Beating Around the Bush: Why Americans Dont Use Cost-Effectiveness Analysis (or do they?)

Peter J. NeumannTufts-New England Medical Center, Boston, MA

OverviewSome historical context

Understanding the current political climate

Why dont Americans use CEA (or do they)?

Looking ahead

Source: Health Care Coverage in America: Understanding the issues and proposed solutions. www.CoverTheUninsured.org/MaterialsHealth insurance cover in US, 2005

Chart10

175.3

38.4

33.2

26.6

10.1

43.6

Sheet1

Employer175.3

Medicare38.4

Medicaid33.2

Direct Purchase26.6

Military Health Insurance10.1

Uninsured43.6

Sheet1

Number of Covered or Unisured (Millions)

Sheet2

Sheet3

Source: 2006 Annual Report of the Medicare Boards of TrusteesMedicare expenditures and income as % of U.S. GDP

A Variation Problem

Dartmouth Atlas of Healthcare

A bit of history

A big country

Were not Canada!

Understanding the current political climate

I just bought a car from a guy that stole my girl, but the car dont run, so I figure we got an even deal Country Western song

Why Dont Americans Use Cost-Effectiveness Analysis?

Why dont Americans use CEA?Mistrust of methodsMethods varyStudies not relevantMistrust of motivesLegal and regulatory barriersSystemic barriersDistaste for (explicit) rationingWe ARE using CEA, just quietly

CEA in America: Key playersMedicareMedicaid (The DERP)Private plans (AMCP Format)FDAOther public payers (VA, DoD)The public health establishment (CDC, NiH, AHRQ, OMB etc.)Private health plansEmployersConsumers

Medicare

Selected cost-effectiveness ratios for technologies covered by MedicareLeft-ventricular assist devices: $500,000-$1.4 million/QALY

Lung-volume reduction surgery: $98,000-$330,000/QALY

Implantable cardioverter defibrillators: $30,000-$85,000/QALY

PET for Alzheimers disease: Over $500,000/QALYSource: Matchar, 2003; Gillick, 2004

Cost Effectiveness and Use of Selected Interventions in the Medicare PopulationSource: Gillick, 2004; Neumann, 2005; www.hsph.harvard.edu/cearegistry.

* projection

Health InterventionCost Effectiveness (2002$ / QALY)% Implementation in MedicareInfluenza vaccineCost saving40-70%Beta blocker after MIUnder $10,000 / QALY85%Cholesterol management, secondary prevention$10,000 to $50,000 / QALY30%Dialysis for ESRD$50,000 to $100,000 / QALY90%Lung-vol reduction surgery$100,000 to $300,000 / QALY5,000 to 100,000 cases per year*Left ventric assist devicesOver $500,000 / QALY5,000 to 100,000 cases per year*PET for Alzheimers diseaseOver $500,000 / QALY50,000 cases per year*

The Medicare Modernization Act

I dont make jokes. I just watch the government and report the facts

Will Rogers

MMA (1)Rx drug coverage for 40+ million$0-$250, patient pays 100%$250-$2,250, patient pays 25%$2251-$3,600, patient pays 100%>$3,600, patient pays 5%Subsidies for low-income elderly and employerNew coverage for prevention (initial physical exam, cardiovascular screen, diabetes screen)Medicare prohibited from negotiating drug prices

MMA (2) Formulary rulesFormularies must have multiple products in each categoryPatients can get non-formulary drug if MD deems necessaryUSP sets therapeutic class and revisesDrug plans required to establish P&T comm.P&T decision must reflect therapeutic advantages in terms of safety and efficacyFormularies may use good practices (e.g., pharmacoeconomics, other tools)

Every formulary must include drugs within each therapeutic category and class, though not necessarily all drugs within such categories and class.

MMA (3)Demonstration projects (includes CEA)AWP reform (CMS monitoring)AHRQ role in comparative-effectiveness research $15 million prohibited from using it to exclude drugs

Medicaid

John Kitzhaber

States Participating in DERP, 2006AlaskaArkansasCaliforniaIdahoKansasMichiganMinnesotaMissouriMontanaNew YorkNorth CarolinaOregonWashingtonWisconsinWyomingCHCF/CALPERSSource: Center for Evidence-Based Policy, OHSU

AMCP Format

MCOs and PBMs That Have Adopted AMCPs Format

The Regence GroupPremera Blue CrossProvidence Health PlanGroup Health CooperativeBC/BS of Hawaii (HMSA)Blue Shield of CaliforniaWellpoint Cardinal HealthHealth PartnersPrescription SolutionsIntermountain Health CareAnthem Rx Mgmt Argus CoventryPrime Therapeutics M PlanMayo Health PlanCaremarkMedImpact ACS State HealthcareVA and DODKaiser Permanente

Audit of 106 economic analyses 2002-2005

Total AMCP Dossiers submitted in 2002-2005115Dossiers including economic information52(45%)

Total number of distinct health economic analyses among the 52 AMCP dossiers containing economic information *(dossiers may contain one or more analyses) 106*

Audit of 106 analyses, detail by year

Year # of AMCP dossiers reviewed# of AMCP dossiers w/economic information# of economic analyses reviewed20023815262003312041200434134320051245Total11552106

General Description 1

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CEA in America: The Critical Importance of Value AssessmentMedicareMedicaid (The DERP)FDAOther public payers (VA, DoD)The public health establishment (CDC, NiH, AHRQ, OMB etc.)Private health plansEmployersConsumers

Looking ahead

Prospects for CEA

The view from academiaCost-effectiveness analysis has had, at best, a troubled youth but it will give way to a successful adulthood.- Peter Ubel, U of Michigan

The view from politicians Im so miserable without you, its like having you here.

I dont know whether to kill myself or go bowling

7 trends to watch1. Growing use of value evidence to inform:CoverageFormulary managementPaymentIncentives2. Expanded use of AMCP Format 3. More consumer-driven health care4. Medicare reforms (tiptoeing around CEA)5. DERP-ization of drug class reviews6. Employers revolt/Unions give back7. A new institute?