Case Mix Adjustment Engine

python
# Hierarchical Condition Category (HCC) Risk Adjustment
hcc_risk_weights = {
    'HCC001': 0.302,  # HIV/AIDS
    'HCC008': 0.331,  # Metastatic Cancer
    'HCC018': 0.318,  # Diabetes with Chronic Complications
    'HCC019': 0.104,  # Diabetes without Complication
    'HCC085': 0.323,  # Congestive Heart Failure
    'HCC096': 0.368,  # Specified Heart Arrhythmias
    'HCC108': 0.191,  # Vascular Disease
    'HCC111': 0.302,  # Chronic Obstructive Pulmonary Disease
    'HCC134': 0.497,  # Dialysis Status (ESRD)
    # ... 86 total HCCs in CMS-HCC V28 model
}

def calculate_case_mix_index(population, claims_history):
    """
    Calculate population-level case mix index using HCC model
    """
    total_risk_score = 0
    
    for member in population:
        # Extract diagnoses from claims history
        diagnoses = extract_diagnoses(claims_history, member.id)
        
        # Map diagnoses to HCCs
        member_hccs = map_diagnoses_to_hccs(diagnoses)
        
        # Calculate member risk score (additive across HCCs)
        member_risk = 1.0  # Baseline healthy member
        for hcc in member_hccs:
            member_risk += hcc_risk_weights[hcc]
        
        total_risk_score += member_risk
    
    # Population Case Mix Index
    case_mix_index = total_risk_score / len(population)
    
    return case_mix_index

def adjust_costs_for_case_mix(actual_costs_pmpm, case_mix_index):
    """
    Normalize costs to a standard case mix of 1.0 (healthy population)
    """
    adjusted_costs = actual_costs_pmpm / case_mix_index
    
    return {
        'actual_pmpm': actual_costs_pmpm,
        'case_mix_index': case_mix_index,
        'adjusted_pmpm': adjusted_costs,
        'disease_burden_impact': (case_mix_index - 1.0) * 100
    }

# Example: Two Employers
# Employer A (Tech Startup):
#   - Actual PMPM: $950
#   - Case Mix Index: 0.88 (healthier than average)
#   - Adjusted PMPM: $1,080 ($950 / 0.88)
#
# Employer B (Manufacturing):
#   - Actual PMPM: $1,200
#   - Case Mix Index: 1.22 (22% sicker than average)
#   - Adjusted PMPM: $984 ($1,200 / 1.22)
#
# Conclusion: Manufacturing is actually MORE cost-efficient 
# when adjusted for their higher disease burden