GC650 Lecture 2 - Cost Data and Measuring Cost

Health economic analysis is supported by (5)

1. Health Services and Outcomes Research

2. Survey Research

3. Clinical Research

4. Epidemiology and Pharmacoepidemiology

5. Preference Research

Types of Cost (3)

1. Direct Costs - healthcare/medical, non-medical other

2. Indirect Costs - productivity, transportation, child care

3. Intangible - Pain/suffering

Types of Cost Data (2)

1. Retrospective (Claims, EHRs, chart reviews, surveys)

2. Prospective (RCTs, surveys, Time and Motion)

Types of Resources Consumed for Cost (5)

1. Hospital Days (per diem, service/procedural costs)

2. Staff time and benefits

3. Office visits

4. Outpatient Medical Supplies

5. Outpatient pharmacy

Where to get cost data (3)

1. Public resources

2. Previously published data

3. Generated yourself

Retrospective Data - What cost are we measuring?

Actual cost not documented, most US based studies use reimbursed amount

Data Aggregator Workflow (Komodo and TriNetX) (4)

1. Data from medical records and clinical trials is aggregated

2. De-ID Process to anonymize

3. Data is linked to Encrypted User Tokens, treatments linked to individual “Tokens”

4. Maps changes in healthcare utilization, patient journey mapping

Major approaches for measuring cost (2)

1. Total incremental cost

2. Micro-costing

Total Costs and Total Incremental Costs

Involves calculating all healthcare costs for a

patient with condition or treatment X and

subtracting the costs for patients WITHOUT

condition or treatment X

Requires high quality “match” between cases and

controls

Micro-Costing

All care specifically related to the care for a given disease, requires knowledge about coding, all services, all medications

Can be retrospective with claims, prospective with observation or survey

Sentinel Initiative

FDA resource, has a repository of codes and validated algorithms for many conditions, adverse events and outcomes

How can we account for the difference between Total Incremental Cost and Microcosting?

Total incremental costs includes all healthcare for the patient population of interest, while microcosting typically only includes care for the specific condition of interest

Data from Provider Surveys (3)

1. Estimate time spent on activities

2. Record number & type of staff involved

3. Estimate percent of patients with various characteristics

Data from Patient Surveys (2)

1. Estimate time spent on and costs of (such as transportation, waiting, childcare)

2. Estimate out of pocket expenses

National Health and Wellness Survey (NHWS)

Large nationwide survey for health data

Prospective Sources - What is Cost?

Typically collect Resource Utilization, need to apply a dollar amount

Ways to Apply a Dollar Amount to Prospective Utilization Data (3)

1. Cost reports for hospital data (cost-charge ratio)

2. Hourly rates for staff time

3. Medicare reimbursement rates

Prospective data collection methods (3)

1. RCTs

2. Time and Motion

3. Surveys

RCTs Advantages (3)

1. High internal validity for efficacy

2. Links measurement of the health outcome with the cost

3. Accurate

RCTs Disadvantages (5)

1. Not generalizable

2. May capture protocol driven costs

3. Time frame is typically short

4. Expensive to collect cost data, and not the primary focus

5. Typically not powered to examine differences in cost between treatment arms

Time and Motion Studies

To determine how much time different staff members spend on different tasks related to a disease/condition or treatment

Convert time to human resource costs

Statistical Analysis of Costs (4)

1. Ordinary least squares (linear regression) is not appropriate, cost data not normally distributed

2. Matching cases and controls

3. Censoring is an issue (patient dropout or death), costs are highest right before death

4. Advanced techniques exist but are not widely used, require a statistician

Adjusting Costs for Inflation

Most of the time we do not find costs from the time frame we wish to model, so we adjust costs using the Consumer Price Index Inflation Calculator

Measurement Considerations (Covered in Pharmacoepidemiology) (7)

1. Accuracy of diagnoses

2. Length of follow-up and ascertaining cause of loss to follow-up

3. Population identification

4. Treatment identification

5. Adherence

6. Outcome ascertainment

7. Period of Observation

Incidence Costs

Beginning with new diagnosis or new treatment, often best approach for generating cost inputs for an economic model

Prevalence Costs

Snapshot in time, captures people at different time points in their disease state or treatment process, often most relevant to a health plan/payer

Considerations in Assessing Costs (4)

1. Time Frame

2. Clinical Efficiency

3. Price Changes

4. Choice of Comparator

Consumer Price Index (CPI)

Measures the average change in prices paid by consumers over time for a “basket” of goods and services, measures inflation and allows for comparability of previously collected price data with today’s prices