Econ Exam 1 Flashcards
Cost-Minimization Analysis (CMA)
compares cost of treatments with equivalent outcomes
Cost-Effectiveness Analysis (CEA)
measures costs in dollars and outcomes in natural health units —it is the most common type
Cost-Utility Analysis (CUA)
measures costs in dollars and outcomes in quality adjusted life year (QALY)
takes patient preference/satisfactions (utilities) into account
a subset of CEA-outcomes in natural health units
Cost-Benefit Analysis (CBA)
compares both costs and benefits in monetary units $
used in wildlife, irrigation and flood control, air quailty
Economics
The study of how individuals and societies choose to allocate scarce resources, why they choose to allocate them that way, and the consequences of those decisions.
Microeconomics
The study of individual decisions
Suppy,demand, elasticity
Macroeconomics
The study of the economy as a whole
-inflation, unemployment -the country
Utility (Satisfaction)
Satisfaction obtained from purchasing a particular good or service
if utility of a good is greater than its cost=BUY
Patient Perspective
Pays for the costs not covered by insurance companies
-copayments, deductibles and any out of pocket costs
Provider Perspective
Pays for the costs of providing products or services
-drugs, hospitalization and lab test
Price
the charge
Cost
the input
ECHO
Economic, Clinical, Humanistic, Outcome
Traditional Cost Category
- Direct Medical Costs
- Direct Non-medical costs
- Indirect costs
- Intangible costs
Direct Medical Costs
most obvious cost to measure
directly related to medical treatment
-diagnostic tests, hospitalization, home infusion, medical visits
ambulance to ER service
buying an OTC cold medicine from a local pharmacy
Direct Non-medical Costs
Cost to the patient that are directly associated with treatment but are not medical in nature
Examples: cost of traveling to and from clinic, food and lodging for out of town treatment, child care services
-gas fee spent on the way to clinic where you receive steroid injections
-you order food while waiting for son to finish chemo
-buying plane ticket to care for moms recovery
-uber fee spent
Indirect Costs
Result from the loss of productivity due to death/illness
Examples: Missing work, or reduced productivity at work due to treatment
-taking a week off from your work to care for ill mom
-come back to work after knee surgery and are slower
Intangible Costs
costs of non-financial outcomes of disease and medial care
examples: nausea from chemotherapy, anxiety during mri scan so take xanax
Consumer price index (CPI)
measure of the average change over time in the prices paid by the consumers
standardization of costs
bringing past costs to the present
CPI as indicator
MULTIPLY (must always add 1 before)
if CPI=4.4%
change to decimal –> 0.044
then add 1 (1+0.044)=1.044
now can multiply the cost by that
discounting of costs
brining future costs to the present
DIVIDE (must always add 1 before)
if Discount rate= 5%
change to decimal –> 0.05
then add 1 (1+0.05)=1.05
now can divide the cost by that
Average Wholesale price (AWP)
list price/sticker price
higher than what pharmacies actually pay for the meds
-redbook-micromedex
wholesale acquisition cost (WAC)
catalog price
sale deals and discounts/rebates NOT included
average manufacturer price (AMP)
amount paid by wholesaler after all sales deals are included
more precise
not available to public
Common sources for US reimbursement rates
physician fee reference
medicare reimbursement rates from CMS (Centers for Medicare and Medicaid Services)
Personnel Costs
consideration of the amount of time spent by medical personnel (work time)
Hospitalizations
- per diem
- disease-specific per diem
- diagnosis related group
- micro-costing
(more precise as you read down)
per diem
average cost per day for all types of hospitalizations
(key words: per day, all)
disease-specific per diem
estimate the costs based on specific disease state
-appendectomy, cardiac bypass surgery costs, small joint repairs and cataract surgery costs etc.
diagnosis related group
classify diagnosis/procedures that use similar resources
control medicare costs
each category has its own reimbursement rate based on: diagnosis, secondary diagnosis, age, sex, and discharge status
each-patient is categorized
micro-casting
collects information on resource use for each component of hospitalization
-need to review patients hospital record
Complete title
Good Example
Cost Benefit Analysis of Ibuprofen vs. Tylenol in Pediatric Patients with Common Cold Symptoms
Bad Examples
(Pharmacoeconomic Analysis) of Glipizide vs. Glyburide in the Veterans Administration
Cost-Effectiveness Analysis of (Two Antibiotic) Therapies in a Large Teaching Hospital
(Ultraceph Found Cost-Effective) When Compared to Megaceph
Clear objective
stated in the beginning-usually in objective section
-to calculate the benefit to cost ration
NOT-to determine if better
appropriate alternatives/comparators
new vs current
drug vs nondrug
etc
alternatives described
what resources? services? and description of drug dose and so on
perspective stated
costs for patients, providers and society
type of study
knowing upfront what type of study is being done ..CBA, CMA etc. and why it is appropriate for the study
relevant costs
stated perspective for the costs, time period, and justification
protocol driven costs should be excluded
relevant outcomes
clinically important and appropriate time periods
adjustment or discounting
assessing resources over years=use adjusted (standardized)
when costs extrapolated more than 1 year out=use discount rate
reasonable assumptions
may not be precise or universally agreed upon
sensitivity analyses
more reliability (robustness) for discount rates
if it supports then your study is more credible
limitations addressed
no PE study is perfect
limitations: small sample size=disturbs reliability
retrospective data collection=disturbs generalization due to potential bias
Appropriate generalizations
if used specific population then needs to be specified in the study as a caution against generalizing or extrapolating
-age, gender, socioeconomic status, disease state
unbiased conclusion
dose study make sense?
does the result show no significant difference but the conclusion strongly supports one of the alternatives
when analyzing if a good title
answer these:
what is being compared?
what type of study is being conducted?
does the title sound biased?
Cost-minimizing analysis (CMA)
pharmacoeconomic analysis that compares the costs of treatments assuming that they have equivalent outcomes
CMA compares: bioequivalent
same active ingredients and same desired outcome
CMA compares: 2 different settings at the same doses
hospital vs home
advantages to CMA
simplest -only costs of intervention are compared
easy to convince readers-due to equivalent outcomes
Disadvantages to CMA
types of interventions are limited
less commonly. used
cost analysis
if outcomes are not measured it is a partial economic analysis and not a full one
cost-effective analysis
if outcomes are measured it is an cost effective analysis that has the same effectiveness
50th percentile
median
75th percentile
75 percent of the charges for that service are equal to or less than that fee nationwide
healthcare professional cost
costs per minute
gross annual salaries including fringe benefits
drug administration cost
hospital supply information
drug cost of IV and SC formulations
unit cost per treatment cycle
US average wholesale price
indirect costs
allow for more precise results
perspective stated?
what costs were measured? patients, providers,payers, society (may not say directly but if see costs then choose it)
relevant costs?
costs were estimated….medical and billing records…..
relevant outcomes?
includes time period and same efficacy/scope
appropiate generalizations?
does not generalize/extrapolates but says appear to be similar but differences can be seen
cost-effectiveness analysis (CEA)
measures costs in dollars and outcomes in natural health units that indicate an improvement in health
most common type
advantages of CEA
measured in clinical units-familiar and acceptable to clinicians
outcomes do not need to be converted to monetary values
ex: symptom free days, mmHG, %healed, life years saved, rehospitalizations avoided
disadvantages of CEA
only one outcome at a time can be compared
so keep to mmHg to mmHG not to FEV
interpretation is subjective -is added benefit worth got the added cost
uses of CEA
cost of mammogram vs prevention of breast cancer
cost of flu vaccine vs. prevention of influenza
average cost (Cost effectiveness ratios) CER
total cost/ effectiveness (change % to decimal)
marginal costs (incremental cost effective ratios (ICER)
change in costs/change in benefits (effectiveness,outcomes…)
(C2-C1) / (E2-E1)
for ICER calculation
must use CCA (cost and outcomes) not CER
high cost and same effectiveness
not cost effective
same cost and higher effectiveness
cost effective
lower cost and lower effectiveness
other factors may be considered to determine the winner
if less effective at a higher cost
not considered cost effective
if more effective at a lower cost
it is considered cost effective
if more effective but at a higher cost
decision maker must decide if the higher effectiveness is worth the higher cost (trade off 1)
if less effective but at a lower cost
decision maker must decide if the lower cost is low enough to outweigh the lower effectiveness (trade off 2)
cost (+)
Quadrant A. Quadrant B
effect (+)
Quadrant C. Quadrant D
quadrant B. is known as Trade off 1-decision maker must decide if the higher effectiveness is worth the higher cost
quadrant D= cost effective
quadrant A= not cost effective
quadrant c= Trade off 2-decision maker must decide if the lower cost is low enough to outweigh the lower effectiveness
primary outcomes (final)
not feasible due to lack of time and monetary resources
ex: cure of a disease, eradication of an infection, life years saved
intermediate outcomes
surrogate outcomes _labs, FEV1, mmHG, A1C
efficacy
does the drug work under controlled conditions?
RCTS are essential
before fda approval
effectiveness
does the drug work in routine medical practices?
after fda approval
efficiency
how well does it work?
elasticity
how much the demand changes as the price changes
market equilibrium price
the point where the supply and demand curves intersect
pharmacoeconomics
description and analysis of the costs of drug therapy to health care systems
scientific discipline that evaluates the value of products and services
humanistic
consequences of disease/treatment perceived and reported by the PATIENT
4 types of direct medical costs
meds, medical services, personnel costs, hospitalizations
