Costing Health Care Services Using Administrative Data: Continuing Care & Physicians Walter P Wodchis 2016 CADTH Symposium Ottawa, ON. April 12, 2012

Disclosure I have no actual or potential conflict of interest in relation to this topic or presentation. 2

Overview 1.Approaching cost estimation 2.Community based services 3.Physician services 3

Approaching Health Care Costs Resource use (Utilization-based costs) Allocate costs based on intensity / volume of use Can be weighted to consider cost of different resources Does not explicitly account for how volume/intensity relates to provider payment (Total cost / Volume) x Quantity Expenditures (Payment-based costs) Allocate costs based on how resources are paid for and how revenues are allocated to resources Payment x Quantity I work mostly under this latter framework 4

Approaching Health Care Costs Expenditures (Payment-based costs) Aim for Payment x Quantity (bottom-up approach) Payments But…Sometimes only have a total budget Then sometimes only have records specifying # of users Sometimes have records specifying total # uses/encounters Sometimes (ideally) have records of specific uses by specific users Quantity Identify and measure cost-drivers at the smallest non- separable unit (e.g. individual encounter/visit) 5

Approaching Health Care Costs Source and method of payment Private payment vs Government direct payment vs Sub-contracted services Bundles or service/encounter-specific 6

Community Care Community services: meals on wheels, transportation, adult day programs, community mental health programs Home Care services: nursing and personal support/homemaking services generally delivered in the home Long term care: assisted living, residential or nursing home care inclusive of care and housing 7

Community Care Community services: Generally no tracking of who uses services or who uses which services Home Care services: Generally pretty good tracking by service providers Mix of direct provision and contracted services Aim to identify type and duration of service for encounter/visit and price for that service (assessment, nursing, personal support, therapy) Assessment and Care planning / Case-management Tricky business … see HSPRN Care Coordination Cost AnalysisHSPRN Care Coordination Cost Analysis 8

Community Care Care Coordination/Case Management (CC/CM) 1.Average Cost Approach allocates total CC/CM costs equally among all home care clients. 2.Direct Service Approach allocates CC/CM costs to clients in proportion to the direct home care services received. 3.Service Recipient Approach first divides total CC/CM resources into separate pools for different client groups (eg. short stay, end-of-life, etc) and then apply one of the first 2 methods. 4.Case-Mix Adjustment Approach allocates CC/CM costs according to client functional status ~ prospective approach proportional to expected direct services 5.Activity-Based Costing Approach begins with defining the activities involved in providing care coordination services and assigning activity-based-costs to clients based on their utilization of care coordination activities. 6.Risk-based Approach allocates care coordination costs for service recipients based on the risk for long-term care placement using functional assessment tools 9

Residential Community Care 10 Supportive Housing, Assisted Living, Residential Long Term Care – Mostly per diem (could be monthly…smallest non- separable unit) – Variation according case-mix/service intensity – Ascribe costs according to cost and payment source Accommodation & Amenities Resident vs Government Resident co-payment Food Resident or Government payment Nursing and Personal Care Variation according to resident functional status (Classification system) Program and Support Services Activity planning Resident or Government payment

Physician Services 11 Resource use (encounters/visits) vs Payments – Primary care (Fee for service (FFS), Capitation, Other) – Specialists (FFS, Alternative Payment Plans, Stipends/Salaries) – Team/Group-based payments – Incentives (rural location, performance-based such as % of diabetics receiving recommended screening)

Physician Services 12 Fee for service – Easiest: Fee Schedule or Amount Paid Other Patient-based (not service-based) payments (Capitation) or Non-patient-based payments (Salary) R esource consumption: Allocate based on use (Total revenues/total use) x Volume/visits - or simply average per patient (e.g. Salary) Expenditures: Allocate based on payment formula (Capitation payment per individual)

Physician Services 13 Other Patient-based payments (Performance payments) e.g. Bonus for proportion of patients completing tests (Cancer Screening, Diabetes-HbA1c etc) - allocate to patients who receive test (compliant patients cost more) - consider materiality (amount of funding) Non-Patient-based payments e.g. Team-based funding for additional services/ providers; Rural service bonuses - allocate only to patients who receive or spread to all

Physician Services 14 Other payments e.g. Specialist Alternative Payment Plans - e.g. Radiation Oncologists, other hospital-based consult services, administrative roles - allocations can vary by Plan (hospital-specific) - consider whether there is a common/dominant approach Consider Materiality – How large are the costs associated with non-service based payments – Which are most important to allocate

Other Issues Use of provider-specific versus regional versus provincial average costs (e.g. home care- specific costs) – Provincial average costs are applicable for a ‘hypothetical’ patient where the primary interest is in evaluating care without attention to prescribing the specific location of care. – More generalizable, less reflective of actual practice. – Provide specific costs are useful for evaluating actual care costs and/or comparing costs across organizations (or networks). 15

Other Issues Approach to discounting over time – Using year-specific costs and discounting using health services specific CPI – Using constant-year cost (e.g. use common fee schedule or capitation formula) Implications – Year-specific costs and discounting reflect real allocation and utilization in year of practice and are consistent with economic guidelines. Other approaches are relevant for comparing utilization changes irrespective of cost. 16

Other Issues Appropriate discount rates – Provider-type inflation factors – Medical care basket price inflation – Overall health care spending inflation Economic evaluation guidelines would recommend medical- care basket price inflation. Calculated provider-type inflation factors (increases in weighted revenue) are difficult due to changes in activities (apportioning price versus intensity change). Similarly, overall health care spending inflation may arise from new services as well as changes in price. 17

Additional Resources 18 HSPRN.CA Our Work Evidence Briefs: CCAC Care Coordination Cost Analysis: CCAC & Care Coordinator Interview Findings. (AHRQ Evidence Brief)CCAC Care Coordination Cost Analysis: CCAC & Care Coordinator Interview Findings. (AHRQ Evidence Brief) Our Work Reports: Guidelines on Person-Level Costing Using Administrative Databases in Ontario. Working Paper Series Volume 1. Guidelines on Person-Level Costing Using Administrative Databases in Ontario.