Class Variables for MEPS Expenditure 

Imputations 

Agency for Healthcare Research and Quality 

U.S. Department of Health & Human Services March 2007 
ABSTRACT

The Medical Expenditure Panel Survey (MEPS) collects data on health care 

utilization, expenditures, sources of payment, insurance coverage, and health care

quality measures. The survey was designed to produce national and regional 

estimates for the U.S. civilian noninstitutionalized population. The data on 

medical expenses are collected from both household respondents in the 

Household Component and from a sample of their health care providers in the 

Medical Provider Component. In the absence of payment information from either 

component, expenditure data are derived for sample persons through an 

imputation process. Missing expense data are imputed at the event level for each

medical event type using a weighted hot-deck procedure. This process utilizes

individual- and event-level data collected in MEPS that are correlated with

medical expenditures. Bivariate analyses and linear regression models were 

utilized to assess the current class variables used for imputation. This paper

details the methodology used to select, prioritize, and categorize the class 

variables used to impute missing expenditures for two event types: doctor visits 

and inpatients hospitalizations. 

Suggested Citation: 

Zodet, M. W., Wobus, D. Z, Machlin, S. R., Kashihara, D., and Dougherty, D. D. 

Class Variables for MEPS Expenditure Imputations. Methodology Report No. 20. 

March 2007. Agency for Healthcare Research and Quality, Rockville, Md. 

http://www.meps.ahrq.gov/mepsweb/data_files/publications/mr20/mr20.pdf 

∗ ∗ ∗

The estimates in this report are based on the most recent data available at the time 

the report was written. However, selected elements of MEPS data may be revised 

on the basis of additional analyses, which could result in slightly different 

estimates from those shown here. Please check the MEPS Web site for the most 

current file releases. 

Center for Financing, Access, and Cost Trends 

Agency for Healthcare Research and Quality

540 Gaither Road 

Rockville, MD 20850 

www.meps.ahrq.gov

ii
The Medical Expenditure Panel Survey (MEPS) 

Background 

The Medical Expenditure Panel Survey (MEPS) is conducted to provide nationally

representative estimates of health care use, expenditures, sources of payment, and 

insurance coverage for the U.S. civilian noninstitutionalized population. MEPS is 

cosponsored by the Agency for Healthcare Research and Quality (AHRQ), formerly the 

Agency for Health Care Policy and Research, and the National Center for Health 

Statistics (NCHS). 

MEPS comprises three component surveys: the Household Component (HC), the 

Medical Provider Component (MPC), and the Insurance Component (IC). The HC is the

core survey, and it forms the basis for the MPC sample and part of the IC sample. 

Together these surveys yield comprehensive data that provide national estimates of the 

level and distribution of health care use and expenditures, support health services 

research, and can be used to assess health care policy implications. 

MEPS is the third in a series of national probability surveys conducted by AHRQ on the 

financing and use of medical care in the United States. The National Medical Care

Expenditure Survey (NMCES) was conducted in 1977, the National Medical 

Expenditure Survey (NMES) in 1987. Beginning in 1996, MEPS continues this series 

with design enhancements and efficiencies that provide a more current data resource to 

capture the changing dynamics of the health care delivery and insurance system. 

The design efficiencies incorporated into MEPS are in accordance with the Department 

of Health and Human Services (DHHS) Survey Integration Plan of June 1995, which 

focused on consolidating DHHS surveys, achieving cost efficiencies, reducing 

respondent burden, and enhancing analytical capacities. To accommodate these goals, 

new MEPS design features include linkage with the National Health Interview Survey

(NHIS), from which the sample for the MEPS-HC is drawn, and enhanced longitudinal 

data collection for core survey components. The MEPS-HC augments NHIS by selecting 

a sample of NHIS respondents, collecting additional data on their health care 

expenditures, and linking these data with additional information collected from the 

respondents’ medical providers, employers, and insurance providers. 

Household Component 

The MEPS-HC, a nationally representative survey of the U.S. civilian noninstitutionalized population, collects medical expenditure data at both the person and household 

levels. The HC collects detailed data on demographic characteristics, health conditions, 

health status, use of medical care services, charges and payments, access to care, 

satisfaction with care, health insurance coverage, income, and employment. 

The HC uses an overlapping panel design in which data are collected through a 

preliminary contact followed by a series of five rounds of interviews over a two and a 

half year period. Using computer-assisted personal interviewing (CAPI) technology, data 

on medical expenditures and use for two calendar years are collected from each

household. This series of data collection rounds is launched each subsequent year on a 

new sample of households to provide overlapping panels of survey data and, when 

iii
combined with other ongoing panels, will provide continuous and current estimates of

health care expenditures. 

The sampling frame for the MEPS-HC is drawn from respondents to NHIS, conducted

by NCHS. NHIS provides a nationally representative sample of the U.S. civilian 

noninstitutionalized population, with oversampling of Hispanics and blacks. 

Medical Provider Component 

The MEPS-MPC supplements and validates information on medical care events reported 

in the MEPS-HC by contacting medical providers and pharmacies identified by household respondents. The MPC sample includes all hospitals, hospital physicians, home 

health agencies, and pharmacies reported in the HC. Also included in the MPC are all 

office-based physicians:

 Providing care for HC respondents receiving Medicaid. 

 Associated with a 75 percent sample of households receiving care through an HMO 

(health maintenance organization) or managed care plan. 

 Associated with a 25 percent sample of the remaining households. Data are collected 

on medical and financial characteristics of medical and pharmacy events reported by

HC respondents, including: 

 Diagnoses coded according to ICD-9 (9th Revision, International Classification of 

Diseases) and DSMIV (Fourth Edition, Diagnostic and Statistical Manual of Mental

Disorders). 

 Physician procedure codes classified by CPT-4 (Current Procedural Terminology, 

Version 4). 

 Inpatient stay codes classified by DRG (diagnosis related group). 

 Prescriptions coded by national drug code (NDC), medication names, strength, and 

quantity dispensed. 

 Charges, payments, and the reasons for any difference between charges and 

payments. 

The MPC is conducted through telephone interviews and mailed survey materials. 

Insurance Component 

The MEPS-IC collects data on health insurance plans obtained through private and 

public sector employers. Data obtained in the IC include the number and types of private 

insurance plans offered, benefits associated with these plans, premiums, contributions by

employers and employees, and employer characteristics. 

Establishments participating in the MEPS-IC are selected through three sampling 

frames: 

 A list of employers or other insurance providers identified by MEPS-HC respondents 

who report having private health insurance at the Round 1 interview. 

 A Bureau of the Census list frame of private-sector business establishments. 

 The Census of Governments from the Bureau of the Census. 

To provide an integrated picture of health insurance, data collected from the first 

sampling frame (employers and other insurance providers) are linked back to data

provided by the MEPS-HC respondents. Data from the other three sampling frames are 

collected to provide annual national and State estimates of the supply of private health 

iv
insurance available to American workers and to evaluate policy issues pertaining to 

health insurance. Since 2000, the Bureau of Economic Analysis has used national 

estimates of employer contributions to group health insurance from the MEPS-IC in the 

computation of Gross Domestic Product (GDP). 

The MEPS-IC is an annual panel survey. Data are collected from the selected

organizations through a prescreening telephone interview, a mailed questionnaire, and a 

telephone follow-up for nonrespondents. 

Survey Management 

MEPS data are collected under the authority of the Public Health Service Act. They are 

edited and published in accordance with the confidentiality provisions of this act and the

Privacy Act. NCHS provides consultation and technical assistance. 

As soon as data collection and editing are completed, the MEPS survey data are released 

to the public in staged releases of summary reports and microdata files. Summary reports 

are released as printed documents and electronic files. Microdata files are released on 

CD-ROM and/or as electronic files.

Printed documents and CD-ROMs are available through the AHRQ Publications 

Clearinghouse. Write or call: 

AHRQ Publications Clearinghouse 

Attn: (publication number) 

P.O. Box 8547 Silver Spring, MD 20907 

800-358-9295 

703-437-2078 (callers outside the United States only)

888-586-6340 (toll-free TDD service; hearing impaired only) 

To order online, send an e-mail to: ahrqpubs@ahrq.gov. 

Be sure to specify the AHRQ number of the document or CD-ROM you are requesting. 

Selected electronic files are available through the Internet on the MEPS Web site: 

http://www.meps.ahrq.gov/

For more information, visit the MEPS Web site or e-mail mepspd@ahrq.gov. 

v
Table of Contents 

Introduction ................................................................................................................... 1


Background ................................................................................................................... 1


Class variables............................................................................................................ 1


MEPS event types ...................................................................................................... 2


Methodology ................................................................................................................. 2


Data ........................................................................................................................... 2


Potential class variables.............................................................................................. 2


Regression models...................................................................................................... 3


Examples ....................................................................................................................... 3


Physician office visits................................................................................................. 4


Hospital inpatient stays............................................................................................... 6


Class variable collapsing strategy ............................................................................... 8


Summary ....................................................................................................................... 9


References ..................................................................................................................... 9


Tables:


Table 1. Total mean expenditures for physician office visits and inpatient hospital


stays, by year (standard error) ................................................................................. 4


Table 2. P-Values (Wald F Statistics) from weighted regression models, by year


(SUDAAN) ............................................................................................................. 4


Table 3. Order of entry into weighted regression models, by year (STEPWISE


procedure)............................................................................................................... 5


Table 4. Coefficients for select variables from weighted regression models, by year


(SUDAAN) ............................................................................................................. 5


Table 5. Final class variable list for imputing physician office visit expenditures ........... 6


Table 6. P-values (Wald F Statistics) from weighted regression models, by year


(SUDAAN) ............................................................................................................. 7


Table 7. Order of entry into weighted regression models, by year (STEPWISE


procedure)............................................................................................................... 7


Table 8. Coefficients for select variables; weighted regression models, by year


(SUDAAN) ............................................................................................................. 8


Table 9. Final class variable list for imputing inpatient hospital expenditures................. 8


Table 10. Coefficients for reason in hospital; weighted regression models, by year


(SUDAAN) ............................................................................................................. 9


vi
Class Variables for MEPS Expenditure Imputations 

Marc W. Zodet, Agency for Healthcare Research and Quality; Diana Z. Wobus, Westat; 

Steven R. Machlin and David Kashihara, Agency for Healthcare Research and Quality; 

and Deborah D. Dougherty, Westat

Introduction 

The Medical Expenditure Panel Survey (MEPS) collects data on health care utilization, 

expenditures, sources of payment, insurance coverage, and health care quality measures. 

The survey, conducted annually since 1996 by the Agency for Healthcare Research and 

Quality (AHRQ), is designed to produce national and regional estimates for the U.S. 

civilian noninstitutionalized population. 

MEPS data on medical expenses are collected from both household respondents in the 

Household Component and from a sample of their health care providers in the Medical 

Provider Component. When payment (i.e., expenditure) information is missing from 

either component, these data are derived through an imputation process. Expense data 

are collected at the event level for each medical event type and a weighted hot-deck 

procedure is used for imputation. This process utilizes individual- and event-level data 

collected in MEPS that are correlated with medical expenditures. AHRQ uses bivariate 

analyses and linear regression models to assess potential variables to use in imputation.

Using office-based visits and inpatients stays as examples, this paper details the 

methodology used to select, prioritize, and categorize the class variables used to impute 

missing expenditure data. The paper does not address the specifics of how the 

imputations are actually carried out. For a more detailed description of the imputation

procedure, see Machlin and Dougherty, 2004. 

Background 

Class variables 

A key component of a hot-deck procedure is the matching of sample observations with 

missing information (i.e., recipients) to similar sample observations not missing the 

information (i.e., donors). Categorical or “class” variables that characterize the sample 

observations are used to classify both recipients and donors into imputation cells (i.e., 

classes). Within each imputation cell, the recipients’ missing values are imputed from

the values of the donors. Variables that are considered important predictors of the data to 

be imputed are the primary candidates for use as class variables. The underlying 

assumption is that the recipients have similar values with regard to the measure of

interest as the donors and that the data associated with the donors within the same 

imputation cell are appropriate for the imputation of the missing values (Cox, 1980). 

Class variables are typically ordered in accordance with predictive importance (i.e., 

more important predictors are ranked higher). If there are fewer donors than recipients in

a cell, then the procedure will begin collapsing over the categories of the class variables,

starting at the bottom of the list and working up, until a sufficient number of donors are 

available. 

1
MEPS event types 

MEPS expenditure data are imputed separately for each of 10 event types: hospital 

inpatient stays, hospital outpatient department visits, emergency room visits, officebased visits (physician and non-physician), home health (agency and paid independent), 

dental, other medical equipment/supplies, and prescription medications. Separate 

imputations are conducted for each event type because the relevant variables and 

statistically significant correlates are not consistent across the event types. Therefore, for 

each event type, the class variables are evaluated and chosen separately, but some of the 

same class variables are used across different event types. For example, the class 

variables for the imputations of both emergency room expenditures and dental 

expenditures include patient age. While the same class variable may be used across

multiple event types, the specification of the specific categories for the variable used in 

the individual imputations may differ. The remainder of this paper discusses the process

by which variables are evaluated and selected for use in the creation of imputation cells. 

Methodology

The lists of class variables used to impute event-specific expenditures were initially

established based on the first year of MEPS data (1996). The process of identifying 

predictors of total expenditures was based both on substantive decisions and statistical

associations that were identified primarily through multiple linear regression models. In

2002, analysts from AHRQ and Westat, the data collection contractor, jointly began to 

reevaluate and revise these lists of class variables. The methods presented in this section 

and the Examples section below are reflective of those efforts and focus primarily on the 

quantitative methods used in the decision process. 

Data

Event-level data are used for these analyses. Only events that were potential donors (i.e., 

complete on the Household Component and/or the Medical Provider Component) were 

used in the analyses. Multiple years of data were examined: 1997, 1998, and 1999. For 

the most part, each year of data was examined separately. However, when the numbers 

of events were small (e.g., home health services), years of data were pooled to stabilize 

the variance of the estimates. 

Potential class variables

The class variables considered for the imputation were those collected in MEPS that 

were thought a priori to potentially have a significant impact on total expenditures. Two 

variables were considered important enough to be included in all imputation procedures: 

type of insurance coverage and total charges. The former was chosen because the 

payment for health care services can vary widely by insurance status and type of 

insurance coverage (e.g., private, Medicare, Medicaid, etc.); the latter because total 

charges are highly correlated with total expenditures. Unfortunately, when expenditures 

are missing total charges are also frequently missing. 

2
Other potential predictors of expenditures were selected quantitatively. These included 

various indicators of health care services (e.g., laboratory tests, radiology, surgeries/ 

extractions, etc.). Predictors can be specific to the type of event. For example, the 

number of nights is associated with inpatient hospital stays, but is not relevant to 

physician office visits. 

Regression models 

Multiple linear regression was used to evaluate the statistical associations between 

potential class variables and total expenditures. The dependent variable in each model 

was total expenditures for the event. Total expenditures were defined as the sum of

direct payments for care provided during the year, including both out-of-pocket, thirdparty (e.g., private insurance, Medicare, and Medicaid), and other miscellaneous 

payment sources.

Two approaches were taken when fitting the regression models to assess the association 

between potential class variables and total expenditures. First, to adjust for the complex

design of MEPS, linear regression models were fit using PROC REGRESS in the 

SUDAAN statistical software package (www.rti.org/sudaan). With these models, the two 

primary considerations were 1) whether or not the resulting regression coefficients were

significant and 2) the relative magnitude and direction of the significant coefficients.

Statistical significance was determined at the α=0.05 level. To provide additional 

guidance in the selection of variables, models were fit using SAS PROC STEPWISE 

(www.sas.com). The significance level for entry and retention was 0.15 (the SAS 

default). Block entry grouping of variables was used to ensure that all levels of a 

particular variable were entered, retained, or eliminated as a group. 

Results from both sets of models (i.e., those fit using SUDAAN and those fit using SAS) 

were considered when selecting the final list of class variables to be used in the 

imputation procedures. Model results were also used to prioritize the class variables, 

which were ranked with the most important substantive and statistical predictors placed 

higher on the list. Model results were also used to determine the collapsing strategies for 

variables with three or more levels. When it became necessary to collapse over

imputation cells due to insufficient availability of donors, the most important predictors 

of total expenditures (i.e., those higher on the list) were preserved. This was an effort to

assure that recipients and donors were matched based on the most important predictors 

of total expenditures. 

Examples 

As noted previously, the process for identifying class variables was performed separately

for each type of event. Examples of how this process works for physician office visits

and inpatient hospital stays are presented below. To provide a point of reference for the 

magnitude of total expenses attributed to each of these two types of medical events, table 

1 presents mean total expenditures per event for 1997 through 1999 for events with 

complete (i.e., not imputed) data. In 2001, approximately one-third of the expenditure 

values were fully imputed for physician office visits and hospital inpatient stays. 

3
Table 1. Mean total expenditures for physician office visits and inpatient hospital stays, by

year (standard error)

1997 1998 1999 

Physician office visits1 $92 ($3) $98 ($3) $107 ($3) 

Hospital inpatient stays

1,2 $5,647 ($301) $5,375 ($304) $5,929 ($367) 

1

Estimates are for patients with complete event data (i.e., donors). 2

Only events of patients who did not die during the year. 

During the late 1990s, total expenditures for a physician office visit averaged roughly

$100 per event while facility expenditures for an inpatient hospital stay during this same 

period averaged approximately $5,600 per event. 

Physician office visits 

Table 2 summarizes p-values for regression model coefficients fit using SUDAAN (i.e., 

adjusted for the complex survey design). Separate models were fit for the years 1997, 

1998, and 1999 with physician office visit expenditures as the dependent variable in

each model. Independent variables in the models were those hypothesized as potentially

significant predictors of office visit expenditures and were the candidate variables from 

which to select the class variables to create the imputation cells.

The information provided in table 2 shows that surgery, radiology, other services, and 

laboratory services were all statistically significant predictors of physician office visit 

expenditures across all three years (p-values < 0.01). Other variables were statistically

significant predictors in some years, but not others. For example, patient age was highly

significant (p-value < 0.01) in 1999, but not in the two preceding years. 

Table 2. P-Values (Wald F Statistics) from weighted regression models, by year (SUDAAN) 

Dependent variable = physician office visit expenditures 

1997 1998 1999 

# Obs Used in Regression 48,815 34,948 31,978 

R2 0.043 0.048 0.032 

Class variable1

Surgery (Yes; No) <0.01 <0.01 <0.01 

Radiology (yes; no) <0.01 <0.01 <0.01 

Other services (yes; no) <0.01 <0.01 <0.01 

Laboratory services (yes; no) <0.01 <0.01 <0.01 

Saw non-MD (yes; no) <0.10 <0.10 

Age (<18; 18-24; 25-64; 65+) <0.01 

Perceived health (poor; other) <0.10 <0.05 

Race/ethnicity (Hispanic; other) 

Census region (S; MW; NE; W) 

MSA (MSA; Non-MSA) <0.05 <0.10 

1

Variables forced into the models are not shown (e.g., Insurance Source of Payment [Private; Medicare; Medicaid; 

CHAMPUS/TRICARE], Decile of Total Charges, and HMO Indicator [Yes; No]) 

Results from fitting the STEPWISE models for each year are presented in table 3, which 

shows the order in which the independent variables entered into the models. Surgery,

radiology, and other services were consistently the first, second, and third variables 

4
entered into the model each year. Perceived health and laboratory services alternated as 

the fourth and fifth variables, depending on the year. 

 

Table 3. Order of entry into weighted regression models, by year (STEPWISE procedure)

Dependent variable = physician office visit expenditures 

1997 1998 1999 

# Obs used in regression 48,815 34,948 31,978 

R2 0.042 0.048 0.032 

Variable entry order 

1st Surgery Surgery Surgery 

2nd Radiology Radiology Radiology 

3rd Other services Other services Other services

4th Perceived health Lab services Perceived health 

5th Lab services Perceived health Lab services 

6th Saw non-MD Age Age 

7th Region Saw non-MD Region 

8th Region Region Saw non-MD 

Table 4 presents the SUDAAN regression coefficients for selected variables used in the 

model. This table illustrates that surgery was consistently associated with higher 

physician office visit expenditures. For the years observed (i.e., 1997–1999), the average 

additional expenditure associated with having a surgical procedure during a physician 

office visit was approximately $200, when controlling for the other variables on the 

model. These additional expenditures were substantially greater than what is observed 

for the other factors being considered. For example, the difference in mean expenditures 

per event associated with surgery compared to radiology (the second strongest effect) 

ranged from approximately $115 in 1999 ($196–$81) to approximately $136 in 1997 

($205–$69). 

 

Table 4. Coefficients for select variables from weighted regression models, by year (SUDAAN), 

Dependent variable = physician office visit expenditures 

β-Coefficients (SE β-Coefficients) 

Class variable 1997 1998 1999 

Surgery $205 ($25) $198 ($28) $196 ($28)

Radiology $69 ( $5) $79 ( $7) $81 ( $9)

Other services $53 ( $9) $44 ($10) $58 ( $8)

Lab services $21 ( $4) $24 ( $6) $20 ( $6)

Perceived health $40 ($25) $30 ($17) $34 ($14)

Saw non-MD -$8 ( $6) -$14 ( $8) -$11 ( $7) 

Among the four most highly significant variables (i.e., surgery, radiology, other 

services, and laboratory services), the magnitudes of the coefficients (i.e., the 

average expenditures) associated with a particular service tended to diminish in 

accordance with the entry order of the variables into the STEPWISE models. 

However, while the expenses associated with surgery were consistently higher than 

those of any of the other factors considered, the magnitude of the differences 

between the other services (i.e., radiology, other, and lab) varied from year to year. 

For example, a simple comparison of the mean office visit expenditures associated 

with radiology compared to other services demonstrated no significant difference in 

1997; but there was a significant difference in 1998, with payments for office visits 

5
involving a radiology service running about $35 more per visit compared with those 

with other services ($79 versus $44). In summary, of the factors considered, surgery 

clearly had the greatest impact on increasing physician office visit expenditures. 

The final list of class variables used to impute physician office visit expenditures is 

presented in table 5. The top three variables were chosen based upon substantive 

reasoning: HMO (an indicator of whether or not the patient was enrolled in an 

HMO), type of insurance coverage, and total charges. The remainder were chosen 

based upon the regression results. Surgery, radiology, and other services followed in 

that order primarily because they were each highly significant in each of the 

SUDAAN models across all three years and because they were consistently the first 

three variables entered into the STEPWISE models in all three years. The laboratory 

services variable was placed above the perceived health variable because it was more 

highly significant in each of the SUDAAN models and because it entered into the 

STEPWISE models before the perceived health variable for two of the three years. In 

turn, the perceived health variable was more statistically significant in the SUDAAN 

models than the saw non-MD variable. It also entered into each of the STEPWISE 

models before saw non-MD and was therefore higher on the list. Despite being 

statistically significant in at least one of the years examined, neither age nor MSA 

(metropolitan statistical area) were included on the final list of class variables. The 

rationale for dropping age and MSA came from the fact that age was only significant 

in one year (p-value < 0.01), and MSA was never retained in any of the STEPWISE 

procedures. 

Table 5. Final class variable list for imputing physician office visit expenditures 

1. HMO 

2. Type of Insurance Coverage

3. Total charges 

4. Surgery 

5. Radiology 

6. Other services 

7. Laboratory services 

8. Perceived health 

9. Saw non-MD 

Hospital inpatient stays 

Table 6 shows that, based on the SUDAAN model, the only statistically significant 

predictors of inpatient hospital stay expenditures of the variables considered were length 

of stay and reason in hospital (p-values < 0.01). These results were consistent across 

each of the three years. Results from the STEPWISE models confirmed the importance 

of both length of stay (LOS) and reason in hospital, as these variables were consistently

the first and second variable, respectively, added to each of the models (table 7). 

6
Table 6. P-values (Wald F Statistics) from weighted regression models, by year (SUDAAN) 

Dependent variable = inpatient hospital stay expenditures 

1997 1998 1999 

# Obs used in regression 1,881 1,294 1,259 

R2 0.40 0.36 0.44 

Class variable1

ER before admission (yes; no) 

HMO (yes; no)

Length of Stay (0, 1, 2,...6, 7, 8-13, 14-30, 31-60, 61+) <0.01 <0.01 <0.01 

Reason in hospital (surgery; treatment/therapy; 

diagnostic tests; give birth; to be born; other) 

<0.01 <0.01 <0.01 

Census region (N; MW; S; W)

MSA (MSA; non-MSA) 

1

Variables forced into the models are not shown (e.g., Insurance Source of Payment [Private; Medicare; Medicaid; 

CHAMPUS/TRICARE] and Decile of Total Charges) 

Table 7. Order of entry into weighted regression models, by year (STEPWISE procedure) 

Dependent variable = inpatient hospital stay expenditures 

1997 1998 1999 

# Obs used in regression 1,881 1,294 1,259 

R2 0.32 0.31 0.31 

Variable entry order 

1st LOS LOS LOS 

2nd Reason Reason Reason 

3rd ER before Region Region 

4th Region HMO 

The coefficients for length of stay and reason in hospital that resulted from SUDAA N 

are presented in table 8. For the most part, mean expenditures per stay increased as the 

length of stay increased. There was some erratic behavior of the coefficients for the 

longest lengths of stay (e.g., sharp drops in average expenditures associated with lengths 

of stay of more than 60 days). While this may have been due to the influence of outliers 

in the 31–60 day category and/or may suggest that some other functional form of the 

variable was more appropriate, it had no impact on our decision to include length of stay

as a high-priority variable. Surgery was the most significant contributor to inpatient 

expenditures compared with the other reasons for hospitalization. The coefficients

indicated that surgery is associated with an approximate increase in inpatient expenditures of at least $3,000 compared to the other reasons category for admission to the 

hospital.

7
Table 8. Coefficients for select variables; weighted regression models, by year (SUDAAN)

Dependent variable = inpatient hospital stay expenditures 

β-Coefficients (SE β-Coefficients) 

Class Variable 1997 1998 1999 

Length of stay (days) 0 (Reference) $0 ( $0) $0 ( $0) $0 ( $0) 

1 $2,121 ( $411) $2,020 ( $488) $771 ( $550) 

2 $3,824 ( $448) $3,073 ( 480) $2,146 ( $638)

3 $4,715 ( $523) $3,792 ( $505) $3,126 ( $569) 

4 $5,637 ( $615) $5,239 ( $727) $4,193 ( $708)

5 $6,922 ( $933) $6,624 ( $976) $4,436 ( $707)

6 $7,853 ( $836) $7,307 ($1,236) $6,165 ( $1,125) 

7 $8,532 ( $927) $7,180 ($1,110) $7,340 ( $1,066) 

8-13 $10,555 ( $1,053) $8,722 ( $761) $8,769 ( $1,124) 

14-30 $18,967 ( $3,048) $18,123 ($2,706) $19,409 ( $4,170) 

31-60 $44,950 ($12,311) $25,739 ($6,567) $39,188 ($17,209) 

61+ $5,484 ( $827) $15,107 ($9,416) $48,210 ($11,756) 

Reason in hospital Surgery (reference) $0 ( $0) $0 ( $0) $0 ( $0) 

Treatment/therapy -$4,342 ( $590) -$3,906 ( $676) -$4,937 ( $882)

Diagnostic tests -$4,315 ( $570) -$3,543 ( $521) -$4,998 ( $734)

Give birth -$3,380 ( $461) -$3,122 ( $532) -$3,780 ( $622)

To be born $2,456 ( $4,525) -$2,082 ($1,956) -$6,554 ( $1,701) 

Other -$3,792 ( $924) -$3,600 ($1,525) -$4,567 ( $796)

The final list of class variables used to impute inpatient hospital expenditures is 

presented in table 9. As usual, type of insurance coverage and total charges were

included at the top of the list. In addition, an indicator of whether or not there was an 

emergency room (ER) event before the hospital admission was included because the 

billing information for the ER and the hospital stay are often rolled up into one 

expenditure figure for the stay. Based on the findings noted above, length of stay and 

reason in hospital then followed in that order. MSA status and census region were also 

included on the final list; based in part on their being retained in the STEPWISE models 

(p-values<0.15). 

Table 9. Final class variable list for imputing inpatient hospital expenditures 

1. Type of Insurance Coverage

2. Total Charges 

3. ER before Admission 

4. Length of Stay

5. Reason in Hospital 

6. MSA/Non-MSA 

7. Census Region 

Class variable collapsing strategy 

Results from the regression modeling presented above were also used to establish the 

collapsing strategy used during the hot-deck procedure for variables with three or more

levels. The coefficients from the SUDAAN regression models weighed heavily in

deciding how to collapse over variables with three or more categories. For example,

consider the reason in hospital variable described above. Note that there was little 

difference between the coefficients for treatment/therapy and diagnostics tests only.

Hence, prior to using the variable in the imputation procedure, it seemed reasonable to 

recode these two levels into one, effectively reducing the variable from six levels to five

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levels (table 10). During the imputation procedure, further collapsing of the remaining 

levels was determined by the number of recipients/donors residing in a given imputation

cell. Given the findings noted above, it was important to maintain surgery as a separate 

category whenever possible since it was associated with the highest mean expenditures. 

Thus, the hot deck was programmed to maintain surgery as a separate category whenever

possible. 

Table 10. Coefficients for reason in hospital; weighted regression models, by year (SUDAAN) 

Dependent variable = inpatient hospital stay expenditures 

β-Coefficients (SE β-Coefficients) 

1997 1998 1999 

Reason in 

hospital: 1

{ 

Surgery (reference) 

Treatment/therapy 

Diagnostic tests only

Give birth 

To be born 

Other 

$0

-$4,342 ( $590)

-$4,315 ( $570)

-$3,381 ( $461)

$2,456 ($4,525)

-$3,792 ( $924)

$0 

-$3,906 ( $676)

-$3,543 ( $521)

$3,122 ( $532)

$2,082 ($1,956)

-$3,600 ($1,525) 

$0 

-$4,937 ( $882)

-$4,998 ( $734)

-$3,780 ( $622)

-$6,554 ($1,701) 

-$4,567 ( $796)

1

Recoded into a single category (i.e., reason in hospital changes from a six-level variable to a five-level variable). 

Summary 

The process of selecting the most appropriate class variables to use when imputing 

health care expenditures is a combination of art and science that involves both 

substantive reasoning and statistical analysis. As illustrated above, predictors of 

expenses can vary by event type, and the selection of class variables includes the 

examination of both person characteristics and event characteristics. Careful selection of

class variables should improve the quality of the hot-deck imputation procedure and 

reduce bias in MEPS expenditure estimates. The class variables used to impute health 

care expenditure data in MEPS are periodically reviewed and refined. Class variables 

being considered for future inclusion in the imputation procedures include provider 

specialty for ambulatory events and person-level condition information. 

References

Cox, B. (1980). The Weighted Sequential Hot Deck Imputation Procedure. American 

Statistical Association 2004 Proceedings of the Section on Survey Research Methods, 

721–726. 

Machlin, S. and Dougherty, D. (2004). Overview of Methodology for Imputing Missing 

Expenditure Data in the Medical Expenditure Panel Survey. Methodology Report No. 

19. March 2007. Agency for Healthcare Research and Quality, Rockville, Md. 

http://www.meps.ahrq.gov/mepsweb/data_files/publications/mr19/mr19.pdf 

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