The University of Southampton
University of Southampton Institutional Repository

Illustrating potential efficiency gains from using cost-effectiveness evidence to reallocate Medicare expenditures

Illustrating potential efficiency gains from using cost-effectiveness evidence to reallocate Medicare expenditures
Illustrating potential efficiency gains from using cost-effectiveness evidence to reallocate Medicare expenditures
Objectives: the Centers for Medicare & Medicaid Services does not explicitly use cost-effectiveness information in national coverage determinations. The objective of this study was to illustrate potential efficiency gains from reallocating Medicare expenditures by using cost-effectiveness information, and the consequences for health gains among Medicare beneficiaries.

Methods: we included national coverage determinations from 1999 through 2007. Estimates of cost-effectiveness were identified through a literature review. For coverage decisions with an associated cost-effectiveness estimate, we estimated utilization and size of the “unserved” eligible population by using a Medicare claims database (2007) and diagnostic and reimbursement codes. Technology costs originated from the cost-effectiveness literature or were estimated by using reimbursement codes. We illustrated potential aggregate health gains from increasing utilization of dominant interventions (i.e., cost saving and health increasing) and from reallocating expenditures by decreasing investment in cost-ineffective interventions and increasing investment in relatively cost-effective interventions.

Results: complete information was available for 36 interventions. Increasing investment in dominant interventions alone led to an increase of 270,000 quality-adjusted life-years (QALYs) and savings of $12.9 billion. Reallocation of a broader array of interventions yielded an additional 1.8 million QALYs, approximately 0.17 QALYs per affected Medicare beneficiary. Compared with the distribution of resources prior to reallocation, following reallocation a greater proportion was directed to oncology, diagnostic imaging/tests, and the most prevalent diseases. A smaller proportion of resources went to cardiology, treatments (including drugs, surgeries, and medical devices, as opposed to nontreatments such as preventive services), and the least prevalent diseases.

Conclusions: using cost-effectiveness information has the potential to increase the aggregate health of Medicare beneficiaries while maintaining existing spending levels
cost-effectiveness, disinvestment, medicare, resource allocation
1098-3015
629-638
Chambers, J.D.
5eb183f8-1e76-4716-8a5d-325360fd8f38
Lord, J.
fd3b2bf0-9403-466a-8184-9303bdc80a9a
Cohen, J.T.
867c61e0-7d3d-4a90-b1cf-e26a64da9843
Neumann, P.J.
f5fa092d-5d89-4169-82b9-f38a141589ec
Buxton, M.J.
0d589723-2238-4473-937d-459e513ab177
Chambers, J.D.
5eb183f8-1e76-4716-8a5d-325360fd8f38
Lord, J.
fd3b2bf0-9403-466a-8184-9303bdc80a9a
Cohen, J.T.
867c61e0-7d3d-4a90-b1cf-e26a64da9843
Neumann, P.J.
f5fa092d-5d89-4169-82b9-f38a141589ec
Buxton, M.J.
0d589723-2238-4473-937d-459e513ab177

Chambers, J.D., Lord, J., Cohen, J.T., Neumann, P.J. and Buxton, M.J. (2013) Illustrating potential efficiency gains from using cost-effectiveness evidence to reallocate Medicare expenditures. Value in Health, 16 (4), 629-638. (doi:10.1016/j.jval.2013.02.011). (PMID:23796298)

Record type: Article

Abstract

Objectives: the Centers for Medicare & Medicaid Services does not explicitly use cost-effectiveness information in national coverage determinations. The objective of this study was to illustrate potential efficiency gains from reallocating Medicare expenditures by using cost-effectiveness information, and the consequences for health gains among Medicare beneficiaries.

Methods: we included national coverage determinations from 1999 through 2007. Estimates of cost-effectiveness were identified through a literature review. For coverage decisions with an associated cost-effectiveness estimate, we estimated utilization and size of the “unserved” eligible population by using a Medicare claims database (2007) and diagnostic and reimbursement codes. Technology costs originated from the cost-effectiveness literature or were estimated by using reimbursement codes. We illustrated potential aggregate health gains from increasing utilization of dominant interventions (i.e., cost saving and health increasing) and from reallocating expenditures by decreasing investment in cost-ineffective interventions and increasing investment in relatively cost-effective interventions.

Results: complete information was available for 36 interventions. Increasing investment in dominant interventions alone led to an increase of 270,000 quality-adjusted life-years (QALYs) and savings of $12.9 billion. Reallocation of a broader array of interventions yielded an additional 1.8 million QALYs, approximately 0.17 QALYs per affected Medicare beneficiary. Compared with the distribution of resources prior to reallocation, following reallocation a greater proportion was directed to oncology, diagnostic imaging/tests, and the most prevalent diseases. A smaller proportion of resources went to cardiology, treatments (including drugs, surgeries, and medical devices, as opposed to nontreatments such as preventive services), and the least prevalent diseases.

Conclusions: using cost-effectiveness information has the potential to increase the aggregate health of Medicare beneficiaries while maintaining existing spending levels

Full text not available from this repository.

More information

Published date: June 2013
Keywords: cost-effectiveness, disinvestment, medicare, resource allocation
Organisations: Primary Care & Population Sciences

Identifiers

Local EPrints ID: 382172
URI: https://eprints.soton.ac.uk/id/eprint/382172
ISSN: 1098-3015
PURE UUID: b5606c19-e55c-4343-8f52-8616108be2db
ORCID for J. Lord: ORCID iD orcid.org/0000-0003-1086-1624

Catalogue record

Date deposited: 18 Jan 2016 13:05
Last modified: 20 Jul 2019 00:34

Export record

Altmetrics

Contributors

Author: J.D. Chambers
Author: J. Lord ORCID iD
Author: J.T. Cohen
Author: P.J. Neumann
Author: M.J. Buxton

University divisions

Download statistics

Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.

View more statistics

Atom RSS 1.0 RSS 2.0

Contact ePrints Soton: eprints@soton.ac.uk

ePrints Soton supports OAI 2.0 with a base URL of https://eprints.soton.ac.uk/cgi/oai2

This repository has been built using EPrints software, developed at the University of Southampton, but available to everyone to use.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive cookies on the University of Southampton website.

×