Hybrid Risk Adjustment for Pharmaceutical Benefits

This paper analyses the application of hybrid risk adjustment versus either only prospective or only concurrent risk adjustment formulae in the context of funding pharmaceutical benefits for the population of an integrated healthcare delivery organization in Catalonia during years 2002 and 2003. We apply a mixed formula and find that a hybrid risk adjustment model maximizes incentives for efficiency in the provision of low risk individuals by reducing within-group variation of drug expenditures and at the same time eliminates incentives for risk selection for a specific set of high risk individuals through the use of concurrent reimbursement.