Cost effectiveness can be part of benefit judgments

December 1, 2007

For payers struggling with unmanageable cost increases in the business of delivering care, however, price cannot be overlooked. Insurers don't necessarily deny coverage of a treatment just because it's expensive, but they would be remiss if they didn't take cost into consideration, as well as safety and effectiveness.

HOW DO YOU PUT A PRICE TAG on health? If you're talking about a new, expensive treatment for your mother's cancer, the price seems irrelevant. For payers struggling with unmanageable cost increases in the business of delivering care, however, price cannot be overlooked. Insurers don't necessarily deny coverage of a treatment just because it's expensive, but they would be remiss if they didn't take cost into consideration, as well as safety and effectiveness. Financial cost, clinical effectiveness and ultimate value remain a challenging matrix to measure, but have great potential for system improvement, experts say.

"Cost effectiveness is a metric for comparing disparate interventions on one scale but can't be used as the only criterion in making coverage decisions-especially if there are not a lot of options for treating a specific disease," says Dana Goldman, director of health economics for Rand Corp.

According to MHE Editorial Advisor Al Lewis, president of the Disease Management Purchasing Consortium International in Wellesley, Mass., disease management is perhaps the only field in which program cost effectiveness is quite explicitly taken into account.

In the June issue of Health Affairs, David Eddy, MD, and Sean Tunis, director of the Center for Medical Technology Policy, discuss evidence-based decision making and cost effectiveness.

Tunis contends that when costs are weighed against benefits, it could be construed as rationing.

Although Medicare explicitly says it does not consider cost in coverage decision making, he finds it difficult to imagine how economic considerations could not influence-whether subtly or directly-a payer's coverage judgments.

Goldman believes that objective cost-effectiveness analyses have to improve because these types of value decisions are often tempered by the judgment of society. He is concerned about access to treatment: Although emerging technologies might be expensive, it is important to make them available, not across the board, but specifically to those who would benefit from them, he says.

Peter J. Neumann, director of the Center for the Evaluation of Value and Risk in Health, Institute for Clinical Research and Health Policy Studies at Tufts-New England Medical Center, however, says that health plans are not readily adopting cost effectiveness as a formal policy tool-perhaps because of a lack of understanding of the concept, lack of trust in it and its perceived lack of relevance.

The virtual colonoscopy is an example of a procedure that might be evaluated for its cost effectiveness compared to an established procedure that is commonly used. While the virtual procedure is less expensive and quicker than a traditional colonoscopy, most insurers don't cover it because it's still considered experimental. Two large studies show the technique is just as effective as the more invasive method in spotting potentially cancerous growths.

Virtual screenings are currently available for those willing to pay for it.

SAFETY AND EFFECTIVENESS

"We do not have a model to make an evaluation based on cost effectiveness," says Charles Cutler, MD, chief medical director for Aetna. "Formal cost-effectiveness comparisons are a methodological challenge. We are more concerned about the appropriateness of an intervention."

He says Aetna evaluates the use of clinical services based on safety and clinical effectiveness. When multiple interventions are an even tradeoff in terms of effectiveness, that's when cost enters the picture.

Diana Hayes, vice president of research and development for Hayes Inc., a health technology assessment company in Philadelphia, agrees.

"Payers are caught in a paradox," she says. "They earn a bad reputation if they deny coverage to save money, or if they cover something expensive and eventually pass the cost along."