Economic Evaluation in Maternal and Child Health: Principles and Cases

1. Economic Evaluation in Maternal and Child Health: Principles and Cases Scott Grosse, PhD Ninth Annual Maternal and Child Health Epidemiology Conference December 12, 2003

2. Presentation Outline Principles • Economics and methods of economic evaluation • Economic evaluation and the policy process • Cost savings ≠ cost effectiveness • Epidemiology matters • No effectiveness, no cost effectiveness Case studies • Medicaid funding of prenatal care and LBW • Folic acid fortification and NTDs

3. Economics –Choice and Consequences • Economics is about getting the most value from scarce resources • Goal should be to maximize well-being, not save money • Opportunity cost – each choice requires one to give up something of value • Economic evaluation entails • Comparison of alternatives • Putting risks and benefits in common units

4. Economic Evaluation • Important to inform policy choices • Not a simple decision rule • Not all that counts can be counted • Can be used at multiple steps in the policy process • Good economic evaluation requires • Solid epidemiology • Ongoing testing of assumptions

5. Methods of Economic Evaluation • Cost of illness (COI) • Measures economic burden of disorders • Estimates can be used to calculate potential benefits of prevention • Cost effectiveness analysis (CEA) • Presumes an effective intervention • Health outcomes expressed in natural units or quality-adjusted life years (QALYs) • Cost benefit analysis (CBA) • Often used to justify regulatory actions • Health outcomes converted to dollars

6. Cost of Illness Components • Direct medical costs • Inpatient hospitalizations • Outpatient visits • Drugs • Other direct costs • Early intervention • Special education • Assistive devices, home modifications • Indirect costs or productivity losses • Premature mortality • Work disability

7. Data Sources for Cost of Illness Studies • Datasets with utilization and/or costs • Hospital discharges • Medicaid • National surveys • National Health Interview Survey (NHIS) • Medical Expenditure Panel Survey (MEPS) • Survey of Income and Program Participation (SIPP) • Proprietary claims databases • Special education records • Datasets with exposures • Vital statistics • Birth defects surveillance • For many analyses, linked datasets are needed

8. Cost of Cerebral Palsy Example(from Honeycutt, Grosse, Dunlap, Schendel, et al., 2003) • Incidence-based estimates project future costs based on current patterns • Lifetime costs converted to present value in year 2000 dollars with 3% discount rate

9. From Cost of Illness to Economic Evaluation of Interventions • Direct cost estimates used to calculate averted costs of care • Included in both CEA and CBA • Indirect cost estimates (productivity losses) • Often used in CBA to convert mortality and morbidity to dollars • Not included in CEA with QALYs • May need to weight costs for multiple outcomes • Example: Costs of prematurity include • Vision impairment • Hearing loss • Cerebral palsy • Mental retardation

10. The Public Health Policy Process

11. Economic Evaluation Is an Iterative Process • Cost of illness studies • Reviews of effectiveness data • Cost effectiveness analysis (CEA) • Prospective economic evaluations • Prior to intervention • Based on clinical data and assumptions • Outcome evaluations • Following implementation • Requires assumptions about long term outcomes • Analyses of potential program options

12. Steps in an Economic Evaluation • Identify the study question and audience • Calculate unit costs for each outcome • Model or estimate changes in outcomes • Calculate costs of intervention • Calculate net costs and outcomes • Negative net direct costs →intervention is cost saving • If net costs are positive, calculate cost effectiveness ratios (e.g., $ per QALY)

13. Cost Effectiveness ≠ Cost Saving • Cost effective = money spent yields good value • Cost savings = prevention saves payers money • “For every dollar spent….” claims are often overstated or misinterpreted • Averted costs usually don’t exceed intervention costs in MCH, except in immunizations • Even if a program is cost saving on average, probably not at the margin • Public health advocates need to make the case for cost effective interventions

14. Fallacy of Cost Savings Argument: Expanded Newborn Screening • Advocates say "For every dollar you spend on screening, you'll save $10 to $20 in long-term...costs.” (Atlanta Journal-Constitution, February 2, 2003) • In 1988 the Office of Technology Assessment found • $2.90 saved per dollar spent if one specimen per infant screened for PKU and hypothyroidism • Other screening options were not cost saving • Two published CEAs of expanded screening with mass spectrometry estimate 20 cents saved per dollar spent (Insinga et al., 2002; Schoen et al., 2002)

15. Cost Effectiveness ≠ Decision Rule • CEA can inform decisions, but should not be viewed as a decision rule • Important outcomes may not be measured • Fairness concerns may trump costs • Estimates are always uncertain • Report confidence intervals or sensitivity analyses • Be cautious: models may not depict reality!

16. Epidemiology Matters • Economic models depend on epidemiologic parameters: • Natural history of disease • Effectiveness of interventions • We often lack reliable data • Expert opinion may be biased • Evaluations are needed that control for • Ascertainment bias • Self-selection bias • Confounding • Evidence-based reviews are needed

17. Example: Newborn Screening for MCAD Deficiency • Untreated MCADD, a fatty acid oxidation disorder, can result in death or disability – How often? • CEA requires projecting frequency of each outcome with and without screening • Assumptions on percentage of neurological disability in MCADD survivors in published CEAs • Schoen et al., Pediatrics, Oct. 2002 0% • Insinga et al., J. Peds Oct. 2002 10% • Venditti et al., Pediatrics, Nov. 2003 32% • Evidence-based review is under way

18. How Well Do Prospective Economic Evaluations Predict Outcomes? • Economic models explain the past well; predicting the future is harder! • Two MCH case studies where economists made predictions prior to implementation of policies • Expansion of Medicaid coverage of prenatal care for prevention of LBW births • Folic acid fortification for prevention of NTD-affected pregnancies • Both interventions were expected to be cost saving • Have they reduced costs?

19. Prenatal Care and Low Birth Weight(see Huntingdon & Connell, NEJM 1994) • Many epidemiologic studies suggested that prenatal care leads to fewer LBW births • Potential bias from confounding, self-selection, and reverse causation not adequately addressed in those studies • Results were used to project reductions in LBW births and costs with public funding of prenatal care • “…every additional dollar spent for prenatal care within the target group would save $3.38 in the total cost of caring for low birthweight infants….” (Institute of Medicine, 1985) • “For each additional $1 spent on prenatal care, $2.57 in medical care costs would be saved.” (Gorsky and Colby, 1989) • Cost savings arguments were influential in expanding Medicaid funding of prenatal care

20. Did Increased Medicaid Funding Lower LBW Births? (see Howell, MCRR 2001) • During 1986-1991, Medicaid coverage for prenatal care more than doubled • Modest increases in prenatal care use resulted • Little evidence of reduction in LBW births • Of seven state evaluations, only FL found any reduction in LBW births for low-income women • Despite lack of change in LBW births, some evidence of decline in infant mortality • VLBW births (<1500 g) account for half of decline • Probably due to better Medicaid funding of NICU care – definitely not cost saving!

21. Implications of Prenatal Care & LBW Case Study • Difficult to project behavioral responses • Don’t assume compliance • Need to address nonfinancial barriers • Routine prenatal care is not enough • Quality and content of care may be more important • Providing care before pregnancy may be essential • Well-designed experiments and rigorous evaluations of proposed options are needed • MCH researchers should be cautious • in inferring causation from observational data • in assuming interventions will have desired effects • Remember: Effectiveness comes before cost effectiveness!

22. Folic Acid Fortification for Prevention of Neural Tube Defects (NTDs) • In 1996, FDA mandated 140 μg folic acid per 100 g enriched grain products by 1998 • Evidence from studies, including RCTs, that 400 μg/d folic acid can prevent 50-75% of NTDs (spina bifida and anencephaly) • Supplement use hard to change • Main risk of fortification is the potential masking of vitamin B12 deficiency in elderly, with neurological damage resulting

23. Two Economic Evaluations of Folic Acid Fortification • Both concluded that fortification at 140 μg/100 g level would have net benefit or cost savings • CBA–Romano, Waitzman, Scheffler, Pi, AJPH 1995 • Net benefit (direct & indirect cost) $94 million per year • Benefit-cost ratio 4.3:1 • Cost savings ratio (direct cost) 1.1:1 • CEA–Kelly, Haddix, Scanlon, Helmick, Mulinare, 1996 • Net savings (direct cost) $4.7 million per year • Cost savings ratio 1.4:1 • Ratio minus time costs 0.6:1 • Both concluded that higher fortification levels would yield greater net benefits • FDA did not base regulation on these results • Safety principle – minimize risk, not maximize benefit

24. Predicted and Actual Changes in NTDs with Fortification • Predicted declines in NTD rates with fortification at the 140 μg/100 g level • Romano et al. 10.2% • Kelly et al. 2.3% • Recorded declines in NTDs (Williams et al., 2002) • 9 surveillance programs with prenatal ascertainment • Spina bifida 40% • Anencephaly 20% • 15 surveillance programs w/o prenatal ascertainment • Spina bifida 28% • Anencephaly 13% • Birth certificates from 47 states (Mathews et al., 2002) • Spina bifida 24% • Anencephaly 21% • Little change in supplement use during this time

25. Why Did Models Not Foresee Rates of NTD Declines? • Folic acid intakes greater than expected • Both studies assumed a threshold model • Below 400 μg per day, no protective effect • Above 400 μg per day • 50% reduction in risk (Romano et al.) • 58% reduction in risk (Kelly et al.) • Different assumptions about dietary folate and NTDs • Folate equal to folic acid (Romano et al.) • Folate has no effect (Kelly et al.) • Percent of women who would newly get sufficient intake from fortified foods • 17% (Romano et al.) • 3% (Kelly et al.) • Current understanding • Dose-response curve for folic acid and NTDs • Dietary folate biological effect equivalent to half of folic acid

26. Effect of Folic Acid on Masking of Vitamin B12 Deficiency? • How many would be affected and to what extent? • Romano et al. assumptions • 500 people would be affected by fortification • Equivalent in severity to subacute combined degeneration of the spinal cord • Estimated cost per case $33,000 • Total cost $16.4 million per year • Kelly et al. assumptions • 89 people would be affected by fortification • Only 6% would need long-term rehabilitation • Estimated cost per case $3,900 • Total cost $350,000 per year • No data on numbers affected or average costs

27. What is the Economic Impact of Folic Acid Fortification? • Based on 15 programs without prenatal ascertainment • Spina bifida births declined 1.30 per 10,000 births, or 520 per year • Anencephaly births declined 0.23 per 10,000 births, or 92 per year • Direct cost per case, in 2003 dollars with 3% discount rate (Waitzman, Romano & Grosse, 2004) • Spina bifida $289,000 • Anencephaly $3,000 • Total averted costs $150 million per year • Total benefit $425 million per year • Cost of fortification $10 million per year

28. Implications of Folic Acid Case Study • Modeling of biological relationships may be very challenging • Economic studies were correct to err on the side of caution • May be very difficult to model risks of harm owing to lack of data • Folic acid fortification at 140 μg/100 g level appears to be an exceptionally efficient health policy • Other outcomes not yet factored in • Neuroblastoma

29. Conclusions • Economic evaluation is a partnership of economics and epidemiology • Economic estimates are no better than the epidemiology they are based on • Both economic and epidemiologic assumptions must be constantly tested by new data

30. Contact Information Scott Grosse Health Economist Office of the Director National Center on Birth Defects and Developmental Disabilities (NCBDDD) Centers for Disease Control and Prevention 404-498-3074 sgrosse@cdc.gov