Part 6, Chapter 4: Manual Exhibit 6-4-AFederal Disparity Index
The Federal Employees Health Plan Disparity Index (hereinafter “FDI”) is an index comparing Indian Health Service (IHS) funding to the cost of providing medical insurance for American Indian/Alaska Native (AI/AN) users in a mainstream health insurance plan such as the Federal Employees Health Plan (FEHP). The FDI starts with an average benchmark cost for enrollees in the FEHP. Because some characteristics of the IHS AI/AN user population differ from the FEHP enrollees in ways that affect health care costs, industry standard actuarial methods statistically adjust FEHP costs for characteristics found in the AI/AN population. These characteristics include demographic factors (age and sex), geographic variations in medical costs, the size/scale of IHS/Tribal health delivery sites, and the poor health status of the AI/AN population as a whole.
The FDI computation is accomplished in several steps:
Following guidelines specified in law, the IHS uses the FDI results to allocate Indian Health Care Improvement Fund (IHCIF) appropriations to IHS and Federally Recognized Tribal sites. The IHCIF appropriations are intended to reduce the funding deficiencies at IHS and Tribal sites as measured by the FDI ratio. The IHCIF formula is designed to reduce inequitable funding variations among IHS and Tribal sites by allocating more funds to sites with the lowest FDI ratio (greatest funding disparity). Sites scoring above 60 percent receive no new IHCIF funds
The FDI model accounts for important, but not all factors that affect the true costs of providing health care services to AI/ANs. Its value lies in systematic comparisons using industry recognized cost forecasts. The FDI is a statistical index that is valid for groups of AI/ANs served at the 250 IHS and Tribal sites. The FDI is not a valid basis to forecast costs for individual patients.
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