Developing Risk Assessment Tools for Large Employers and Testing Risk Adjustment Approaches in Health Care Purchasing

Can purchasers use one of two advanced risk assessment models for determining which health plans are most efficient, for negotiating individually and collectively with plans for better premiums, and for employers offering multiple plans, establishing their contributions to each plan based on the premium for the most efficient plan? The Pacific Business Group on Health (PBGH) 1) tested and refined two different practical methods for assessing the relative risk of enrollees in different companies offering a variety of managed health plans; and 2) applied these methods to several employer members of the PBGH. One method used self-reported health status data and the other used socioeconomic data abstracted from employees personnel files. Testing these risk adjustment tools with large employers provided public and private policymakers with information vital to understanding the implications of using such tools.