EPBI 467 Cost-Effectiveness Analysis in Health Care

Cost-Effectiveness Analysis

..while standing on one footMendel E. Singer, PhD MPHAssociate ProfessorDept. of Epidemiology and Biostatisticsmendel@case.edu

1Remember.Cost is not the same as chargesCost is more than just a transfer of money

2Types of CostsMedical CostsOffice visit, lab test, hospitalizationNon-Medical CostsLost time, Lost wages, lost productivity, transportation

3PerspectivePerspectiveWhat costs you include depends on the perspective of the analysis.Patient, Payer, Societal (all costs regardless of who pays)

What is the cost of a Prescription?Cost to Patient?Cost to Insurer?Societal Cost4Measuring CostMicro-costing: Detail every inputTime-motion studiesEvery person involved, how longEquipment used (aging)OverheadGross CostingReimbursement Rates as ProxyMedicareMedicaid3rd Party InsurerSpecific Institutions Estimate5Differential Timing of CostsInflationUsed to adjust old cost estimates to a more recent yearAll cost estimates must be from the same yearBureau of Labor StatisticsMedical Consumer Price IndexMedical ServicesMedical Equipment

6DiscountingDiscounting

Would you rather have $100 now or in 20 years?After adjusting for inflation?

Opportunity Cost what you could have done with the money

This is necessary to compare costs now to those incurred downstream.

Note: discounting is net of inflation i.e. after adjusting for inflation

What is Clinical Decision Analysis?Structured methodology for decision making Map out the different possibilitiesCompares 2 or more treatment strategiesMulti-step strategies that model actual practiceCould also use purely for modeling natural historyReally a simulated longitudinal TrialTreatment for Hepatitis C, get estimates of % progressing to Cirrhosis, Advanced liver disease, Transplant, Liver cancerE.g. what would happen if .Single measure for comparison Can do a series of measures

8Components of Decision AnalysisDefine the study populationIdentify treatment alternativesSelect outcome measureModel course of diseasePopulate model with dataMostly from literatureCost sourcesMedicare reimbursement rate, Cost of drugsClaims data analysisAnalyzeSensitivity analysisUncertainty in the data estimates9Problem DefinitionReference Case60-year old male4 cm abdominal aortic aneurysmOtherwise, patient is in good healthSurgery vs Watchful WaitingTime horizon: 1 yearOutcome Measure: SurvivalAlive = 1Dead = 0

Abdominal Aortic Aneurysm

Reference Case: 60-year old male, 4 cm aneurysm, good health

Strategies: Surgery vs Watchful Waiting

Outcome Measure: Survival at 1 year (alive = 1, dead = 0)

At each node there is a number in a box indicating the mean (average) outcome.At all terminal nodes, it first shows the outcome score associated with that result, and then shows the probability of the path ending in that terminal node.What is Cost-Effectiveness Analysis ?13

Name: Darth Vader, M.D.Interests:Cost-effective health careSpecialty:End of Life Care

14What is Cost-Effectiveness Analysis ?Based on the decision analytic modelNow track both cost and effectiveness

Cost vs. EffectivenessWhats a good deal for the money?

Really a simulated longitudinal TrialTreatment for Hepatitis CGet estimates of % progressing to: Cirrhosis, Advanced liver disease15DA/CEA:MotivationOutcomes Research/Quality AssurancePractice GuidelinesHealth PolicyPharmaceuticals - Justifying new drugsProviders and Insurers Identify research prioritiesDemonstrate need for large trials16Why use DA/CEA?Complexity of decisionsMany potential complicationsInformation overloadStructures the decision processPublished studies too narrowly focusedCustomizableSimulate strategies unable to test in practice17Impediments to Conducting DA/CEAsPoor DataLack of dataWrong dataIncomplete dataFunding Poor federal fundingShort-term focus of HMOs, insurers18Barriers to Acceptance of ResultsWrong comparatorMissing strategiesToo complexWrong populationTimelinessStrings attached (private funding)19Types of Economic EvaluationsCost-MinimizationCost only (assumes equal effectiveness)Cost-Benefit AnalysisValues cost and health in monetary unitsCost-Effectiveness AnalysisObjective measure of effectivenessCost-Utility AnalysisSubjective measure of effectivenessOften the measure is Quality-Adjusted Life Years (QALYs)Years of life are weighted by a utility score that measures patient preferences for a particular state of health. Huh? 20Health State UtilitiesUtility What does the term really mean?Valuation under uncertaintyMeasure of Patient PreferenceScale 0 1, where:1 = Full Health0 = DeathPossible to have negative utility (< death)True Scale same meaning across scale21Examples1.000Full Health0.998Well, Aspirin therapy0.75Mild Stroke with residua0.62Moderate COPD0.00Death

2 years of life with moderate COPD:2 x 0.62 = 1.24 QALYs22Incremental Cost-EffectivenessNever Use Average Cost-effectiveness RatiosWhich do you prefer?1 brand new Rolls Royce for $25 ($25 each)2 brand new Rolls Royces for $100 ($50 each)Always use incremental C-E Ratios(Difference in Cost) / (Difference in Effectiveness)Possible outcomesOne strategy is dominated (cost , effectiveness ), orIs the extra effectiveness worth the extra cost?23CostEffectivenessDrug A$ 10010.00 QALYsSurgery$1,10010.05 QALYsIncremental Cost-Effectiveness Analysis

Cost Effective.ICERDrug A----------------------------Surgery$1,0000.05 QALYs$20,000/QALYIs this intervention cost-effective?24ExampleCostEffectivenessDrug A$ 10010.00 QALYsSurgery$1,10010.05 QALYsIncremental Cost-Effectiveness Analysis

Cost Effective.ICERDrug A----------------------------Surgery$1,0000.05 QALYs$20,000/QALYIs this intervention cost-effective?Standards for Cost-EffectivenessCommon threshold: $50,000 - $100,000/QALY

International studies often use 1 GDP/QALY, though WHO suggests: