Table 3.

Comparison of Risk Adjustment Methods Targeting Mental Illness Group – Net Compensation by Mutually Exclusive Chronic Condition Groups (in U.S. Dollars, 2011).

Group	Baseline OLS	Data Transformation		Adding RxHCC Risk Adjustors	Constrained Regression		N
	(1)	(2)	(3)	(4)	(5)	(6)
GPSF	92.81	97.85	96.06	94.07	96.96	97.22	1,500,000
Grouped R2	99.34	99.90	99.78	99.62	99.85	99.86	1,500,000
R2	11.38	11.32	11.36	11.39	11.35	11.35	1,500,000
Mental illness only	415	748	581	623	1021	1058	97,746
Multiple chronic conditions, mental illness	−1026	−257	−641	−789	−468	−434	238,482
Multiple chronic conditions, no mental illness	−32	29	−1	−115	−141	−148	266,614
Diabetes only	677	426	552	608	492	481	117,014
Heart disease only	−101	−214	−157	−170	−247	−256	197,196
Cancer only	217	−2	107	162	24	12	106,684
No chronic conditions	273	−56	108	217	80	68	476,664

Notes: Column (1) contains the simplified CMS−HCC Version 21 risk adjustment regression. (2) contains the regression where we intervene to increase spending by 10% for all persons with a mental illness. (3) contains the regression where we intervene to increase spending by 5% for all persons with a mental illness. (4) is the baseline OLS regression with three additional RxHCC risk adjustor indicators. (5) is a constrained regression with a constraint of ${\overline{Y}}_{MH}-35.28={\sum }_j{\beta }_j{\overline{z}}_{j,MH}$ (targeting the average spending for the mental illness group achieved by the data transformation implementation in (2)). (6) is a constrained regression with a constraint of ${\overline{Y}}_{MH}={\sum }_j{\beta }_j{\overline{z}}_{j,MH}$ to achieve zero net compensation for the mental illness group. GPSF, Grouped R² , and R² have a maximum of 100. For GPSF and Grouped R² , the data are partitioned into 6 groups (mental illness (combining “mental illness only” and “multiple chronic conditions, no mental illness”), diabetes only, heart disease only, cancer only, and no chronic conditions). Chronic conditions refer to cancer, diabetes, heart disease, and mental illness, as defined by CCS categories; the groups are mutually exclusive.