Does a mandatory telemedicine call prior to visiting a physician reduce costs or simply attract good risks?

This paper aims to estimate empirically the efficiency of a Swiss telemedicine service introduced in 2003. We used claims' data gathered by a major Swiss health insurer, over a period of 6 years and involving 160 000 insured adults. In Switzerland, health insurance is mandatory, but everyone has the option of choosing between a managed care plan and a fee-for-service plan. This paper focuses on a conventional fee-for-service plan including a mandatory access to a telemedicine service; the insured are obliged to phone this medical call centre before visiting a physician. This type of plan generates much lower average health expenditures than a conventional insurance plan. Reasons for this may include selection, incentive effects or efficiency. In our sample, about 90% of the difference in health expenditure can be explained by selection and incentive effects. The remaining 10% of savings due to the efficiency of the telemedicine service amount to about SFr 150 per year per insured, of which approximately 60% is saved by the insurer and 40% by the insured. Although the efficiency effect is greater than the cost of the plan, the big winners are the insured who not only save monetary and non-monetary costs but also benefit from reduced premiums.

New approaches to reimbursement schemes based on patient classification systems and their comparison.

We propose reimbursement schemes based on patient classification systems (PCSs) that include adjustments for length of stay (LOS) and exceptional costs and are designed to minimize undesirable effects of economic incentives. In addition, a statistical approach to compare the schemes and the underlying PCSs is proposed, where costs and LOSs for two successive years are used. The first year data provides estimates of the class cost means and the next year's reimbursements which are compared with the second year's costs. This method focuses on the predictive power of a PCS and differs from the usual retrospective analyses based on the proportion of explained variance for single year data. The approach is applied to discharge data of Swiss hospitals where stays are grouped according to five PCSs: All Patient Diagnosis-Related Groups (AP-DRGs), All Patient Refined Diagnosis-Related Groups (APR-DRGs), International Refined Diagnosis-Related Groups (IR-DRGs), Australian Refined Diagnosis-Related Groups (AR-DRGs), and SQLape. When adjusting for LOS and outliers, these systems do not differ substantially in their ability to predict cost of stay. Therefore, increasing the number of classes does not necessarily improve cost predictions. However, the payment of a fixed amount per diem (not exceeding the marginal cost) and correcting the reimbursements for exceptional costs substantially reduces the average discrepancy between costs and reimbursements.

Risk adjustment in Switzerland.

In Switzerland the new law on Health Insurance, effective since 1996, introduced pro competitive changes in the market of sickness funds. The legislator expected high mobility between sickness funds of both healthy and sick insured as open enrolment was introduced with the new law. That is why the risk adjustment scheme, that was already introduced 1993, was limited until 2005. However, consumer mobility remained low and risk selection strategies are still profitable, since risk-adjustment is based only on demographic variables. This paper describes risk adjustment, consumer mobility, risk selection activities of sickness funds and the impact of imperfect risk adjustment on the development of HMO and PPO models. The paper concludes with a description of the current political and scientific discussion in Switzerland.

Risk adjustment and risk selection on the sickness fund insurance market in five European countries.

From the mid-1990s citizens in Belgium, Germany, Israel, the Netherlands and Switzerland have a guaranteed periodic choice among risk-bearing sickness funds, who are responsible for purchasing their care or providing them with medical care. The rationale of this arrangement is to stimulate the sickness funds to improve efficiency in health care production and to respond to consumers' preferences. To achieve solidarity, all five countries have implemented a system of risk-adjusted premium subsidies (or risk equalization across risk groups), along with strict regulation of the consumers' direct premium contribution to their sickness fund. In this article we present a conceptual framework for understanding risk adjustment and comparing the systems in the five countries. We conclude that in the case of imperfect risk adjustment-as is the case in all five countries in the year 2001-the sickness funds have financial incentives for risk selection, which may threaten solidarity, efficiency, quality of care and consumer satisfaction. We expect that without substantial improvements in the risk adjustment formulae, risk selection will increase in all five countries. The issue is particularly serious in Germany and Switzerland. We strongly recommend therefore that policy makers in the five countries give top priority to the improvement of the system of risk adjustment. That would enhance solidarity, cost-control, efficiency and client satisfaction in a system of competing, risk-bearing sickness funds.