Estimating the Economic Burden of Cardiovascular and Chronic Diseases: Methods and Data

1. Estimating the Economic Burden of Cardiovascular and Chronic Diseases: Methods and Data Scott Grosse, PhD Associate Director for Health Services Research and Evaluation, Division of Blood Disorders, NCBDDD Division of Heart Disease and Stroke Prevention Annual Grantees Meeting September 16, 2009 The findings and conclusions in this presentation are those of the author and do not necessarily represent the views of the Centers for Disease Control and Prevention.

2. Why Do an Economic Analysis? Call attention to the magnitude of a problem Burden of disease Monetary costs – Cost of Illness (COI) Quality of life QALYs or DALYs Evaluate prevention policies or programs Economic evaluation of intervention Cost-effectiveness Cost-benefit Return on investment (ROI)

3. Costs, Payments, and Charges Costs = value of resources used up in providing service Payments = expenditures by payers Charges = list prices Hypothetical example Hospital bill (charge) $100,000 Total payments $60,000 Individual co-pay $10,000 Insurance reimbursement $50,000 Estimated resource cost $48,000 Calculated by multiplying cost-to-charge ratio by hospital charge

4. Cost of Illness (COI) Attributable cost of a disease and its consequences/complications Requires comparison of costs for similar but unaffected individuals Incremental cost = net difference in costs Example Mean expenditure for disease Y is $12,000 per year Mean expenditure for unaffected is $3,000 per year Incremental cost is $9,000 per year per person

5. Types of Cost Direct cost Value of resources used to take care of people with disease Medical Non-medical Unpaid caregiving Indirect cost Lost economic productivity of an affected person due to death or disability

6. Direct Costs of Disease Medical Costs Hospitalizations Physician office visits Drugs and medical supplies Non-medical costs Special education and therapies Travel to seek care Paid care Direct costs -- medical and non-medical -- are identified and estimated for the cost of the intervention and cost of the disease prevented in the NET COST equation. Examples of direct medical costs include diagnostic tests and procedures, drugs and medical supplies, physician office visits, and hospitalizations. Direct non-medical costs include such items as program administration and management, physical facility space and utilities, and patients’ out-of-pocket expenses for travel, food, and child care. Again, exactly what direct costs should be included depends on the perspective(s) of the CEA. Also, costs may vary by disease severity, so it may be desirable to disaggregate direct medical costs by severity. Direct costs -- medical and non-medical -- are identified and estimated for the cost of the intervention and cost of the disease prevented in the NET COST equation. Examples of direct medical costs include diagnostic tests and procedures, drugs and medical supplies, physician office visits, and hospitalizations. Direct non-medical costs include such items as program administration and management, physical facility space and utilities, and patients’ out-of-pocket expenses for travel, food, and child care. Again, exactly what direct costs should be included depends on the perspective(s) of the CEA. Also, costs may vary by disease severity, so it may be desirable to disaggregate direct medical costs by severity.

7. Cost of Unpaid Caregiving Time spent caring for sick or disabled individual Methods Opportunity cost Value of lost earnings How to value other time uses foregone? Replacement cost to hire paid caregiver Classification Direct cost in US panel recommendation Indirect cost in UK guidelines

8. Indirect Costs of Disease Costs associated with productivity losses: Disability Earnings lost due to acute illness or disability Mortality Earnings lost due to premature death Earnings include benefits and taxes not just wages and salaries Indirect costs -- productivity losses -- are identified and estimated for the cost of patients’ participation in the intervention and cost of productivity losses prevented in the NET COST equation. Productivity losses due to morbidity include wages lost as a result of unexpected illness or disability. Productivity losses due to mortality include future earnings lost as a result of premature death. The value of lost time should be estimated using wages for persons in the labor force to derive the mean value of lost work days or mean present value of lost future earnings. Depending on the target population of interest, it may be appropriate to use age- or gender-specific wage rates. For persons not in the labor force (i.e., unemployed persons, homemakers, students, and retirees), the value of their lost time may be similar to those in the labor force. Indirect costs -- productivity losses -- are identified and estimated for the cost of patients’ participation in the intervention and cost of productivity losses prevented in the NET COST equation. Productivity losses due to morbidity include wages lost as a result of unexpected illness or disability. Productivity losses due to mortality include future earnings lost as a result of premature death. The value of lost time should be estimated using wages for persons in the labor force to derive the mean value of lost work days or mean present value of lost future earnings. Depending on the target population of interest, it may be appropriate to use age- or gender-specific wage rates. For persons not in the labor force (i.e., unemployed persons, homemakers, students, and retirees), the value of their lost time may be similar to those in the labor force.

9. Direct Medical Cost: Accounting Approaches Direct estimation Single data set Aggregate utilization and cost for principal diagnosis Attributable cost for individuals with disease Requires individually identified data Indirect approach Identify utilization of services associated with a condition Calculate average unit cost for services from another source Multiply utilization by unit costs

10. Incremental Costs in Accounting Approaches Compare total costs for individuals with and without disorder Stratified by age and gender Absolute difference in costs Ratio of costs Mean Median Potential biases Differences in race/ethnicity or SES Differences in other health conditions (comorbidities)

11. Regression Approach Statistical models ICD-9 codes, including comorbidities, included as predictors Control for demographic and SES variables Two-part models First equation predicts positive utilization as dichotomous variable Second equation predicts costs as continuous variable among those with positive costs Costs often log-transformed because of skewness

12. When To Use Accounting or Regression Approaches? Accounting approach commonly used in pediatric health services research for conditions present at birth Assumption: other illnesses are secondary to congenital conditions Regression approach preferred for other chronic conditions

13. Comorbidities Include in regression only conditions not in the causal pathway from condition of interest to health care use Examples Obesity, do not include any disease that can result from obesity, e.g., diabetes Diabetes, include obesity but not hypertension Heart disease, include diabetes

14. Data Sources for Medical Costs National surveys National Health Interview Survey (NHIS) Medical Expenditure Panel Survey (MEPS) Administrative data Hospital discharges Health Care Utilization Project (HCUP), AHRQ State databases National Hospital Discharge Survey (NHDS), CDC/NCHS Insurance claims data Medicare Medicaid HMOs Health plan and employer databases

15. Survey vs. Administrative Data Surveys Cover all people, not limited by payer type Complete demographic and SES data Can include indirect and direct costs Limited numbers of observations, useful only for common conditions Administrative data Limited by service type (hospital) or payer time (insurance) Limited demographics, no SES Large numbers of observations, good for rare conditions or outcomes

16. Case Ascertainment Administrative data use ICD-9-CM codes Billing codes and medical records can differ Underascertainment of conditions not currently treated Need to validate by linkage to other databases Medical records Vital records (e.g., gestational age) Surveys rely on self-report or parental report, also problematic Not confirmed diagnoses Widespread misunderstanding

17. Hospital Discharge Data Information on admissions and procedures Facility fees – charges, not costs Apply CMS cost-to-charge ratio Adjust for professional fees, if possible Pros and cons Easily available Can’t link multiple discharges for individuals with public use databases

18. HCUP Databases Data from 37 participating states State Inpatient Databases Weighted for national estimates Nationwide Inpatient Sample (NIS) 20% sample of nonfederal short-stay hospitals Annual Kids Inpatient Database 20% sample of pediatric (0-20 years) administration Available every 3 years

19. Stroke Hospital Discharge Example HCUPnet.AHRQ.gov NIS data from 2007 Stroke: ICD-9-CM codes 433-435 All hospitalizations 1,256,403 discharges Payer: 70.4% paid by Medicare Age: 23.7% 45-64, 72.5% >64 Principal diagnosis 731,732 discharges 22,541 (3.1%) in-hospital deaths Median charge $26,700

20. Insurance Claims Data Large, proprietary insurance databases Multiple health plans Tens of millions of covered lives Can link services by unique individual ID Inpatient, outpatient, pharmaceuticals Link over time, but need to restrict to continuous enrollment Issues of representativeness

21. Congenital Heart Disease Example (Boulet et al., 2009) Health care costs for children < 3 years old with congenital heart defects (CHDs) in Marketscan Research Database – 2005 Age and Number Prevalence* Mean Mean %attributable to Category (per 10,000) costs cost inpatient (dollars) ratio admissions No CHDs <1 year 114,561 3,844 67 1 year 71,029 2,462 15 2 years 77,344 1,583 14 Multiple Severe <1 year 72 6.3 241,219 63 93 1 year 46 6.4 79,763 32 72 2 years 35 4.5 49,479 31 72 Isolated Severe <1 year 222 19.3 120,813 31 90 1 year 129 18.1 30,723 12 61 2 years 118 15.2 16,503 10 44 Multiple mild <1 year 201 17.5 83,379 22 89 1 year 137 19.2 22,902 9 56 2 years 134 17.2 13,160 8 20 Isolated mild <1 year 168 14.6 23,551 6 80 1 year 122 17.1 15,697 6 59 2 years 146 18.8 3,559 2 7 Any CHD <1 year 663 57.5 97,894 25 90 1 year 434 60.7 29,228 12 63 2 years 433 55.7 13,769 9 42 *CHD = congenital heart defect

22. Caregiver Time Costs Methods Valuation methods Opportunity cost Value of lost earnings straightforward Value of lost leisure difficult to estimate Replacement cost How much to hire paid caregivers Counting caregiving time Lost earnings or total caregiving? Incremental or attributable cost?

23. Productivity Costs Lost value of economic production due to Death – 100% loss Disease – proportionate loss during episode Disability – proportionate loss

24. Short-Term Productivity Losses and Caregiver Costs Stang et al. (2004) used MarketScan Health and Productivity Database 1997-99 Lost work days by families with migraine 59-62% higher when adult had migraine 11-34% higher when child had migraine (caregiving cost) Health care costs also higher for family members of individuals with migraine 24% higher for spouse of affected adult 11% higher for child of affected parent

25. Productivity Estimates Labor market earnings (gross) Wages & salaries Fringe benefits and payroll taxes Self-employment income Nonmarket production Household services Productivity estimates in 2007 US dollars by age and sex Grosse SD, Krueger KV, Mvundura M. Economic productivity by age and sex: 2007 estimates for the United States. Medical Care. 2009;47:S94–S103

26. Productivity Estimate Methods Data from American Time Use Survey, US Census Bureau, 2003 to 2007 Time diary data on hours of paid work and household productivity Compensation Annual earnings by 5-year age groups, 15-19 to 75-79 and 80+ Total compensation multiplies earnings by 1.309 for employer cost of insurance, retirement, and legally required benefits

27. Household Productivity Household services include Household production Housework Outdoor chores Home and auto maintenance Shopping Paying bills Providing care to others Child care Adult care Replacement cost method Each service valued as average hourly wage in relevant occupation, $8-12/hr, plus benefits

28. Lifetime Productivity Present value is the sum of discounted values in each future time period Social discount rate 3% in US Future changes in productivity levels Constant or real dollars Productivity assumed to rise 1% per year Total present value in 2007 dollars $1.2 million at birth $1.6 million at ages 15-29

29. Aggregate COI Estimates Two types Prevalence-based – how much cost this year for prevalent cases? Incidence-based – what is the present value of future costs for newly incident cases?

30. Prevalence-based Cost Analysis How much do we spend each year to take care of individuals with condition X? Lost productivity from prevalent cases and deaths in current year Future costs from current year deaths muddies the picture Doesn’t tell one about how much can be saved through prevention

31. Incidence-Based Cost Estimates Present value of lifetime costs of a new case Future costs are discounted Essential for calculating value of prevention Synthetic cohort Assume cross-sectional differences apply in future years Assume relative costs are stable

32. Cost of Cardiovascular Disease: AHA (Rosamond et al., 2008) Prevalence-based cost estimates updated each year, adjusted for inflation Direct costs from Hodgson & Cohen (1999) Indirect costs from Rice et al. (1985) Direct and indirect costs of CVD $448.5 billion in 2008 dollars Coronary heart disease $156.4 billion Heart failure $34.8 billion “Other” heart diseases $97.1 billion Stroke $65.5 billion Hypertension $69.4 billion

33. Data Sources for Hodgson & Cohen on Direct Medical Costs of CVD National Hospital Discharge Survey – 1993 National Health Interview Survey – 1993 National Ambulatory Medical Care Survey – 1992 National Hospital Ambulatory Medical Care Survey – 1992 National Home and Hospice Care Survey – 1992 National Medical Expenditure Survey – 1987 National Nursing Home Survey – 1985

34. Limitations of AHA Cost Estimates Limitations in analytic methods used for cost calculations Changes in medical technology since ca. 1990 Changes in patterns of earnings and household activities since 1970s Need for new cost estimates based on contemporary data No estimate of unpaid caregiving cost

35. Medical Costs of Hypertension Hodgson & Cai (2001) projected total medical cost of hypertension, including sequelae, adjusted for tobacco use Attributable risk assumptions: Hodgson and CAI Medical Care *Hypertension includes ICD-9-CM codes 401-405. †Cardiovascular complications include ICD-9-CM codes 410-414, 424-438, 440-441. ‡All other conditions include any condition that is not hypertension and not a cardiovascular complication of hypertension.

36. Total Cost of Hypertension (Hodgson & Cai, 2001) Estimated total $108.8 billion (1998 $) Hypertension (principal Dx) $22.8 billion Cardiovascular complications $29.7 billion All other diagnoses $56.4 billion Implication – AHA cost estimate for “hypertensive disease” covers fraction of costs due to hypertension Treatment for high blood pressure Assuming no stroke or CHD

37. The Economic Burden of Chronic Cardiovascular Disease for Major Insurers Justin G. Trogdon, Eric A. Finkelstein, Isaac A. Nwaise, Florence K. Tangka and Diane Orenstein Health Promot Pract 2007; 8; 234 DOI: 10.1177/1524839907303794 Econometric (regression) approach Data from 2000-2003 Medical Expenditure Panel Survey Civilian, noninstitutionalized population Restricted to those covered by Medicaid, Medicare, and/or private health insurance Estimates adjusted to 2005 dollars by Medical Care CPI Prevalence (self-reported) Congestive heart failure 0.5% Other heart disease 5.9% Stroke 0.8% Hypertension 13.1%

38. Trogdon et al. Regression Model 2-part model Logit regression on whether positive expenditures Generalized linear equation for expenditures Control variables Diseases – 4 CVDs, and cancer, diabetes, injuries, dyslipidemia, HIV/AIDS, pneumonia, asthma, COPD, depression, substance abuse, arthritis, back problems, skin disorders, renal failure, pregnancies Demographics/SES -- age, sex, race/ethnicity, region, education, family income

39. Trogdon et al. Results (1) Last column – All expenditures per person with disease Other columns – Average expenditure per payer

40. Trogdon et al. Results (2) Results from model dropping CHF, stroke, other heart disease Costs of hypertension 1.37 x higher than in full model Full cost of hypertension 4.77 x higher in Hodgson & Cai

41. Trogdon et al. Results (3) Attributable medical cost for all CVD $149 billion (2005 $) (17% of total) Compare with AHA estimate of $257.6 billion (2006 $) Included $42.6 billion in nursing home costs excluded from MEPS analysis

42. Use of COI Estimates in Economic Evaluations Incidence-based COI estimates needed Direct medical costs always useful Direct non-medical costs used in CEA from societal perspective Indirect costs Not included in CEA Can be included in CBA ROI includes worker absenteeism