Transcript Disparities in Treated Prevalence among Medicaid

ECONOMIC EVALUATION IN HEALTH CARE
Mihail Samnaliev, PhD
Senior Health Economist
Boston Children's Hospital
_______________
The speaker for this session has reported NO FINANCIAL RELATIONSHIPS with a
commercial entity producing healthcare-related products and/or services
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ECONOMIC EVALUATION IN HEALTH CARE
Lecture 1: Principles of health economic evaluations
(02/12/2013 2-3pm Karp 7)
Lecture 2: Cost-effectiveness analysis (02/19/2013 23pm Karp 7)
Lecture 3: Planning evaluations, data collection and
analysis, examples
(02/26/2013 2-3pm Karp 7)
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Outline
Lecture 1: Principles of health economic evaluations

Background and goals

Overview of economic evaluation methods

Guidelines and expectations
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4
Health outcomes vs. spending
GOAL
EFFICIENCY
Welfare theory: maximize individual utility from limited resources
Extra-welfarism: Maximize health gains from limited resources
How to improve efficiency?
A new intervention leads to:
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Lower costs without a change in quality/outcomes
Improved outcomes without additional costs
Lower costs, better outcomes
Increased costs and improved outcomes ? (assuming favorable tradeoff)
Poorer health outcomes but (significantly) lower costs ?
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How economic evaluations benefit your research
1. New perspective: addresses different questions, e.g.,
 Is the intervention affordable?
 What is its net economic benefit to society?
 Informs health policy
 Can be viewed as an extension of clinical research studies
2. Helps with extending / new funding
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E.g., can increase Significance and Innovation (NIH)
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Example 1: Economic evaluations in grant proposals
Aim 1: Determine the comparative effectiveness of XYZ smoking
interventions
Aim 2: Estimate the cost and the cost-effectiveness of the interventions.
 Hypothesis – The intervention will be less expensive and more
effective compared to current practice.
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Affordable?
Good value for money?
Informs health policies
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Example: 2 Preventing early childhood caries
Clinical evaluation:
Goals: To evaluate oral health outcomes: Does the intervention work?
Conclusion: “A risk based disease management approach …associated
with lower rates of new cavitation and with reduced pain” (Ng et al. 2012
HCPU)
Economic evaluation:
Rationale: “As health care costs continue to rise, economic evaluations
are increasingly used to inform health policy and treatment decisions.
Further, payers are often reluctant to reimburse new effective models of
care unless there is evidence of economic impact /affordability…. “
Goal: To assess its cost-effectiveness; What is its economic value to
society?
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3. Payers requirements
• Efficacy/effectiveness ≠ reimbursement
• Payers want to know if
• Intervention reduces overall costs, or
• Increases costs : by how much?
• Cost : Value
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Summary
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Economic evaluations inform resource allocation decisions
made by:
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Governments
Payers: Medicare, Medicaid and private payers
Providers (e.g. to optimize care within BCH)
The research community
Can complement clinical research to test new hypotheses
Efficiency: optimal distribution of LIMITED resources to
maximize societal welfare /health gains
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2013 MA State budget, Source: www.mass.gov
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Outline

Background and goals

Overview of economic evaluation methods

Guidelines and expectations
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Types of economic evaluations
• Cost analysis
• Cost-benefit analysis (CBA)
• Cost-effectiveness analysis (CEA)
• Cost-utility analysis (CUA) measures cost/QALY)
• Cost-consequence analysis (CCA)
Other
• Budget impact analysis (BIA)
Cost analysis
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As a first step in a full economic evaluation
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As a stand alone evaluation
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To estimate the cost of illness
To estimate cost offsets (does intervention ‘pay for itself’ and over
what period of time?)
Cost analysis
• To compare alternative interventions
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Caution: a partial evaluation; it does not include benefits, and
may not be able to address the question of economic efficiency
Cost-minimization (usually) not considered good practice
(e.g. Brigs and O’Brien 2001. The Death of Cost-minimization
analysis”: “we pronounce the (near) death of CMA …” and
subsequent articles)
Instead, joint estimation of costs and outcomes
Cost comparisons need to be justified
Cost-Benefit Analysis (CBA)
• Costs and benefits are monetized
n
B   Bt(1  i)
t 1
t
n
C   Ct (1  i ) t
t 1
t=time (1 to n years), i= discount rate (e.g. 3%)
• Net present value (NPV) = B – C (needs to be positive)
• Ratio B:C (preferred ; independent of scale of
intervention; choose highest B/C among alternatives)
When is CBA appropriate?
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Has a broad scope; typically conducted from a societal
perspective
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Especially relevant when there are expected external
benefits/costs of an intervention
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Within or outside the health care system
Often aims to inform government decision makers
(helps evaluate overall impact on society and design
policies that improve social welfare)
Example: CBA of substance abuse treatment
Costs
Benefits
Medication costs
Counseling
Case managers
Patient co-pays
Prevented hospitalizations/ED
Savings from reduced Tx of co-morbidities
Increased employment & productivity
Reduced road accidents
Reduced criminal justice costs
Reduced informal care giving time
Reduced mortality
Benefits to family members
Example: Ettner SL. Benefit-cost in the California treatment outcome project: does substance abuse
treatment "pay for itself"? Health services research 2006 Apr;41(2):613
Total Cost = $1,583
Total Benefits = $11,487
Two limitations of CBA
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Methodologically difficult to accurately value /monetize
some benefits, e.g.
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What is the value of reduced pain?
What is the value of a symptom free day (patients with asthma)?
What is the value of an additional life year gained?
Valuing life is often considered unethical
3. Cost-effectiveness analysis (CEA)
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Effects are not monetized
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Incremental cost-effectiveness ratio (ICER)
Costnewstrategy  Costcurrentpra ctice
Enewstrategy  Ecurrentpra ctce
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ICER = the cost of an additional unit of effectiveness, e.g.:
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Cost per symptom free day (asthma interventions)
Cost per (quality –adjusted) life year ( cost-utility analysis, CUA)
4.Cost-consequence analysis (CCA)
“Most commonly cost-effectiveness ratios (CERs) are used to indicate
value; however, incremental cost-effectiveness is rarely used to inform
decisions about health services in the United States’ “ (Russell et al.
1996)
“The cost-consequence format is more likely to be approachable, readily
understandable and applied by healthcare decision-makers than a
simple CER” (Mauskopf 1998)
4.Cost-consequence analysis (CCA)
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Costs and outcomes are presented separately
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Not linked in a ratio (as in CBA, CEA)
+ More transparent;
+ Gives users confidence in the results
+ Decision makers can consider/weigh each outcome separately
depending on its perceived importance
- No criteria for when an intervention should be adopted
Drug A
Units
Costs
Drug B
Units
Costs
Direct medical care use/costs
Drug A/B
Other drugs
Physician visits
Hospital stays
Other medical care (e.g. dialysis)
Direct nonmedical care use/costs
Transportation
Crutches and other equipment
Paid caregiver time
Indirect resource use/costs
Time missed from work for patient
Time missed from other activities
Time missed from other activities for
unpaid caregiver
Total direct and indirect costs
Symptom impact
Patient distress days
Patient disability days
Quality-of-life impact
Quality-adjusted life-years decrement
Quality-of-life profile measure scores
Source: Josephine A. Mauskopf, John E. Paul,David M. Grant and Andy Stergachis. The Role of Cost-Consequence
Analysis in Healthcare Decision Making. Pharmacoeconomics 1998 Mar; 13 (3): 277-288
5. Budget Impact Analysis
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Payer: Intervention A is cost-effective, but can we pay for it?
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Increasingly used for budgeting purposes
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E.g., to estimate financial impact among all beneficiaries with
a disease over a 1 year period
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Additional costs
Cost offsets (e.g. from improved health)
Results may be driven by a change in per-person costs and number
of people receiving treatment
5. Budget Impact Analysis
Comparison of economic evaluation and budget impact analysis
Economic Evaluation
Budget Impact Analysis
Question
addressed
Is it good value for money?
Is it affordable?
Goal
Efficiency of alternatives
Plan for financial impact
Health outcomes Included
Excluded
Measure
Added cost per unit of benefit
or outcome
Total expenditure ($)
Time horizon
Usually longer term (may be
lifetime)
Usually short (1 to 5
years)
Source: Guidelines for the economic evaluation of health technologies: Canada [3rd
Edition]. Ottawa: Canadian Agency for Drugs and Technologies in Health; 2006
Summary of (most common) economic evaluations
Type
Costs Outcomes
Cost
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CEA
√
√ (Not monetized)
ICER
CBA
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√ (Monetized)
Benefits/Costs
CCA
√
√ (Not monetized)
Presented separately
BIA
√
How about
CER ?
Costs vs. outcomes
√ (not monetized clinical
outcomes)
CEA=cost-effectiveness analysis, CBA=cost-benefit analysis, CCA=cost-consequence analysis;
CER= comparative effectiveness research; ICER= incremental cost-effectiveness ratio;
Outline
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Background and goals
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Overview of economic evaluation methods
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Guidelines and (decision makers’) expectations
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Guidelines for the conduct of economic evaluations
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UK , Canada (well defined and with influence in the US)
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USA
UK
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The National Institute for Health and Clinical Excellence (NICE) provides
guidance to the NHS in England and Wales on the clinical and cost
effectiveness of selected new and established technologies.
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National Institute for Health and Clinical Excellence (NICE)
“Guide to the methods of technology appraisal”:
• Requires the use of CUA
• Cost per QALY
• Very specific recommendations for how to measure costs and QALYs
• HT are reimbursed if Cost / QALY below pre-specified threshold (e.g.
£30,000 per QALY)
http://www.nice.org.uk/media/b52/a7/tamethodsguideupdatedjune2008.pdf
UK’s National Institute for Health and Clinical Excellence (NICE)
“Guide to the methods of technology appraisal”
“For the reference case, cost-effectiveness (specifically cost–utility)
analysis is the preferred form of economic evaluation. This seeks to
establish whether differences in costs between options can be justified
in terms of changes in health effects. Health effects should be
expressed in terms of QALYs.
The focus on cost-effectiveness analysis is justified by the more
extensive use and publication of these methods compared with cost–
benefit analysis and the focus of the Institute on maximising health
gains from a fixed NHS/PSS budget. Given its widespread use, the
QALY is considered to be the most appropriate generic measure of
health benefit that reflects both mortality and HRQL effects.
“Guidelines for the economic evaluation of health technologies:
Canada [3rd Edition]. Ottawa: Canadian Agency for Drugs and
Technologies in Health; 2006.”
2.2.3. Use a cost-utility analysis (CUA) as the Reference Case where
meaningful differences in health-related quality of life (HRQL) between the
intervention and comparators have been demonstrated.
2.2.4. Use a cost-effectiveness analysis (CEA) as the Reference Case when
a CUA is an inappropriate choice. Use a final outcome (e.g., life-years
gained), or if that is impossible, an important patient outcome. Only use a
surrogate outcome if it has a well established link (i.e., validated) with one of
those outcomes….”
“Guidelines for the Economic Evaluation of Health Technologies:
Canada” (continued)
2.2.5. A cost-minimization analysis (CMA) is appropriate as the Reference
Case when the evidence shows that the important patient outcomes of the
intervention and comparators are essentially equivalent. Provide justification
for conducting a CMA. (Note: slides above)
2.2.6. A cost-benefit analysis (CBA) may be useful in some situations, but
generally, it should be considered as a secondary analysis. Explain all the
steps taken to convert outcomes into monetary values, and analyze key
assumptions using a sensitivity analysis.
2.2.7. A cost-consequence analysis (CCA) is generally not expected to be
used as the Reference Case, unless a CEA or a CUA are inappropriate to
use. To enhance reporting transparency, use a CCA as an intermediate step
in reporting the other types of economic evaluations.
US
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The AMCP Format for Formulary Submissions Version 3.0
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WellPoint, Health Technology Assessment Guidelines: Drug
Submission Guidelines for New Products, New Indications, and New
Formulations (Updated September 2008)
Other useful references (not discusses) include:
 Curtis, P., Gordon, C., Slaughter-Mason, S., & Thielke, A. (2012).
Washington State Health Technology Assessment Program:
Stakeholder engagement project. Portland, OR: Center for Evidencebased Policy, Oregon Health & Science University
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FDA: Guidance for Industry Patient-Reported Outcome Measures:
Use in Medical Product Development to Support Labeling Claims
The AMCP Format
1.1. CLINICAL BENEFITS
1.2 ECONOMIC BENEFITS: Summarize the economic benefits of the
PROPOSED THERAPY, in terms of:
 Cost per unit
 Context of the proposed cost: potential clinical benefits provided
(including quality of life benefits) and potential economic benefits
(including savings or cost offsets)
 Shortcomings of other therapies
Briefly present results of any observational research or economic data,
with inclusion of the PMPM or ICER result at minimum. Briefly summarize
other published information on the cost or economic impact of the product
(such as impact of resource utilization or other cost offsets).
WELL POINT
“In order to better support WP’s formulary decisions, manufacturers
should demonstrate should demonstrate the following:
1) The potential for medical cost offsets following formulary listing of their
product. This should be expressed in terms of the total direct costs of care
and the impact in per member per year costs.
2) The potential productivity impacts of introducing patients to the new
product, where appropriate.
3) The impact on patient reported outcomes, including patient satisfaction
as well as quality of life. Where appropriate, health outcomes should be
expressed in terms of cost per QALY.”
US: Expectations
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Research
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NIH: CEA, sometimes CBA
Health Policy/economics /services research journals: CEA, CBA
Clinical journals increasingly publish CEA
Funding source
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NIH: CEA, CBA, other economic impacts
CMS: currently focus on cost containment
PCORI: comparative effectiveness research, cost evaluations
Private payers: varies across payers (clinical benefits, BIA,
sometimes CEA)
Summary
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Maximize health utility /health gains from limited resources
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Several tools (types of economic evaluations) can be used
but in principle they all aim to increase economic efficiency
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Full economic evaluations are well grounded in economic
theory though they may not always be requested/ used by
decision makers
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The actual evaluation method may depend on the decision
maker’s expectations, data availability and resource/time
constraints