Our system of community rated private health insurance is underpinned by a Risk Equalisation Scheme. Under the scheme, insurers receive risk equalisation and hospital utilisation credits to compensate for the additional cost of insuring older and less healthy members, which are funded by stamp duty levies payable by insurers in respect of each insured life covered.
Risk equalisation credits are paid on the basis of age, gender and type of cover. Since 1 March 2016 the hospital utilisation credits paid to insurers have been expanded to include all day case admissions to hospital, in addition to the existing utilisation credit payable for all overnight stays. This enhancement to the scheme increases the support provided for less healthy people of all ages. It also supports the provision of clinically appropriate treatment on a day case basis.
I support in principle the introduction of a refined health status measure for risk equalisation based on diagnosis-related groups (DRGs). The introduction of a DRG-based health status measure will target support more accurately in respect of less healthy insured members of all ages and will facilitate a better understanding of the extent to which differences in claims costs between insurers are driven by differences in the underlying risk profile of their members. Both consumers and efficient insurers will benefit from a more robust system of risk equalisation. In 2014 the Health Insurance Authority prepared a report which set out the necessary steps, time frames and additional resource requirements for incorporating DRGs into the Risk Equalisation Scheme. My Department will publish a redacted version of the report on its website this week.
A key requirement is collection of and access to the necessary data from both public and private hospitals. A DRG system has been operational in Irish public hospitals for over 20 years which groups all inpatient and daycase activity for each hospital into DRGs which are clinically similar and require similar health resources. Using DRG data for risk equalisation will require the collection and coding of all hospital activity data for both public and private hospitals under the Hospital Inpatient Enquiry (HIPE) system overseen by the Healthcare Pricing Office (HPO) of the HSE. In April 2015 my Department asked insurers to submit proposals on how best to progress this matter and to encourage private hospitals to begin collecting this data.
As part of the Government’s Health Reform Program one of the priorities for my Department and the HSE (including the HPO) is the roll out of Activity Based Funding (ABF) in line with the Government’s policy and the ABF Implementation Plan 2015-2017. This entails switching to ABF funding for inpatients and daycases for public patients in public hospitals and the development of a classification system for outpatients. As indicated in the Plan, the roll out of ABF will take a number of years to implement. The use of HIPE in relation to other policy developments will have to be considered in light of resources available and the priorities I have outlined in relation to the ABF Program.
