Hybrid risk adjustment for pharmaceutical benefits

Abstract

This paper analyses the application of hybrid risk adjustment versus either prospective or concurrent risk adjustment formulae in the context of funding pharmaceutical benefits for the population of an integrated healthcare delivery organisation in Catalonia during years 2002 and 2003. We apply a mixed formula and find that, compared to prospective only models, a hybrid risk adjustment model increases incentives for efficiency in the provision for low risk individuals in health organisations, not only as a whole but also within each internal department, by reducing within-group variation of drug expenditures.