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. Health Economics Resource Center3 Outline 1. Overview 2. Decision Support System 3. HERC or DSS Costs? 4.Fee Basis and Prosthetics Data 5.Examples and Q&A

4. Health Economics Resource Center4 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?

5. Health Economics Resource Center5 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.

6. Health Economics Resource Center6 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.

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

8. Health Economics Resource Center8 Cost assignment in DSS Production System Cost allocated to departments –Cost of supplies, contracts –Staff time allocations (data unique to DSS)

9. Health Economics Resource Center9 Cost assignment in DSS Production System Allocate costs to production units (ALB) Distribute indirects and find unit cost of products (DCM)

10. Health Economics Resource Center10 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

11. Health Economics Resource Center11 DSS Production System Allocate costs to production units (ALB) Distribute indirects and find unit cost of products (DCM) Assign costs to encounters (DCR)

12. Health Economics Resource Center12 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)

13. Health Economics Resource Center13 DSS National Data Extracts Encounter-Level National Data Extracts National ALBCC Extract Allocate costs to production units (ALB) Distribute indirects and find unit cost of products (DCM) Assign costs to encounters (DCR) DSS Production System

14. Health Economics Resource Center14 Department-level cost files Account Level Budget Cost Center –Detail cost by cost center –Useful to find personnel cost, overhead rates

15. Health Economics Resource Center15 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

16. Health Economics Resource Center16 Encounter-level cost detail files Cost sub-totals Prescription file Intermediate Product Department Files Lab, radiology extracts

17. Health Economics Resource Center17 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

18. Health Economics Resource Center18 Improvement in DSS cost estimates Better data on inpatient medical procedures Improvements via standardization, audit, and review NDE filters out erroneous records

19. Health Economics Resource Center19 HERC or DSS Cost Data How Do They Compare? Ciaran Phibbs, PhD

20. Health Economics Resource Center 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

21. Health Economics Resource Center 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

22. Health Economics Resource Center 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

23. Health Economics Resource Center 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.

24. Health Economics Resource Center HERC vs. DSS Person-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

25. Health Economics Resource Center HERC vs. DSS Outpatient 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

26. Health Economics Resource Center Differences Between HERC & DSS Outpatient 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

27. Health Economics Resource Center27 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

28. Health Economics Resource Center28 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.

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

30. Health Economics Resource Center30 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

31. Health Economics Resource Center31 Overview of Fee Basis Program Some common uses: Community nursing home care Community nursing home care Home-based care Home-based care –E.g.: long-term oxygen therapy Compensation & pension exams Compensation & pension exams

32. Health Economics Resource Center 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

33. Health Economics Resource Center33 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.

34. Health Economics Resource Center34 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

35. Health Economics Resource Center35 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

36. Health Economics Resource Center36 Highlights of Financial Data Amount claimed by vendor Amount paid Medicare prospective payment amount (inpatient)

37. Health Economics Resource Center37 Highlights of Vendor Data Vendor ID Address (city, state, zip) Related VA station number

38. Health Economics Resource Center38 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

39. Health Economics Resource Center39 Creating Discharge Records (2) Records are typically processed within 30 days of invoicing. BUT Invoices may be sent LONG after services are rendered. THEREFORE THEREFORE To find all services in a fiscal year, look in the Fee Basis files in that year and the 2 following years.

40. Health Economics Resource Center40 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

41. National Prosthetic Patient Database

42. Health Economics Resource Center42 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).

43. Health Economics Resource Center43 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

44. Health Economics Resource Center44 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)

45. Health Economics Resource Center45 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

46. Health Economics Resource Center46 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 tions/technical_reports.asp

47. Using Multiple Datasets: Examples

48. Health Economics Resource Center48 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.

49. Health Economics Resource Center49 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

50. Health Economics Resource Center50 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

51. Health Economics Resource Center51 Cost of Joe’s Care 2. Outpatient prescription medications, cont’d - -Cost PBM has purchase price (only) for each script DSS NDE for outpatient care has daily total cost for the “pharmacy clinic” – rolls up all scripts per day DSS Pharmacy Extract has many cost variables for each prescription: fixed direct, variable direct, indirect, variable supply

52. Health Economics Resource Center52 Cost of Joe’s Care 3. VA emergency room care Utilization:Cost: - DSS NDEs - PTF, OPC - HERC AC

53. Health Economics Resource Center53 Cost of Joe’s Care 3. VA emergency room care ER care can vary substantially in cost. Thus, DSS will be a better option than the HERC AC data. HERC data may be accurate on average but will most likely understate the variance substantially.

54. Health Economics Resource Center54 Cost of Joe’s Care 4. Inpatient mental health bedsection UtilizationCost DSS NDEs PTFHERC AC

55. Health Economics Resource Center55 Cost of Joe’s Care 4. Inpatient mental health bedsection, cont’d Cost DSS NDE will have most precise costs. HERC AC may be fine if the patient didn’t have surgery, since surgery produces much of the cost variation. If you use DSS for one aspects of care, use it for all aspects unless you have a strong justification for doing otherwise!

56. Health Economics Resource Center56 Cost of Joe’s Care 5. Telehealth UtilizationCost OPCHERC ACDSS NDE Be sure to validate! Consider using self-report or provider report if datasets are inaccurate. Note: DSS lacked telehealth before FY2003.

57. Health Economics Resource Center57 Cost of Joe’s Care 6. PTSD Group Therapy UtilizationCost OPCHERC ACDSS NDE Either option is reasonble; there is likely to be little variation in cost across therapy sessions.

58. Health Economics Resource Center58 Cost of Joe’s Care Summary - 1 DSS NDEs, including the Pharmacy Extract, can be used for all of Joe’s care. OPC/PTF, combined with HERC AC data, can also be used for all of Joe’s care.

59. Health Economics Resource Center59 Cost of Joe’s Care Summary - 2 DSS better captures variation in inpatient care. but HERC data include estimated Medicare payments (“HERC Values”). HERC data use Medicare RVUs and thus may have greater external validity.

60. Health Economics Resource Center60 Typical patient: Evelyn Evelyn is a 75 y.o. veteran with osteoporosis and emphysema who lives at home. Non-VA care: orthopedist, community nursing home VA care: - pulmonologist and primary care physician - outpatient prescriptions through CMOP - inpatient med/surg care - physical therapy - walker - long-term oxygen therapy

61. Health Economics Resource Center61 Cost of Evelyn’s Care 1. Non-VA orthopedist UtilizationCostMedicare Self-reportMedicare; HERC AC; self- report; Fee Basis Medicare data available from VIREC with 2-year lag. Self-report acceptable for short horizons. Best to validate if possible.

62. Health Economics Resource Center62 Cost of Evelyn’s Care 2. Community nursing home UtilizationCost a. If paid by VA… Fee Basis DSS outpatient NDE b. If paid by another source… Self-reportMedicare; Fee Basis; DSS

63. Health Economics Resource Center63 Cost of Evelyn’s Care 3. VA inpatient med/surg 4. Outpatient pulmonologist, PCP, physical therapy UtilizationCost DSS NDE PTF/OPCHERC AC DSS preferable for inpatient, both acceptable for outpatient. (Use DSS for all – best not to mix DSS and HERC data.)

64. Health Economics Resource Center64 Cost of Evelyn’s Care 5. VA prescription medications UtilizationCostDSS Pharmacy NDE PBMPBM (direct cost only)

65. Health Economics Resource Center65 Cost of Evelyn’s Care 6. Walker UtilizationCost no good source NPPD * * NPPD costs are reflected in HERC and DSS outpatient data, so do not double-count. Use NPPD costs only to estimate direct costs of devices or services.

66. Health Economics Resource Center66 Cost of Evelyn’s Care 7. Long-term oxygen therapy UtilizationCost NPPD NPPD * * NPPD costs are reflected in HERC and DSS outpatient data, so do not double-count. Use NPPD costs only to estimate direct costs of devices or services.

67. Health Economics Resource Center67 Questions? herc@va.gov www.herc.research.va.gov