Estimating Cost at Each Stage of Care

1. Estimating Cost at Each Stage of Care Mark Smith, PhD Paul Barnett, PhD Ciaran Phibbs, PhD HERC Cyberseminar February 28, 2007

2. Estimating Cost at Each Stage of Care Mark Smith, PhD Paul Barnett, PhD Ciaran Phibbs, PhD HERC Cyberseminar February 28, 2007

3. Outline • 1. Overview • 2. Decision Support System • 3. HERC or DSS Costs? • 4. Fee Basis and Prosthetics Data • 5. Examples and Q&A Health Economics Resource Center

4. Research on multiple care settings • VA patients often receive care in many settings. This can be a challenge for cost research: • - Utilization records are split among several datasets. • - No single dataset has costs and procedures for all care. • Result: assessing cost across multiple settings often requires merging data from multiple sources. • So what? Health Economics Resource Center

5. Research on multiple care settings • Different datasets have different cost variables • Include or exclude overhead (indirect) costs • Differing methods to estimate costs • Differing patterns of updating and validation Assigning costs across the continuum of care requires familiarity with many datasets. Health Economics Resource Center

6. Representative patients • During this workshop we will describe several datasets: • Decision Support System datasets • HERC Average Cost datasets • National Prosthetic Patient Database • Fee Basis data At the end we will consider two hypothetical patients and consider which databases we might use to assess the total cost of their care across multiple settings. Health Economics Resource Center

7. Introduction to Decision Support System (DSS) Cost Data Paul G. Barnett, PhD

8. Cost assignment in DSS Production System • Cost allocated to departments • Cost of supplies, contracts • Staff time allocations (data unique to DSS) Health Economics Resource Center

9. Distribute indirects and find unit cost of products (DCM) Cost assignment in DSS Production System Allocate costs to production units (ALB) Health Economics Resource Center

10. DSS assigns costs to products • Indirect (overhead) costs are distributed to patient care departments • Intermediate products counted • All services and products in VISTA (VA electronic medical records) • Relative Value Units (RVUs) assigned to products and totaled • Cost per RVU used to find cost of each intermediate product Health Economics Resource Center

11. Distribute indirects and find unit cost of products (DCM) Assign costs to encounters (DCR) DSS Production System Allocate costs to production units (ALB) Health Economics Resource Center

12. DSS National Data Extracts • Production system not accessible • National Data Extracts • SAS files available at VA national computing center in Austin, TX • Web based report generator (VSSC web site) Health Economics Resource Center

13. Allocate costs to production units (ALB) National ALBCC Extract Distribute indirects and find unit cost of products (DCM) DSS Production System Assign costs to encounters (DCR) Encounter-Level National Data Extracts DSS National Data Extracts Health Economics Resource Center

14. Department-level cost files • Account Level Budget Cost Center • Detail cost by cost center • Useful to find personnel cost, overhead rates Health Economics Resource Center

15. Encounter-level DSS Cost Files • Inpatient files • Discharge file • Treating specialty (bed section) file • Outpatient Files • Outpatient cost • Low-cost outpatient visit file • Daily pharmacy cost Health Economics Resource Center

16. Encounter-level cost detail files • Cost sub-totals • Prescription file • Intermediate Product Department Files • Lab, radiology extracts Health Economics Resource Center

17. Advantages of DSS • Reflects on-site review of staffing, costing, workload • Sums to actual VA costs • Consistent with utilization data • Useful to study VA efficiency • Doesn’t rely on assumptions based on coding or non-VA relative values Health Economics Resource Center

18. Improvement in DSS cost estimates • Better data on inpatient medical procedures • Improvements via standardization, audit, and review • NDE filters out erroneous records Health Economics Resource Center

19. HERC or DSS Cost DataHow Do They Compare? • Ciaran Phibbs, PhD Health Economics Resource Center

20. Quick Overview of HERC Average Cost Estimates • Acute (med/surg) inpatient care • DRG weights with adjustments for length of stay and ICU days • Scale to actual VA costs by category of care • Other inpatient care • Per diem costs, by category of care Health Economics Resource Center

21. Quick Overview of HERC Average Cost Estimates, Continued • Outpatient care • Assign private sector (mostly Medicare) RVUs to VA CPT codes • Scale to actual VA costs by category of care • Category costs from CDR FY 98-03 • Category costs summaries of DSS since FY 04 Health Economics Resource Center

22. Implications, DSS vs. CDR • 98-03, CDR assigned more costs to inpatient care, and less to outpatient care than DSS • For 98-03, need to be careful about mixing HERC and DSS cost estimates. • e.g. use DSS for outpatient care and HERC for inpatient care would over-estimate costs Health Economics Resource Center

23. See Guidebooks for Full Details About the HERC Average Cost Data • HERC web site • www.herc.research.va.gov/publications • Separate guidebooks for inpatient, outpatient, and person-level data. • Additional information about these data in Technical Reports. Health Economics Resource Center

24. HERC vs. DSSPerson-Level Costs • Person-level (per year) costs are similar • Overall correlation = 0.72 • Inpatient acute med/surg correlation = 0.66 • Other inpatient care correlation = 0.77 • Outpatient care correlation = 0.51 Health Economics Resource Center

25. HERC vs. DSSOutpatient Encounter Costs • At the encounter level, overall correlation between HERC and DSS only 0.26 • If trim the top and bottom 1% relative outliers, the correlation increases to 0.72 Health Economics Resource Center

26. Differences Between HERC & DSSOutpatient Encounter Costs • Surgery more likely to have much higher DSS costs • Categories with many low cost items, such as labs, are much more likely to have large relative differences Health Economics Resource Center

27. How to Choose HERC vs. DSS Costs • Study design is the most important consideration • HERC costs are based on non-VA weights or RVUs. • DSS designed to capture actual VA production costs • Examine the costs that are important to your study Health Economics Resource Center

28. When not to use HERC AC Outpatient dataset • If your study will have systematic differences on within CPT code resource use. • Example, add a brief smoking counseling component to physician visit • Study focuses on CPT codes that HERC used imputed values for. • Using local cost estimates, and they don’t seem correct. There could be errors in the CDR allocations that HERC relies on. Health Economics Resource Center

29. The Fee Basis (FEE) filesMark W. Smith, PhD

30. Overview of Fee Basis Program • Pays for care at non-VA facilities in three situations: • VA cannot provide the care locally • It is economical to do so • Travel to a VA facility is medically infeasible Health Economics Resource Center

31. Overview of Fee Basis Program • Some common uses: • Community nursing home care • Home-based care • E.g.: long-term oxygen therapy • Compensation & pension exams Health Economics Resource Center

32. Overview of Fee Basis files • Subset of all VA contract care • Most “sharing agreement” care from affiliate universities is not included • Substantial non-VA utilization unaccounted for Health Economics Resource Center

33. What Data Rows Represent • Outpatient: a single service provided, reflected in the CPT procedure code • Inpatient: all days of stay within the invoice period (typically a calendar month). • A single inpatient stay may be billed in multiple invoices and hence multiple Fee Basis records for the patient. Health Economics Resource Center

34. Highlights of Patient Data • Scrambled SSN (SCRSSN) • Primary Service Area (PSA) • 3-digit VA station number •  Can be linked by SCRSSN to other VA databases to find other patient-level variables Health Economics Resource Center

35. Highlights of Clinical Data • Outpatient: • Date of service • 1 CPT procedure code • Inpatient: • Start and end dates of invoice period • Up to 5 surgery codes • Up to 5 ICD-9 diagnosis codes Health Economics Resource Center

36. Highlights of Financial Data • Amount claimed by vendor • Amount paid • Medicare prospective payment amount (inpatient) Health Economics Resource Center

37. Highlights of Vendor Data • Vendor ID • Address (city, state, zip) • Related VA station number Health Economics Resource Center

38. Creating Discharge Records (1) • Goal: Create a single discharge record from multiple inpatient service (INPT) records • Method: Concatenate by SCRSSN using TREATDTF and TREATDTO • Use VENDID to find a transfer from one provider to another Health Economics Resource Center

39. Creating Discharge Records (2) • Records are typically processed within 30 days of invoicing. • BUT • Invoices may be sent LONG after services are rendered. • THEREFORE • To find all services in a fiscal year, look in the Fee Basis files in that year and the 2 following years. Health Economics Resource Center

40. Overlap with Other VA Files • Community nursing home care also in • DSS outpatient files • PTF Extended Care files • Most completed hospital stays also in PTF Non-VA Hospitalization files Health Economics Resource Center

41. National Prosthetic Patient Database

42. NPPD Creation • “Prosthetics Package” in VISTA records all orders for prosthetic items and services that are channeled through the Prosthetics and Sensory Aids Service (PSAS). Health Economics Resource Center

43. NPPD Structure • Each record represents a single prosthetic device or service ordered. • Multi-part items (e.g., wheelchairs) have a separate record for each element, but often a single overall price. • NPPD is an order database, not a use database. One cannot tell… • whether a patient picked up an ordered item • for how long it was used (if ever) • whether it was returned Health Economics Resource Center

44. NPPD Costs • Costs for new items represent the local/regional/national contract cost. • Costs for repaired items represent 50% of the local contract cost or the actual repair cost, whichever is less. • Labor and overhead costs do not appear in NPPD. • All NPPD costs are represented in other cost datasets already (e.g., within variable supply cost or indirect cost in DSS) Health Economics Resource Center

45. NPPD Uses • Reasonable uses of NPPD • Comparing costs for particular items or services across stations or VISNs • Studying changes over time in prescribing practices for particular types of items, such as wheelchairs • Inadvisable use of NPPD • Locating prosthetics orders or cost for particular individuals Health Economics Resource Center

46. HERC Technical Reports • Fee Basis data: report completed • NPPD: report in progress URL: http://www.herc.research.med.va.gov/publica tions/technical_reports.asp Health Economics Resource Center

47. Using Multiple Datasets: Examples

48. A typical patient: Joe • Joe is a 42 y.o. homeless veteran with PTSD and comorbid depression. • He enters a domiciliary for 30 days. After discharge he receives prescription medications. He stops taking them and his depression becomes severe. He is taken to the VA emergency room and then transferred to an inpatient mental health bedsection. After discharge he receives monthly telehealth contacts and returns to VA for a PTSD therapy group. Health Economics Resource Center

49. Cost of Joe’s Care • 1. Domiciliary • - Utilization: PTF, DSS NDE • - Cost: HERC AC, DSS NDE • HERC data based on average cost per day; DSS allows more variation. • Little difference in practice: domiciliary care is unlikely to vary much in cost day to day Health Economics Resource Center

50. Cost of Joe’s Care • 2. Outpatient prescription medications • - Utilization: • PBM V3.0 Database (“PBM”) • DSS Pharmacy NDE (“DSS Pharmacy Extract”) • DSS NDE for outpatient care: daily summary, not • at the prescription level Health Economics Resource Center