Budget Impact Analys

Methods & Data

Patsi Sinnott, PT, PhD

November 28, 2012
–

Budget Impact Analysis: Ove

 Analysis of expenditures for a pro

over a short period (often 1-3 yearincluding the effect of an y offsettin 

savings 

Evaluates a scenario rather than a single Evaluates a scenario rather than a single 

– Includes comparison to the status quo – Incl d iti it l ludes sensitivity analysis 
Budget Impact Analysis: Over

 To estimate feasibility/affordabilit

– For budgeting/forecasting – What are your partners asking? What are your partners asking? 

 How much will this cost  Now – later – much later? 
Budget Impact Analysis: Persp

 BIA takes the buyer/provider/paye

BIA takes the buyer/provider/paye

perspective. 
Budget Impact Analysis: Ho

 BIA uses a short horizon – usually 

years at most. 

– Long

-term modeling is unnecessary

term modeling is unnecessary

– Costs are not discounted. 

– Siav

ings 

i f f ff n 

far 

future cannot offset 

initial/start-up or investment costs. 
–

Budget Impact Analysis: Ut

 BIA does not measure utility BIA does not measure utility. 

– No need to survey patients – No calculation of QALYs – Outcomes are assumed to be known Outcomes are assumed to be known
–

Budget Impact AnalysisBudget Impact Analysis

Framework

 Estimating 

– The cost of the intervention – Changes in staffing schedules and u

Changes in staffing, schedules and u

technology 

– Changes in pt. access/throughput/de– Potential Savings Potential Savings – Cost to operate 
Current Key Factors to 

Environment identify 

Total 

Population Incidence and 

p revalence

Sick population 

% Diagnosed 

and %Treated Target

Population Current way of 

treatment Resources, 

Utilization Unit cost 

Cost of Illness Cost of Illness 

Impacts on 

Incidence (for 

preventive...) 

Diagnosis 

Treatment 

Complex of 

services 

+ New therapy 

or procedure 

En

P

Sick 

P

R

R

U

CoCo

Estimation Framework
Reference Scenario/ Reference Scenario/

Current Environment

 Po

pulation 

– How many patients are getting care? 

 Who gets care? Who gets care? 

– essential: clinical characteristics – 

a

dvance

d: enroll ment pr

ior

ity, VERA ca

– how many need VA-funded transportatio

 What is the size of the target popu
Reference Scenario/ Reference Scenario/

Current Environment

 What treatment(s) are the current What treatment(s) are the current 

population getting? 

 What other healthcare resources a

curren

t popu

l

ation getting?
Reference Scenario Reference Scenario –

The Intervention(s) 

 What is “the intervention”? 

– Where is it provided? – How often is it provided? How often is it provided? – Who provides the care? 

 What do the providers do when they a

“providing the care”? 

– What resources, technologies, etc are use
Comparison Scenario

 Relative to reference scenario, how wi

chan

ge? 

– Demand for care (number of patients see

– will new patients be drawn into the system? will new patients be drawn into the system? – will new patients become eligible for contra

home care, anything else outside VA? 

– is the incidence or prevalence changing? 

– Future need for care within BIA horizon Future need for care, within BIA horizon – Copayments collected, VERA payments 
–

–

C i ompar son Scenario

 Relative to reference scenario how wi

Relative to reference scenario, how wi

change? 

– Staff mix & consequent costs

mix of MDs NPs RNs mix of MDs, NPs, RNs 

– how will staff changes affect costs? 

– Space and other overhead costs 

– clinical space requirements – will new space be rented, purchased, or built? 

– Technology purchase/repair costs Technology purchase/repair costs 
Costing in the BIA

 Using the perspective of VA: 

– VA s ’ costs: costs: yes – Patient’s costs: no (earnings, transportat– S i ’ Soc

iety’s costs: no 

( h ot

her payers, emp

lo

caregivers)

 Estimate the change in units/type of ca Estimate the change in cost per unit of 

Estimate the change in cost per unit of 
Cost Data Sources: Encoun

 Decision Support System (DSS) Natio

Extracts 

(NDEs)

– Inpatient files 

– discharge (one record per stay) – bedsection (one record per bedsection segme

stay) 

– Outpatient files 

– Encounters: one record per person-clinic-day – Pharmacy: one record per prescription 
Cost Data Sources: Encoun

 HERC Average Cost data 

– 

Inpat

ient fil es

– discharge: can be linked to PTF discharge files – med/surg disc

harges an

d non-med/ h surg disc

harg

linked to PTF bedsection files 

– Outpatient files 

– encounters: can be linked to OPC 

– pharmacy: none except when delivered in clinic 

(use DSS or PBM pharmacy data) 
–

C t D Cost Data Sources: Encoun

 HERC Average Cost data vs. DSS 

– Uses Medicare relative value units (RVUs) not 

Uses Medicare relative value units (RVUs) not 

– Less granularity = more similarity in costs acro

encounters

 For comparison to DSS costs,see HER

publications: 

– Go to HERC intranet web site 

– Choose Publications – Choose Technical Reports 
Cost of the Intervention 

 Direct measurement 

– Observe

/track i iact

i

v

i

t

ies an

d ass

ign 

 Pseudo bill Pseudo bill 

– Use billing codes/services and assig

 Cost regression 

– When costs of care are kno n When costs of care are kno

wn 

– Estimating the marginal costs 
Direct Measurement

 Identify all elements of the interve Observe or track activities  Summarize time/materials and sup

Summarize time/materials and sup

 Use VA labor costs to estimate the 

of the time (time x $) 
Pseudo bill 

 Use CPT/other utilization codes to 

estimate th t e in erventi on costs

– When CPT codingis specified and h

validity (and consistently employed

– Use Medicare or other payment sch

Use Medicare or other payment sch
Micro-costing the Interven

 Cost regression 

– E i st

imate marg

ina

l costs us

ing stat

is

techniques 

– Use to estimate marginal effect of a

intervention intervention 

– Use when data exists for current pra– Not for new technology or when acc

cost is not known cost is not known 
Cost Data Sources: Staff ti

 Average hourly staff cost for 70+ occu

categories can be fig red sing either categories can be fig

ured using either 

sources: 

– DSS ALBCC – Financial Management System 

OR  Use HERC technical report #12 supple

which has fi

gured them for FY2001-F
Cost Data Sources: Supplies, Ma

 National Prosthetics Patient Database 

– recor

ds purc

hase pr

ice o

f all items or

dered thro

VISTA Prosthetics and Sensory Aids package 

– includes nearly all medical items for internal an

includes nearly all medical items for internal an

use, not just prosthetics or sensory aids (glassesaids

) 

– stored and handled by NPPD data manager at H

VAMC 

 Your local A&MMS purchasing office
S i i i A l Sens

i

t

i

v

ity 

Ana

lyses



Purpose: t t th t l

to 

test the ro

bus

tness o

f your resul

 Method: chan

ge assum

ptions in 

your model 

how the final outcome changes 

 Univariate: change one at a time Univariate: change one at a time 

– Easy, but possibly misleading – 

Not considered state-of-the-art 

 Multivariate: change multiple assumptions a

– Probably will require software and/or a formal 

Probably will require software and/or a formal 

– High credibility – Allows useful graphing Allows useful graphing 
5. Cost of new care/intervention 

Summary 

 BIA requires six items: 1. Size and characteristics of 

patient 

p

o

pulatio

2. Usual care: current mix of care offered to cu

population population 

3. Cost of usual care 4. New care: mix of care under the new interv6. Use and cost of other health care services re

the intervention and the condition under stuthe intervention and the condition under stu

Source: Mauskopf et al. (2007)
Resources 

 HERC web site (www.herc.research.va.gov

– Guidebooks Guidebooks [most on intranet site on

[most on intranet site on

– Technical reports [most on intranet site on– FAQ responses FAQ responses – Slides from training courses (cyber-seminars)

 VIREC web site (www.virec.research.va.go

– Research user guides (RUGs) on DSS, PTF, OP– Technical reports (pharmacy) 
Resources

 Many articles on decision modelin

discrete event analysis appear in thjournals: journals: 

– Medical Decision Making – Health Economics – Value in Health 
Resources

 ISPOR recommendations on BIA: 

M k f J S lli SD A L t l Mauskopf J, Sullivan SD, Annemans L, et al. 

Principles of Good Practice for Budget Impact Analysis: RepISPOR Task Force on Good Research Practices – Budget ImpValue in Health 2007;10(5):336-347.

 VA-funded literature review on bu

impact analysis: Luck J,Parkerton P,Ha g ig i F.

What is the business case for improving care for patients with conditions?

Journal of General Internal Medicine Journal of General Internal Medicine 2007;22(Suppl 3):396 2007;22(Suppl 3):396-
Cost Data Sources: Indire

 PG Barnett, M Berger. Indirect Costs of Spe

VA Mental Heal h Tt 

Treatment. HERC Tec

h

n

Report #6. (on HERC web site)

 Rosenheck R, Neale M, Frisman L. Issues i

estimating th f i e cos

t of 

innovati ve men

t

a

l hea

programs. Psychiatric Quarterly 1995;66(1
Next HERC Course

“How can Cost Effectiveness Anal

How can Cost Effectiveness Anal

Made More Relevant to US He

C ?” Care?” 

Paul Barnett, PhD

December 5, 2012