CMA/Cost Determination Flashcards
1
Q
Costs + Economic Evaluation
A
- Should be current estimates
- Also used for estimates of future years: inflation NOT considered
2
Q
Historical Cost Information - Standardized
A
- As economy increases, monetary value tends to decrease
- To insure valuations are consistent, historical costs are adjusted to current costs
- Costs collects >1 year prior to the current time need to be adjusted to the current value
- CPI used to estimate inflation rate: published by Bureau of Labor and Statistics
3
Q
Retrospective Costs - Standardized
A
- Use Annual Average Index
- Compare CPI for two years and get a ratio
- Current year cost = Past Year Cost * (1 + Ratio)
4
Q
Alternative Method
A
- Uses annual rate of inflation
- Average annual inflation rate~=2.88%
- Current year costs = Past Year Cost * (1+Average Inflation Rate)^(# of years)
5
Q
Historical Adjustment Formula
A
- Convert historical costs into present value
- Present value = Historical Costs * (1+r)^(# of years after estimated year)
- r: Discounted rate
6
Q
Future Estimated Costs - Discounting
A
- Time preference: humans tend to place decreased value on future event compared to near/present events
- Opportunity cost: forego using resources for other ventures
- Catastrophic Risk (future uncertainty)
- Discount rate time preference placed on future expenditures
- Discounting is NOT the same as inflation, all costs should be in real terms prior to discounting
- For medication/health: 3% discount rate is the most cost-effective
- Cost estimates >1 year should be discounted
7
Q
Discounting Formula
A
- Convert future costs to present value
- Present Value = Future Cost * [1/(1+r)^# years after intial year]
- Discount Factor: [1/(1+r)^# years after intial year]
8
Q
Cost Determination
A
- Disease timeline helps identify resources
- Prior: lost work days, less productivity, travel
- During: rent, salary, diagnosis, supplies, treatment, monitoring, intangible costs
- After: adverse effects
9
Q
Identifying Cost
A
- Impact inventory: look at event pathway of your model
- Identify and break down all costs that lead to the overall cost of each event
- Identifying small costs will insure that no costs are are missed, even if not used in the actual analysis
10
Q
Perspective + Costs
A
- Health Care Sector: payer amount and maybe out-of-pocket costs
- Societal: ALL costs
11
Q
Micro-costing
A
- Most precise method
- Identified, measures, and values each resource used and adds them together
- Best used by organizations as opposed to insurers
12
Q
Gross Costing
A
- Average cost
- Used directly observed cost information
- Data can be obtained from single data source; less time consuming but isn’t always available and can miss some costs
- EX: average cost for ED allergic reaction visit, etc.
13
Q
Direct Medical Cost: Pharmacy Products (8)
A
- AAC
- AWP
- WAC Price
- AMP
- ASP
- NADAC
- FSS
- 340B Drug Discount Program
14
Q
AAC
A
- Actual Acquisition Cost
- Paid by pharmacy to wholesaler or direct pirchaser
15
Q
AWP
A
- Average Wholesale Price
- Redbook
- Estimated of price paid by retail pharmacies to wholesale distributors
- Doesn’t represent TRUE cost to pharmacy
16
Q
WAC Price
A
- Wholesaler Acquisition Costs
- Estimate of manufacturer’s “sticker” or “list price” to wholesalers
- Doesn’t include discounts on rebates
- Not TRUE cost to wholesaler
17
Q
AMP
A
- Average Manufacturer Price
- Price manufacturers charge wholesalers or pharmacies after discounts
- More precise estimation of what pharmacies actually pay
- Provided by certain manufacturers
18
Q
ASP
A
- Average Sales Price
- Weighted average sales price for all purchasers
- Net of price adjustments
- Used as basis for reimbursement
19
Q
NADAC
A
- National Average Drug Acquisition Cost
- Monthly survey of outpatient drug acquisition for retail pharmacies
- Used as reference for state Medicaid plans, only published for Medicaid
20
Q
FSS
A
- Federal Supply Schedule
- list price paid by VA and IHS for medications
21
Q
340B Drug Discount Program
A
-Drug pricing program that requires drug manufacturers to provide outpatient drugs at significantly reduced prices to eligible healthcare organizations and covered entities
22
Q
Direct Medical Costs - Rx Recommendations
A
- Use most recent FSS prices
- Use WAC to adjust for discount, estimate industry-wide discount ~27%
- If WAC and FSS are not available, search and use average of investor analysts’ launch price
- If not available, use a drug with similar characteristics and class’s average price as a placeholder
- If all not available or doesn’t exist, conduct analysis using threshold prices only with no base case price
23
Q
Direct Medical Costs - Medical Services
A
- If available and suited to research question - use gross cost data
- If not available, use micro-costing by identifying and quantifying all relevant resources consumed and place monetary value on all of them
- May be diagnosis based
24
Q
Diagnosis Codes
A
- ICD: International Classification for Disease, comprehensive list of every disease and subtype (broad)
- DRG: Diagnosis Related Groups, inpatient classification scheme to incorporate case mix; groups require similar resources (more specific)
25
Q
Medical Data
A
- Medical Expenditures Panel Survey (MEPS)
- Collected by U.S. AHRQ
- Set of large-scale surveys of individuals, families, providers, and employers
- Useful for assessing overall cost of are for patients (including out of pocket costs)
26
Q
Direct Medical Cost - Inpatient Care
A
- Cost per DRG or average for given ICD group - most widely used
- Other methods include cost per diem, cost per diem for specific diagnoses, and micro-costing
27
Q
MEDPAR
A
- Overseem by CMR
- Medicare payments listed by DRGs
- Include Medicare reimbursements, total charges, and covered charged
28
Q
HCUP
A
- Collected by AHRQ
- Hospital data (in and out) and ED units
- Longitudinal HC delivery and patient outcomes data at national, regional, state, and community levels
29
Q
Hospital Charges
A
- Charges - amount that hospital bills patient or payer, NOT what hospital is paid for care
- Subject to market forces in private insurance schemes
- Can be used as costs in national insurance countries
- Medicare data can be used to calculate cost-to-charge ratio to estimate cost to insurance company and patients
30
Q
Hospital Costs - CMS
A
- Cost-to-Charge Ratio = Medicare Reimbursements/Covered Charges
- Cost: CtC Ratio * Charges
- CtC Ratio can be DRG and ICD code specific
31
Q
Hospital Costs - All Payers
A
- HCUP uses information for costs for ALL payers to calculate cost/charge ratios that are used to estimate mean costs
- DRGs specific only
32
Q
CMA
A
- Cost Minimization Analysis
- Measures and compares intervention/treatment delivery costs when outcomes are assumed to be equivalent
- Hypothesis: one is cost-saving
- Focuses on cost difference since outcomes are assumed/found to be the same
33
Q
CMA Assumptions
A
- Benefits/Negatives are the same
- NOT “cost-effective” study
34
Q
CMA Applications
A
- Comparing AB rated generics
- Costs of receiving same medication in different settings (home v.s. hospital)
35
Q
CMA Limitations
A
- Types of applications or interventions may be limited
- Validity is contingent upon assumption of equivalent benefits/outcomes
- Cannot be used when there are important differences in the alternatives
- Tendency for inappropriate use
