance organizationsHumansMaleMedicaidMedicareModels, economicRate setting and reviewRegression analysisRisk managementUnited StatesHumansArticle