using cost-effectiveness analysis to inform state policy · using cost-effectiveness analysis to...

“Using CEA to inform state policy” 30 November 2017

© Jeffrey S. Hoch, PhD 1

USING COST-EFFECTIVENESS ANALYSIS TO INFORM STATE POLICY

Jeffrey S. Hoch, PhD

Associate Director, Center for Healthcare Policy and Research

Professor and Chief, Division of Health Policy Management

Department of Public Health Sciences,

University of California, Davis

Health Policy and Management

E: [email protected]

T: @j_hoch

https://twitter.com/j_hoch

2

© Jeffrey Hoch, PhD



Disclaimer

▪The opinions expressed in this talk are mine and are not meant to represent official positions of the people or groups with whom I work.


4

THIS SESSION IS NOT…HOW TO DO CEA

Mathy, Statsy, or Numbery

Focused on health & other areas


WHY YOU SHOULD CARE

Costs challenge

patients and

payers

01

Paying for Value(not volume) is a popular ‘solution’

02Cost-effectiveness analysis is a way to look at Value.

03

6




WHAT IS VALUE?

“In most industries, “value” as defined by consumers is associated with in four attributes:

Accessibility: “can I get what I need or want from you?”

Service: “is dealing with you a pleasant experience?”

Effectiveness: “is what you’re providing going to satisfy my need or want?”

Costs: “what’s the cost to me and my family and is it worth it?”

https://tinyurl.com/ow7rfl7

process

outcome

cost

7


The trip and

the options

What it “costs”what you “get”

The Trade-off

8


https://tinyurl.com/y9eygdms

9




“In collaboration with the partner organizations, Consumer Reports has created resources… to engage

in… conversations about the overuse of medical tests and procedures that provide little benefit and in

some cases harm.

“Choosing Wisely recommendations should not be used to establish coverage decisions or exclusions.

Rather, they are meant to spur conversation about what is appropriate and necessary treatment. As

each patient situation is unique, providers and patients should use the recommendations as guidelines

to determine an appropriate treatment plan together.

Policy is made for a population, not a patient.

How to use Cost-Effectiveness Analysis (CEA) to look at

Value at the population (policy) level?

10


COUNT DOWN TO USE

4 Quadrants

3 Findings

2 Items of interest

1 Thing

https://tinyurl.com/ycmqu724

11


WHERE ARE WE?

An economic evaluation

tells you a tradeoff

located in one of 4 areas

4 Quadrants, 3 Findings, 2 Items of interest, 1 Thing

12




Less effective More effective

Costs more

Costs less

4 potential outcomes

2 dimensions

x

2 directions


13


2 X 2 TABLE = 4 QUESTIONS

“More or less” means > 2 options.

• Are they relevant/correct?

Whose cost?

• Decision maker’s perspective included?

Which outcome (what to use as effect)?

• Is one that matters included?

Over what time horizon?

• Over policy/clinically relevant time period?

“more than” or “less than” 1 option is

compared to a 2nd option.

Does the “usual care” in the analysis match

your context / reality?


14





Whose cost?





• Over policy/clinically relevant time period?

The decision maker cares about the

decision maker’s costs (i.e., not paying =

not a cost)


15







Whose cost?





• Over policy/clinically relevant time period!

What are you trying to accomplish with

this policy or program?

What amount of “success” does the new option offer?


16





Whose cost?






0

200

400

600

800

1000

1200

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Time horizon matters

Costs Benefits

cost benefit


17





Whose cost?







18




Less effect More effect

Costs more

Costs less


RightCost?

RightEffect?

Both Cost and Effect

19


EXAMPLE OF THE MAIN TYPES OF CHALLENGES

1) Can you find the right box?

• YES or NOT yet

II) Is the information useful/relevant?

• YES or NOT yet


20


A NEW SMOKING CESSATION PROGRAM

A 6 month study shows that a new smoking cessation program costs $2,500 per person.


21




A NEW SMOKING CESSATION PROGRAM

A 6 month study shows that a new smoking cessation program costs $2,500 per person.

Some of the benefits reported by those who quit include:

Better appearance

Better breath and whiter teeth

Appetite for food is rediscovered

An improved sense of smell

Better lung capacity


22


EXAMPLE COMPLETED

The new smoking cessation program helps more people quit smoking

than the standard practice and costs more over a 50 year time horizon.


23


COUNT DOWN TO USE

4 Quadrants

3 Findings

2 Items of interest

1 Thing


24





Costs more

Costs less


2 dimensions

x

2 directions

Easy NO


25



Costs more

Costs less


2 dimensions

x

2 directions

Easy YES


26



Costs more

Costs less


2 dimensions

x

2 directions

It Depends

It Depends


27




Less effective Similar Effect More effective

Costs more

Similar Costs

Costs less

3 potential findings


28


TEST YOUR UNDERSTANDING

• What do you need to know?

https://tinyurl.com/y8avgp854 Quadrants,3 Findings, 2 Items of interest, 1 Thing

29


TEST YOUR UNDERSTANDING, CONTINUED

• What might you find?

https://tinyurl.com/y8avgp854 Quadrants,3 Findings, 2 Items of interest, 1 Thing

30




COUNT DOWN TO USE

4 Quadrants

3 Findings

2 Items of interest

1 Thing


31


Less effective Same Effect More effective

Costs more

Costs the same

Costs less

2 items of interest: 1) Estimate


32


Less effective Same Effect More effective

Costs more

Costs the same

Costs less

2 items of interest: 2) Uncertainty


33




ESTIMATE

• How much extra cost?

• How much extra effect?

• How much extra cost per extra effect?

• How much more extra benefitthan extra cost?

• What other values are possible?

• What is the 95% CI?

UNCERTAINTY

USING 2 ITEMS OF INTEREST: 1) ESTIMATE & 2) UNCERTAINTY


$75,000 extra cost and 6 more months of life

$75,000 / 0.5 years = $150,000 per year of life

34


Patient outcome

Cost

C

E

35

© Jeffrey S. Hoch, PhD4 Quadrants, 3 Findings, 2 Items of interest, 1 Thing = 6 months or 0.5 year

= $75,000



More Effective, E > 0Less Effective, E < 0

More Costly, C > 0

Less Costly, C < 0

Less Costly/Less Effective

Lose-Lose

Win-Win

More Costly/More Effective

COST-EFFECTIVENESS PLANE

© Jeffrey S. Hoch, PhD

36


36



More Effective, E > 0Less Effective, E < 0

More Costly, C > 0

Less Costly, C < 0

Less Costly/Less Effective

More Costly/More Effective

COST-EFFECTIVENESS PLANE

© Jeffrey S. Hoch, PhD

37

0.5 yr 1.0 year

$75,000

$150,000



Extra cost

Extra cost per

1 extra effect (ICER)


THE STORY

OF ONE

ARTICLE…

© JEFFREY S. HOCH, PHD


38

Estimates


39




Uncertainty


40


WHAT IS THE DECISION MAKER WILLING TO PAY?

Is $150k per year of life worth it?

YES!This is cost-

effective!

noThis is not cost-

effective

WTP

WTF?


41


WTP

P(CE)

Uncertainty

42




COUNT DOWN TO USE

4 Quadrants

3 Findings

2 Items of interest

1 Thing


43


In a perfect theory world (where budget determines WTP)….

Calculate all of the extra cost per extra effect (using CEA) and then purchase from lowest to highest until you run out of your budget



44

In a perfect theory world (where WTP determines budget)….

Use CEA results to purchase from lowest to highest until you hit the magical WTP threshold (e.g., £30,000)



45



Neither the budget nor the WTP are known and no payer is “buying” everything at once. No rec committee knows…



46

There is something odd about the choreography of the CEA…

47

© Jeffrey Hoch, PhD4 Quadrants, 3 Findings, 2 Items of interest, 1 Thing

WHAT IS BEING CONSIDERED?

“Given the available evidence on comparative effectiveness and incremental cost-effectiveness, and considering other benefits, disadvantages, and contextual considerations, what is the long-term value for money of treatmentwith acupuncture and usual care versus usual care alone for patients with chronic low back pain?


48




CHBRP

Clinical

evidence

Patient

values

Cost-effectivenessFeasibility of Adoption

(into the Health System)

The 4 key areas

50

© Jeffrey S. Hoch, PhD4 Quadrants, 3 Findings, 2 Items of interest, 1 Thing

LESSONS FROM FRONT ROW SEATS…

1) Other evidence in addition to economic evidence is used in decision

making

2) almost no one is a health

economist among policy advisors and policy makers

3) Good & Useful can be better than Perfect & Right



51



TO USE CEA, YOU MUST HAVE …

4 Quadrants

3 Findings

2 Items of interest

1 Thing


52 © Jeffrey Hoch, PhD

FINAL EXAM

• 1) Is this cost-effective?

• 2) How do people view CEA?


FINAL EXERCISE

• Example: Cost-effectiveness of epoetin-alpha (EPO) to augment

preoperative autologous blood donation (PAD) in elective surgery

• Concerns:

• Allogeneic (someone else’s) blood might have disease

• Autologous (your own) blood is costly to get, and so is EPO

“Economic analysis of erythropoietin use in orthopaedic surgery.” by Coyle D, Lee KM, Fergusson DA, Laupacis A. Transfus Med . 1999 Mar;9(1):21-30.




FEEDING DATA TO A MODEL


COST EFFECTIVENESS RESULTS

Is EPO cost-effective? 56 © Jeffrey Hoch, PhD

COST EFFECTIVENESS RESULTSBY HOMER

Is EPO cost-effective? 57 © Jeffrey Hoch, PhD



COST EFFECTIVENESS RESULTSBY HOMER SIMPSON

Is EPO cost-effective? What do we already know (what can we already achieve w/o EPO)?58


Intervention Life Years Extra Life Years

Cost Extra Cost

Cost per life year gained

No intervention EPO

13.037758 13.037782

0.000024

269 1857

1588

$66.3 million

PAD EPO + PAD

13.037725 13.037731

0.000006

968 2903

1935

$329.3 million

Incremental cost-effectiveness ratio (ICER) = C / E

ICER = Extra cost / Extra effect

“extra cost of 1 more unit of extra effect”

COST EFFECTIVENESS RESULTS



4 Quadrants

3 Findings

2 Items of interest

1 Thing


More costly,

more effective

Easy no

C = $1935 E= 3 minutes;

C/E = 330 mill per 1 YR

NO uncertainty shown





4 Quadrants

3 Findings

2 Items of interest

1 Thing



DIFFERENT OPINIONS

SOUND L IKE…


WHAT HAPPENED

IN ONTARIO?





4 Quadrants

3 Findings

2 Items of interest

1 Thing



AS HEALTHCARE BECOMES MORE EXPENSIVE…

There will be more focus on “value” (i.e., cost and effectiveness of new treatments).

Cost-effectiveness analysis (CEA) is a tool used throughout the world to help inform policy.

The questions you ask when “smart shopping” are the same ones users of CEA should ask


[email protected]

66© Jeffrey S. Hoch, PhD

E: [email protected]: @j_hochhttps://twitter.com/j_hoch

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