Diagnosis based risk adjustment of capitation rates: the case of the national hospital insurance fund (NHIF), Nairobi Kenya

Abstract

This research aimed to provide a wholesome analysis of the claim payment system of the National Hospital Insurance Fund (NHIF) which includes Capitation system and Fee for Service (FFS). Capitation is an amount of money paid in advance to hospitals to cater for the medical needs of each patient, in each period of cover hence in order to be predictive of medical costs must reflect the key risk characteristics that influence the need for medical care. The process of incorporating these factors is lmown as risk adjustment and this paper aimed to carry out such an adjustment for the Kenyan case using demographic factors and diagnostic information alongside development of risk adjusted capitation rates for the NHIF. For the FFS, the research purposed to fit a statistical distribution to· NHIF's randomly occurring claims whose reimbursement is required in full.