Predicting Healthcare Costs in a Population of Veterans Affairs Beneficiaries Using Diagnosis-Based Risk Adjustment and Self-Reported Health Status

BACKGROUND: Many healthcare organizations use diagnosis-based risk adjustment systems for predicting costs. Health self-report may add information not contained in a diagnosis-based system but is subject to incomplete response. OBJECTIVE: The objective of this study was to evaluate the added predictive power of health self-report in combination with a diagnosis-based risk adjustment system in concurrent and prospective models of healthcare cost. RESEARCH DESIGN: This was a cohort study using Department of Veterans Affairs (VA) administrative databases. We tested the predictive ability of the Adjusted Clinical Group (ACG) methodology and the added value of SF-36V (short form functional status for veterans) results. Linear regression models were compared using R(2), mean absolute prediction error (MAPE), and predictive ratio. SUBJECTS: Subjects were 35,337 VA beneficiaries at 8 VA medical centers during fiscal year (FY) 1998 who voluntarily completed an SF-36V survey. MEASURES: Outcomes were total FY 1998 and FY 1999 cost. Demographics and ACG-based Adjusted Diagnostic Groups (ADGs) with and without 8 SF-36V multiitem scales and the Physical Component Score and Mental Component Score were compared. RESULTS: The survey response rate was 45%. Adding the 8 scales to ADGs and demographics increased the crossvalidated R by 0.007 in the prospective model. The 8 scales reduced the MAPE by 236 US dollars among patients in the upper 10% of FY 1999 cost. CONCLUSIONS: The limited added predictive power of health self-report to a diagnosis-based risk adjustment system should be weighed against the cost of collecting these data. Adding health self-report data may increase predictive accuracy in high-cost patients.