predicting pharmacy and other health care costs
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Predicting Pharmacy and Other Health Care Costs. Arlene S. Ash, PhD Boston University School of Medicine & DxCG, Inc. Academy Health Annual Meeting San Diego, CA June 6, 2004. Predicting Drug and Other Costs from Administrative Data. Use various “profiles” R x D x Both - PowerPoint PPT PresentationTRANSCRIPT
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Predicting Pharmacy and Other Health Care Costs
Arlene S. Ash, PhD
Boston University School of Medicine &
DxCG, Inc.
Academy Health Annual Meeting
San Diego, CA
June 6, 2004
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Predicting Drug and Other Costs from Administrative Data• Use various “profiles”
– Rx
– Dx
– Both
• To predict next year’s costs– Total $– Non-pharmacy $– Pharmacy $
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Data
• 1998-1999 “Commercial Claims and Encounters” Medstat MarketScan
• N ~ 1.3 million – Mean age: 33 yrs– Percent female: 51%
• Diagnoses: ICD-9-CM codes
• Pharmacy: NDC codes
• Costs (incl. deductibles, copays, COB)
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DCG Model Structure
• Diagnoses drive prediction (Risk Score, or RS)– ~15000 Diagnoses group – 781 Disease Groups – 184 Condition Categories (CCs)– Hierarchies imposed 184 HCCs
• Model– Predicts from age, sex and (hierarchical) “CC profile”– One person can have 0, 1, 2 or many (H)CCs– Risks from HCCs add to create a summary RS
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Sample DCG/HCC Year-2 Prediction Prediction for Year 2
$805 48 year old male
$3,512 HCC16: Diabetes w neurologic or peripheral circulatory manifestation
$1,903 HCC20: Type I Diabetes
$266 HCC24: Other endocrine/metabolic/nutritional disorders
$455 HCC43: Other musculoskeletal & connective tissue disorders
_____ $6,941 FINAL PREDICTION (RS)
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Pharmacy Model Structure
• 80,000+ NDC codes 155 RxGroups
• Hierarchies imposed– E.g., insulin dominates oral diabetic meds
• Relevant coefficients add to create a risk score for each person
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NDC codes (n ~ 82,000+)
RxGroups (n = 155)
Aggregated Rx Categories (ARCs)(n = 17)
Rx Classification System
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Sample RxGroup Year-2 Prediction
$3,352 79-year old male
$1,332 RxGroup 23: Anticoagulants (warfarin )
$1,314 RxGroup 42: Antianginal agents
$1,538 RxGroup 116: Oral diabetic agents ______ $7,536 FINAL PREDICTION
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Year-1 Dx and Rx Prevalence
• Diagnoses– 74% have at least one valid ICD-9 code– Mean # of HCCs per person: 2.5
• Pharmacy – 66% have at least one prescription– Mean # of RxGroups per person: 2.5
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Year-2 Costs
• Total Cost (incl., inpatient, outpatient and pharmacy) – Mean: $2,053 – CV: 386
• Non-Pharmacy Cost– Mean: $1,601 – CV: 471
• Pharmacy Cost– Mean: $452– CV: 278
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Predictive Power of Models (Validated R2)
PredictorsTotal $ Non-Pharm $ Pharmacy $
Rx 11.6% 7.1% 48.2%
Dx 14.6% 11.6% 22.5%
Rx & Dx 16.8% 12.4% 49.3%
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Validated Predictive Ratios (E/O)
Rx Dx Rx & Dx
Asthma Dx (n=38,000) 0.90 0.98 1.00
Asthma/COPD Rx (84,000) 0.95 0.86 0.95
Depression Dx (49,000) 0.85 1.01 1.01
Antidepressant Rx (90,000) 0.98 0.82 0.99
Diabetes Dx (33,000) 0.84 1.02 1.03
Diabetes Rx (23,000) 1.01 0.90 1.03
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Take Home Lessons• Predicting next year’s cost is easiest for
Rx $, hardest for Non-Rx$
• Both kinds of data predict well– Dx predicts other costs better
– Rx predicts Rx$ much better than Dx
– Both together are extremely accurate
• The high predictabiity of Rx$ from Rx data bodes ill for the viability of the new Medicare drug insurance product