Transcript of Cyberseminar
HERC Health Economics Cyberseminar
Challenges measuring healthcare costs attributable to an individual chronic condition
Presenter: Steve Zeliadt, PhD MPH
October 16, 2013
This is an unedited transcript of this session. As such, it may contain omissions or errors due to sound quality or misinterpretation. For clarification or verification of any points in the transcript, please refer to the audio version posted at or contact .
Moderator: We are pleased to have Steve Zeliadt present for us today. Steve is a core investigator at the Seattle VA. He is also a research assistant professor in the Department of Health Services at the University of Washington. He actively conducts research there with collaborators at the Health Promotion and Research Center and the Urology Outcomes Research Collaborative. He is also an affiliate investigator at the Fred Hutchison Cancer Research Center and Group Health Research Institute. His research interests involve helping patients and providers make individualized and informed decisions about cancer care. He received his Ph.D. in Health Services and MPH from the University of Washington. Today he will be talking about challenges in measuring healthcare costs attributable to individual chronic conditions. Welcome Steve.
Steve Zeliadt: Thank you Jean. I wanted to notify everyone when I talked to the operator that there might be some problems in the VANTS line. Heidi assures us that if that happens, she will solve it. If everything goes mute, someone will know about it and we will figure out a back-up plan.
Thank you guys very much for joining me today on this call. This work is coming out of a grant that we had. Andrew Zhou, who is the biostatistician chair who runs VASA for the VA, looked at all kinds of different approaches to modeling healthcare costs, really focusing on non-parametric approaches. I was involved in that grant, looking at how we interpret what comes out of those models. If you are interested in the very complex non-parametric methods, we can talk about that. That is not the focus of today’s call. Today’s call is really talking about thinking carefully about interpreting all the coefficients we get, especially when we are focusing on attributable costs in individual chronic diseases.
For today, I have a few goals for you guys. I teach this class to the health economics and Ph.D. students at the University of Washington. We do spend a lot of time looking at all the different types of cost models to run. We do not spend as much time talking about interpreting those coefficients. When it comes time for some of the exams and the students are writing out their answers, they write things that do not make a lot of sense. The inspiration for this session today is to talk, focusing on that part.
What I want you guys to do is really think carefully about this issue of causalities. We think about causality a lot in disease outcomes and health outcomes. We do not think about it so much in cost outcomes. Almost always, we present our findings about cost in terms of causality. A little bit of today is an issue of semantics and some of it is philosophical approaches. This is issue of causality and cost is really important. I want you to think really carefully and critically about that.
I am going to go over some of the different approaches that have been used to estimate attributable costs. I hope that at the end of the day you will know what those methods are and think about how you can adopt those or choose one of those methods for some work that you might want to do. What I am focusing on too is really understanding what the challenges are with this. When you do want to say diabetes costs X, how do you go about that? What are some of the challenges of that?
I want all of you to be a little bit skeptical at the end of this session, when you read something that says heart disease costs $100 billion dollars or X-disease costs these billions of dollars. We are all guilty of this. We are going to talk a little bit about that later. Be a little skeptical and you will see why, in making these sorts of causal and large statements.
I wanted to introduce you all to something, or reintroduce you all to something, that you are all familiar with. That is the general causal framework. When we think about this in terms of smoking and lung cancer, it makes a lot of sense. We really want to understand how much lung cancer is caused by smoking. If we got rid of smoking, how much lung cancer incidence would go down? When we think about causality, that is the type of question we are looking at. We can think about that. It makes sense in some circumstances. It is very intuitive. We are looking at fractures and calcium deficiencies.
We can look at cost and we can look at utilization in more single event episodes of care, such as pregnancy. It is pretty easy to add up the cost of pregnancy and say that if this person had not been pregnant, the cost would be different. We can make a pretty strong causal association between that exposure and that type of utilization or cost. It is not easy to do. It is not easy to look at the causality for smoking and lung cancer. This is part of the goal. What we are looking for here is how much cost there is associated with heart disease or how much cost is associated with and due to having a diagnosis of diabetes.
In reality, this is really complex. There is a whole series of measured and unmeasured confounders. We will talk a little bit about that, but keep that in mind. When you try to approach this problem and you are bringing the data that you have to bear to this problem, that you are going to try to account for all these different factors. The underlying causal framework is looking at how much this disease or this disease process is causing is cost.
I should not be so hard on the Ph.D.students, but these are quite a few examples of what investigators, individuals, the Institute of Medicine and everyone is guilty of, when they imply causality and cost. Here are some examples. This first one is a very commonly cited paper that is looking at the cost of cancer. I do not have the actual investigator’s link to this to protect identities and not cause any guilt. These are the types of examples of what we are trying to get out of these models and the data that we have available.
We are looking at cancer and saying that it costs $125 billion dollars. Another one is looking at costs. These are using the words incremental costs. This is the incremental cost of care for people with diabetes, as compared to those people without diabetes. This is a very common statement in many articles. Then we look at the proportion, the proportion of the total costs that are attributable to a condition. These are the kinds of examples that we want to talk about. I want you to really think about the causality issue when you are trying to write up and summarize what your findings are in the data that you have available to you.
Think about this in terms of the counterfactual. In terms of lung cancer and smoking, we think about this pretty intuitively. How much lung cancer would decrease if there were no smoking? If we cured cancer, would we actually save $125 billion? That is what that statement and those causality associations imply.
I have a poll question here, which is to see how guilty we all are of these types of statements. I want to find out from the audience how many of you have written a paper like this or have done something that says this condition costs this. There are a few other options as well, people who are interested in attributable costs, plan to measure attributable costs but have not done it yet, then people who just want to know more about cost methods and how these things originate so they can use the data and the findings and people who might be on the call who are just curious about this and have not thought yet about attributable costs, so this is a little bit new to them but they are interested in it.
Okay. The votes are pouring in here. Everything is changing here pretty dramatically. We will see.
Moderator: We will give them a few more seconds for things to change around a little bit. We will let you read the results out here.
Steve Zeliadt: Can everyone see the results?
Moderator: Not yet. I have not broadcast the results. We wonder if we broadcast the results too early, if it skews the data. I try to hold off on it a little bit.
Steve Zeliadt: This is not a very scientific question.
Moderator: You never know. It looks like things have leveled off here. I will show the results. If you want to read through them for anyone we have on the phone, that would be fantastic.
Steve Zeliadt: Okay. I think they are broadcast now. It is interesting. There are quite a few people, about 1/3 or a little under 1/3 who have actually tackled this problem. I know some of you have done this in the VA. There is about 1/3 that are trying to think about doing this and are interested in doing it, but have not done it before. About 1/3 is interested in it, have not done it before, but a few people who definitely want to add those very influential findings to their grant applications. That is the first paragraph of almost every grant that says X-disease costs X-billions of dollars. Okay. Is there a way to make this go away here? There we go. Great.
Okay. I am going to talk about all the different approaches. There are a couple of very simplistic approaches to this. These are not done as commonly as they used to be. They do not really apply very much to the VA. It is important for everyone to be aware of these. What happens is that you are sitting there looking at your data set. You have a whole bunch of medical claims. You have every claim on every patient that was seen in Medicare or insurance plans. You know they had this on this date and on this date they had this hospitalization. On this date, they had this activity. You can look at those and you can find the procedures you are interested in. That is one thing you can do.
Here we are talking about conditions. What you can do is find all the people who had a diagnosis anywhere in any of their, up to 15 sometimes, diagnosis codes on one of their claims. You add all those together. You find all the claims that had any mention of diabetes and you sum them all together. You say this is the cost of diabetes. This is referred to as the sum-all approach.
You can imagine that now you do it for diabetes and your colleague down the hall is interested in adding them all up. She does them for depression. Now you have a problem because some people have depression and diabetes on the same claim. One of you is saying this cost is attributable to diabetes. One of you is saying this is attributable to depression.
An alternative approach is to sum only the primary diagnosis code for each of the claims, hospitalizations or care activities that you have in your data set. You look and you find just the primary diagnosis code. You sum only those together. That is called the sum-primary approach. This approach does not work all that well in the VA because our coding approaches are a little bit different. It might work better in a Medicare or claims system, where coding is really carefully scrutinized. There are some caveats to that as well, because things are likely to be upcoded for maximum utilization. Even if the visit was due to a lesser condition or more minor condition, it might be upcoded to one that would be more likely to be reimbursed.
On the next slide, I have some data that comes out of MEPS, which is the Medical Expenditure Panel Survey. I do not work very closely with MEPS. The students I teach work with the data. It is a very easily accessible cost data set. It comes out of the National Health Interview Survey. They ask patients to scrutinize their medical expenditures for a whole year. They go and find every bill, every claim, every medical cost that these 25,000 people in the National Health University Survey might have. They look at them really carefully. It includes VA costs. They find patients that have VA. They estimate what the VA paid for costs. They do not actually have a bill for the VA. The VA costs are in there as well.
They use this data to estimate what the total cost of care in the U.S. is. In 2009, which is where this data set came from, the total cost was about $1.3 trillion. $1,260 billion is what the MEPS data set projected was spent on medical care in the U.S. This data set or attempt of looking at the data comes from the National Heart, Lung and Blood Institute. They are interested in clearly documenting how much diseases they are interested in cost. At the top, they highlight blood diseases, COPD and cardiovascular diseases. In the first column, it sums up to $278 billion. That is about 22% of the $1.3 trillion that was spent in the U.S. in MEPS.
This approach relies very heavily on the sum-primary diagnosis claims. They find each claim, each procedure and each activity that was found in MEPS, and the cost associated with that gets associated with just one condition. That is how they total this.
There are a couple of things to note about this. In the first slide, we talked about cancer costing $125 billion dollars. From the MEPS estimate, using this approach, they have a much lower cost of $86 billion. One of the inspirations and reasons for this session today is to understand what is going on here. It is a little bit like the Republicans and Democrats coming together and saying they are talking about the exact same thing, but they have two very different prices attached to it. On one hand, investigators looked at Medicare claims and used data from Medicare. They extrapolated it to younger populations as well, to come up with the $125 billion cost estimate. In the MEPS data set, they estimate that cancer cost at $86 billion. You will note the National Heart, Lung and Blood Institute likes the MEPS data, because it highlights how much the costs are for the diseases they are interested in, compared to other diseases.
There are a couple of other costs associated on this slide that I really do not want to talk too much about. The NHLBI also estimates the indirect costs of mortality. They have an approach for estimating when people die from these diseases, at what age and how many years of life are lost to that. They put in some dollar amounts for those. That is a little bit beyond what we are talking about today. That is what that other column is for.
Moving on from looking at the claims data that you might have available, there are some approaches that use more of an accounting approach. This is what I want to focus a lot on today. One thing that many people do is this first approach. They find the people with the conditions. They find somebody with diabetes. They just add up all the costs that person had over a year. That person might have had $10,000 on average for cost. Then the cost for diabetes is $10,000 on average. That is a total cost approach. It is pretty commonly done. There is the same problem that we had before when your colleague down the hall finds somebody who had diabetes and depression. Now they are saying this person also has depression that cost $10,000 a year.
What we want to do is move to a more attributable cost or net cost approach. This is very commonly done using matching. This was pioneered using Medicare data in the cancer setting. What would happen is that they would find a cohort of patients with cancer. They would find a matched cohort of patients without cancer. Usually they match on very few things. That might not be such a bad idea in the cancer scenario, because cancer is perceived as a generally random process. They would find 20,000 people on Medicare that had breast cancer. They would find 20,000 women who were matched on the same age, same geographic region and same race, and look at those. They would take those two different cohorts. What they would do is sum together all the cost for all the people with breast cancer. Then they would sum together all the cost for all the people who looked just like those women, but did not have breast cancer. They would end up with the net or attributable cost.
This is the source of that $125 billion cost estimate. This is a pretty common approach. You can imagine there might be some problems with this. If you are looking at lung cancer, which is definitely associated with smoking, the population that you find when you find a lung cancer population have probably been smoking for 30 or 40 years. You probably cannot easily go and find a matched cohort of the same people who have been smoking for 30 or 40 years who do not have lung cancer. The people in your cohort of lung cancer cases have many other things they might have. They have been smoking for 30 years. Their heart disease risks might be higher. Their diabetes risk might be higher, compared to the general population. This approach does not directly account for that.