Member risk adjustment for ambulatory episodes of care

The purpose of this study was to model health-plan member risk based on member characteristics in order to separate member risk from other utilization determinants for the use of health care services across sites of care. The approach was to build episodes of care (EOCs) by sorting one year of encounter/claims data into Common Treatment Categories. These data came from a variety of health plans, both capitated and non-capitated, covering over 2 million lives. The EOCs were characterized by an array of event and intensity measures. Episode-level risk for each of these measures was modeled by regressions based on member demographic and clinical characteristics. The results of this study show that member characteristics explain a substantial amount of event and intensity variation within episodes and that no single performance measure can summarize the care of health plan members. This method for evaluating member risk can be used both to stratify members according to their future risk and potentially to assess provider or health plan performance or to adjust reimbursement for performance or risk selection.