Estimating Cost at Each Stage of Care

Mark Smith, PhD

Paul Barnett, PhD

Ciaran Phibbs, PhD

HERC Cyberseminar

February 28, 2007

Estimating Cost at Each Stage of Care

Mark Smith, PhD

Paul Barnett, PhD

Ciaran Phibbs, PhD

HERC Cyberseminar

February 28, 2007

Outline

1.   Overview

2.   Decision Support System			

3.   HERC or DSS Costs?	

4.	Fee Basis and Prosthetics Data	

5.	Examples and Q&A

Research on multiple care settings

VA patients often receive care in many settings.  This can be a challenge for cost research:

	- Utilization records are split among several datasets.

	- No single dataset has costs and procedures for all care.

Result: assessing cost across multiple settings often requires merging data from multiple sources.  

So what?

Research on multiple care settings

Different datasets have different cost variables

Include or exclude overhead (indirect) costs

Differing methods to estimate costs

Differing patterns of updating and validation  

Assigning costs across the continuum of care requires familiarity with many datasets.

Representative patients

During this workshop we will describe several datasets:
        - Decision Support System datasets
        - HERC Average Cost datasets
        - National Prosthetic Patient Database
        - Fee Basis data

At the end we will consider two hypothetical patients and consider which databases we might use to assess the total cost of their care across multiple settings.

Introduction to Decision Support System (DSS) Cost Data

Paul G. Barnett, PhD

Cost assignment in DSS Production System

Cost allocated to departments
        - Cost of supplies, contracts
        - Staff time allocations (data unique to DSS)

Cost assignment in DSS Production System

Allocate costs to production units (ALB)

Distribute indirects and find unit cost of products (DCM)

DSS assigns costs to products

Indirect (overhead) costs are distributed to patient care departments

Intermediate products counted
        - All services and products in VISTA (VA electronic medical records)

Relative Value Units (RVUs) assigned to products and totaled
        - Cost per RVU used to find cost of each intermediate product

DSS Production System

Allocate costs to production units (ALB)

Distribute indirects and find unit cost of products (DCM)

Assign costs to encounters  (DCR)

DSS National Data Extracts 

Production system not accessible

National Data Extracts
        - SAS files available at VA national computing center in Austin, TX
        - Web based report generator (VSSC web site)

DSS National Data Extracts

Encounter-Level National Data Extracts

National ALBCC Extract

Distribute indirects and find unit cost of products (DCM)

Allocate costs to production units (ALB)

Assign costs to encounters  (DCR)

DSS Production System

Department-level cost files

Account Level Budget Cost Center
        - Detail cost by cost center
        - Useful to find personnel cost, overhead rates

Encounter-level DSS Cost Files

Inpatient files
        - Discharge file 
        - Treating specialty (bed section) file

Outpatient Files
        - Outpatient cost
        - Low-cost outpatient visit file
        - Daily pharmacy cost

Encounter-level cost detail files

Cost sub-totals 

Prescription file

Intermediate Product Department Files 

Lab, radiology extracts

Advantages of DSS

Reflects on-site review of staffing, costing, workload  

Sums to actual VA costs

Consistent with utilization data

Useful to study VA efficiency

Doesn’t rely on assumptions based on coding or non-VA relative values

Improvement in DSS cost estimates

Better data on inpatient medical procedures 

Improvements via standardization, audit, and review

NDE filters out erroneous records

HERC or DSS Cost DataHow Do They Compare?

Ciaran Phibbs, PhD

Quick Overview of HERC Average Cost Estimates

Acute (med/surg) inpatient care
        - DRG weights with adjustments for length of stay and ICU days
        - Scale to actual VA costs by category of care

Other inpatient care
        - Per diem costs, by category of care

Quick Overview of HERC Average Cost Estimates, Continued

Outpatient care
        - Assign private sector (mostly Medicare) RVUs to VA CPT codes
        - Scale to actual VA costs by category of care

Category costs from CDR FY 98-03

Category costs summaries of DSS since  FY 04

Implications, DSS vs. CDR

98-03, CDR assigned more costs to inpatient care, and less to outpatient care than DSS

For 98-03, need to be careful about mixing HERC and DSS cost estimates.  

		e.g. use DSS for outpatient care and HERC for inpatient care would over-estimate costs

See Guidebooks for Full Details About the HERC Average Cost Data

HERC web site
        - www.herc.research.va.gov/publications
        - Separate guidebooks for inpatient, outpatient, and person-level data.
        - Additional information about these data in Technical Reports.  

HERC vs. DSSPerson-Level Costs 

Person-level (per year) costs are similar
        - Overall correlation = 0.72
        - Inpatient acute med/surg correlation = 0.66
        - Other inpatient care correlation = 0.77
        - Outpatient care correlation = 0.51  

HERC vs. DSSOutpatient Encounter Costs 

At the encounter level, overall correlation between HERC and DSS only 0.26

If trim the top and bottom 1% relative outliers, the correlation increases to 0.72 

Differences Between HERC & DSSOutpatient Encounter Costs 

Surgery more likely to have much higher DSS costs

Categories with many low cost items, such as labs, are much more likely to have large relative differences

How to Choose HERC vs. DSS Costs

Study design is the most important consideration

HERC costs are based on non-VA weights or RVUs.  

DSS designed to capture actual VA production costs

Examine the costs that are important to your study

When not to use HERC AC Outpatient dataset

If your study will have systematic differences on within CPT code resource use.
        - Example, add a brief smoking counseling component to physician visit

Study focuses on CPT codes that HERC used imputed values for.

Using local cost estimates, and they don’t seem correct.  There could be errors in the CDR allocations that HERC relies on.

The Fee Basis (FEE) filesMark W. Smith, PhD

Overview of Fee Basis Program

Pays for care at non-VA facilities in three situations:
        - VA cannot provide the care locally
        - It is economical to do so
        - Travel to a VA facility is medically infeasible

Overview of Fee Basis Program

Some common uses:
        - Community nursing home care
        - Home-based care 
        - E.g.: long-term oxygen therapy
        - Compensation & pension exams

Overview of Fee Basis files 

Subset of all VA contract care
        - Most “sharing agreement” care from affiliate universities is not included
        - Substantial non-VA utilization unaccounted for

What Data Rows Represent

Outpatient:  a single service provided, reflected in the CPT procedure code

Inpatient: all days of stay within the invoice period (typically a calendar month).  

	A single inpatient stay may be billed in multiple invoices and hence multiple Fee Basis records for the patient.

Highlights of Patient Data

Scrambled SSN  (SCRSSN)

Primary Service Area (PSA)
        - 	3-digit VA station number

 Can be linked by SCRSSN to other VA databases to find other patient-level variables

Highlights of Clinical Data

Outpatient: 
        - Date of service
        - 1 CPT procedure code

Inpatient:
        - Start and end dates of invoice period 
        - Up to 5 surgery codes
        - Up to 5 ICD-9 diagnosis codes

Highlights of Financial Data

Amount claimed by vendor

Amount paid 

Medicare prospective payment amount (inpatient) 

Highlights of Vendor Data

Vendor ID

Address (city, state, zip)

Related VA station number

Creating Discharge Records (1)

Goal:  Create a single discharge record from multiple inpatient service (INPT) records

Method:  Concatenate by SCRSSN using TREATDTF and TREATDTO

Use VENDID to find a transfer from one provider to another

Creating Discharge Records (2)

Records are typically processed within 30 days of invoicing.	

			BUT

Invoices may be sent LONG after services are rendered.

		    THEREFORE

To find all services in a fiscal year, look in the Fee Basis files in that year and the 2 following years.  

Overlap with Other VA Files

Community  nursing home care also in
        - DSS outpatient files
        - PTF Extended Care files

Most completed hospital stays also in PTF Non-VA Hospitalization files

National Prosthetic Patient Database 

NPPD Creation

“Prosthetics Package” in VISTA records all orders for prosthetic items and services that are channeled through the Prosthetics and Sensory Aids Service (PSAS).

NPPD Structure
        - Each record represents a single prosthetic device or service ordered.
        - Multi-part items (e.g., wheelchairs) have a separate record for each element, but often a single overall price.
        - NPPD is an order database, not a use database.  One cannot tell... 
        - whether a patient picked up an ordered item 
        - for how long it was used (if ever)	
        - whether it was returned

NPPD Costs
        - Costs for new items represent the local/regional/national  contract cost.
        - Costs for repaired items represent 50% of the local contract cost or the actual repair cost, whichever is less. 
        - Labor and overhead costs do not appear in NPPD.
        - All NPPD costs are represented in other cost datasets already (e.g., within variable supply cost or indirect cost in DSS)

NPPD Uses
        - Reasonable uses of NPPD
        - Comparing costs for particular items or services across stations or VISNs
        - Studying changes over time in prescribing practices for particular types of items, such as wheelchairs
        - Inadvisable use of NPPD
        - Locating prosthetics orders or cost for particular individuals 

HERC Technical Reports

Fee Basis data:  report completed

NPPD: report in progress

URL:  http://www.herc.research.med.va.gov/publica   

           tions/technical_reports.asp

Using Multiple Datasets: Examples

A typical patient: Joe

Joe is a 42 y.o. homeless veteran with PTSD and comorbid depression.  

He enters a domiciliary for 30 days. After discharge he receives prescription medications.  He stops taking them and his depression becomes severe.  He is taken to the VA emergency room and then transferred to an inpatient mental health bedsection.  After discharge he receives monthly telehealth contacts and returns to VA for a PTSD therapy group. 

Cost of Joe’s Care

1.  Domiciliary

	- Utilization:  PTF, DSS NDE

	- Cost:  HERC AC, DSS NDE

HERC data based on average cost per day; DSS allows more variation.  

Little difference in practice: domiciliary care is unlikely to vary much in cost day to day

Cost of Joe’s Care

2.  Outpatient prescription medications

	- Utilization:  

		PBM V3.0 Database (“PBM”)

		DSS Pharmacy NDE (“DSS Pharmacy Extract”)

		DSS NDE for outpatient care: daily summary, not 

			at the prescription level

Cost of Joe’s Care

2.  Outpatient prescription medications, cont’d
        - Cost	

PBM has purchase price (only) for each script

DSS NDE for outpatient care has daily total cost for the “pharmacy clinic” – rolls up all scripts per day

DSS Pharmacy Extract has many cost variables for each prescription:  fixed direct, variable direct, indirect, variable supply

Cost of Joe’s Care

3. VA emergency room care

Utilization:				Cost:

	- DSS NDEs 			- DSS NDEs

	- PTF, OPC 			- HERC AC

Cost of Joe’s Care

3. VA emergency room care

ER care can vary substantially in cost.  Thus, DSS will be a better option than the HERC AC data. 

HERC data may be accurate on average but will most likely understate the variance substantially. 

Cost of Joe’s Care

4.  Inpatient mental health bedsection

	Utilization			Cost

	DSS NDEs 			DSS NDEs

	PTF				HERC AC

Cost of Joe’s Care

4.  Inpatient mental health bedsection, cont’d

Cost

	DSS NDE will have most precise costs.  HERC AC may be fine if the patient didn’t have surgery, since surgery produces much of the cost variation.  

	If you use DSS for one aspects of care, use it for all aspects unless you have a strong justification for doing otherwise!

Cost of Joe’s Care 

5.  Telehealth

	Utilization		Cost

	OPC			HERC AC

	DSS NDE		DSS NDE

Be sure to validate!  Consider using self-report or provider report if datasets are inaccurate.

Note: DSS lacked telehealth before FY2003.

Cost of Joe’s Care 

6.  PTSD Group Therapy

	Utilization		Cost

	OPC			HERC AC

	DSS NDE		DSS NDE

Either option is reasonble; there is likely to be little variation in cost across therapy sessions.

Cost of Joe’s Care 

Summary - 1

DSS NDEs, including the Pharmacy Extract, can be used for all of Joe’s care.

OPC/PTF, combined with HERC AC data, can also be used for all of Joe’s care.

Cost of Joe’s Care 

Summary - 2

DSS better captures variation in inpatient care.

	but

HERC data include estimated Medicare payments (“HERC Values”). HERC data use Medicare RVUs  and thus may have greater external validity.

Typical patient: Evelyn 

Evelyn is a 75 y.o. veteran with osteoporosis and emphysema who lives at home.  

Non-VA care:  orthopedist, community nursing home

VA care: 

- pulmonologist and primary care physician

- outpatient prescriptions through CMOP

- inpatient med/surg care 

- physical therapy 

- walker 

- long-term oxygen therapy

Cost of Evelyn’s Care 

1.  Non-VA orthopedist

	Utilization		Cost

	Medicare		Medicare 

	Self-report		Medicare; HERC AC; self-

					report; Fee Basis

Medicare data available from VIREC with 2-year lag.

Self-report acceptable for short horizons.  Best to validate if possible.

Cost of Evelyn’s Care 

2.  Community nursing home

	Utilization			Cost

a.  If paid by VA...

	Fee Basis		 	Fee Basis 

	DSS outpatient NDE   	DSS outpatient NDE

b.  If paid by another source...

   	Self-report			Medicare; Fee Basis; 					DSS			

Cost of Evelyn’s Care 

3.  VA inpatient med/surg 

4.  Outpatient pulmonologist, PCP, physical therapy

	Utilization			Cost

	DSS NDE   			DSS NDE

	PTF/OPC			HERC AC

DSS preferable for inpatient, both acceptable for outpatient.  (Use DSS for all – best not to mix DSS and HERC data.)

Cost of Evelyn’s Care 

5.  VA prescription medications 

	Utilization			Cost

	DSS Pharmacy NDE	DSS Pharmacy NDE

	PBM				PBM (direct cost only)

Cost of Evelyn’s Care 

6.  Walker

	Utilization			Cost

	no good source 		NPPD *

* NPPD costs are reflected in HERC and DSS outpatient data, so do not double-count.  Use NPPD costs only to estimate direct costs of devices or services. 

Cost of Evelyn’s Care 

7.  Long-term oxygen therapy

	Utilization			Cost

	NPPD	 			NPPD *

* NPPD costs are reflected in HERC and DSS outpatient data, so do not double-count.  Use NPPD costs only to estimate direct costs of devices or services.  

Questions?herc@va.govwww.herc.research.va.gov