Can value-based insurance impose societal costs?

BACKGROUND: Among policy alternatives considered to reduce health care costs and improve outcomes, value-based insurance design (VBID) has emerged as a promising option. Most applications of VBID, however, have not used higher cost sharing to discourage specific services. In April 2011, the state of Oregon introduced a policy for public employees that required additional cost sharing for high-cost procedures such as total knee arthroplasty (TKA). OBJECTIVES: Our objectives were to estimate the societal impact of higher co-pays for TKA using Oregon as a case study and building on recent work demonstrating the effects of knee osteoarthritis and surgical treatment on employment and disability outcomes. METHODS: We used a Markov model to estimate the societal impact in terms of quality of life, direct costs, and indirect costs of higher co-pays for TKA using Oregon as a case study. RESULTS: We found that TKA for a working population can generate societal benefits that offset the direct medical costs of the procedure. Delay in receiving surgical care, because of higher co-payment or other reasons, reduced the societal savings from TKA. CONCLUSIONS: We conclude that payers moving toward value-based cost sharing should consider consequences beyond direct medical expenses.

Surgery for hip fracture yields societal benefits that exceed the direct medical costs.

BACKGROUND: A hip fracture is a debilitating condition that consumes significant resources in the United States. Surgical treatment of hip fractures can achieve better survival and functional outcomes than nonoperative treatment, but less is known about its economic benefits. QUESTIONS/PURPOSES: We asked: (1) Are the societal benefits of hip fracture surgery enough to offset the direct medical costs? (2) Nationally, what are the total lifetime benefits of hip fracture surgery for a cohort of patients and to whom do these benefits accrue? METHODS: We estimated the effects of surgical treatment for displaced hip fractures through a Markov cohort analysis of patients 65 years and older. Assumptions were obtained from a systematic literature review, analysis of Medicare claims data, and clinical experts. We conducted a series sensitivity analyses to assess the effect of uncertainty in model parameters on our estimates. We compared costs for medical care, home modification, and long-term nursing home use for surgical and nonoperative treatment of hip fractures to estimate total societal savings. RESULTS: Estimated average lifetime societal benefits per patient exceeded the direct medical costs of hip fracture surgery by USD 65,000 to USD 68,000 for displaced hip fractures. With the exception of the assumption of nursing home use, the sensitivity analyses show that surgery produces positive net societal savings with significant deviations of 50% from the base model assumptions. For an 80-year-old patient, the breakeven point for the assumption on the percent of patients with hip fractures who would require long-term nursing home use with nonoperative treatment is 37% to 39%, compared with 24% for surgical patients. Nationally, we estimate that hip fracture surgery for the cohort of patients in 2009 yields lifetime societal savings of USD 16 billion in our base model, with benefits and direct costs of USD 21 billion and USD 5 billion, respectively. For an 80-year-old, societal benefits ranged from USD 2 billion to USD 32 billion, using our range of estimates for nursing home use among nonoperatively treated patients who are immobile after the fracture. CONCLUSIONS: Surgical treatment of hip fractures produces societal savings. Although the magnitude of these savings depends on model assumptions, the finding of societal savings is robust to a range of parameter values. LEVEL OF EVIDENCE: Level III, economic and decision analyses. See the Instructions for Authors for a complete description of levels of evidence.

Communication skills.

Surveys of American Academy of Orthopaedic Surgeons members and patients indicate that orthopaedic surgeons are "high tech, low touch." According to patients and colleagues surveyed, orthopaedic surgeons are given high ratings by patients and colleagues for their skills in the operating room, but their listening and communication skills can be improved upon; they could listen better and show more empathy for their patients. Communication affects patient satisfaction, adherence to treatment, and physician satisfaction. Communication problems have also been cited as the most common factor in the initiation of malpractice suits. All orthopaedic surgeons can benefit from improving their communication skills.

The direct and indirect costs to society of treatment for end-stage knee osteoarthritis.

BACKGROUND: Although total knee arthroplasty for end-stage osteoarthritis is a cost-effective procedure, payers are focusing on its indications and cost because of its high and growing use. Improvements in pain and physical function from total knee arthroplasty could yield benefits in the form of increased work life and lower disability payments. The purpose of this study was to estimate the value of total knee arthroplasty from a societal perspective, including the costs and benefits to patients, employers, and payers. METHODS: A Markov model was used to estimate the value of total knee arthroplasty for patients with end-stage osteoarthritis of the knee by comparing direct and indirect costs between surgical and nonsurgical treatment scenarios. Direct costs included all medical costs for surgical and nonsurgical treatment of osteoarthritis of the knee. Indirect costs were related to lost wages due to an inability to work, lower earnings, or receipt of disability payments. Direct and indirect costs and quality-of-life measures were incorporated into the Markov model to estimate the impact of total knee arthroplasty on costs over patients' lifetimes and quality-adjusted life years. The assumptions used in the model were developed with use of claims and survey data as well as clinical expert opinion and the peer-reviewed literature. RESULTS: Compared with nonsurgical treatment, total knee arthroplasty increased lifetime direct costs by a mean of $20,635 (net present value in 2009 U.S. dollars). These costs were offset by societal savings of $39,565 from reduced indirect costs, resulting in a lifetime societal net benefit from total knee arthroplasty of $18,930 per patient. Eighty-five percent of these savings originated from increased employment and earnings, with the remaining 15% from fewer missed workdays and lower disability payments. CONCLUSIONS: The estimated lifetime societal savings from the more than 600,000 total knee arthroplasties performed in the U.S. in 2009 were estimated to be approximately $12 billion. These societal savings primarily accrued to patients and employers. The study demonstrates the importance of a societal perspective when considering the costs and benefits of total knee arthroplasty and policies that will affect access to this procedure.

The societal and economic value of rotator cuff repair.

BACKGROUND: Although rotator cuff disease is a common musculoskeletal problem in the United States, the impact of this condition on earnings, missed workdays, and disability payments is largely unknown. This study examines the value of surgical treatment for full-thickness rotator cuff tears from a societal perspective. METHODS: A Markov decision model was constructed to estimate lifetime direct and indirect costs associated with surgical and continued nonoperative treatment for symptomatic full-thickness rotator cuff tears. All patients were assumed to have been unresponsive to one six-week trial of nonoperative treatment prior to entering the model. Model assumptions were obtained from the literature and data analysis. We obtained estimates of indirect costs using national survey data and patient-reported outcomes. Four indirect costs were modeled: probability of employment, household income, missed workdays, and disability payments. Direct cost estimates were based on average Medicare reimbursements with adjustments to an all-payer population. Effectiveness was expressed in quality-adjusted life years (QALYs). RESULTS: The age-weighted mean total societal savings from rotator cuff repair compared with nonoperative treatment was $13,771 over a patient's lifetime. Savings ranged from $77,662 for patients who are thirty to thirty-nine years old to a net cost to society of $11,997 for those who are seventy to seventy-nine years old. In addition, surgical treatment results in an average improvement of 0.62 QALY. Societal savings were highly sensitive to age, with savings being positive at the age of sixty-one years and younger. The estimated lifetime societal savings of the approximately 250,000 rotator cuff repairs performed in the U.S. each year was $3.44 billion. CONCLUSIONS: Rotator cuff repair for full-thickness tears produces net societal cost savings for patients under the age of sixty-one years and greater QALYs for all patients. Rotator cuff repair is cost-effective for all populations. The results of this study should not be interpreted as suggesting that all rotator cuff tears require surgery. Rather, the results show that rotator cuff repair has an important role in minimizing the societal burden of rotator cuff disease.

The hidden dangers of winter sliding.

One of the irresistible allures of freshly fallen snow is the urge to flop onto the ground and slide downhill. Generations of families have been coming together to go sledding for centuries. Unfortunately, this perceived innocuous activity has predictable injury patterns, many of which are preventable with minimal effort or expense. Catastrophic injuries, not infrequently involving younger children, also seem to be preventable with education of the parents and the general public. The current authors reviewed the available literature on sledding injuries and summarized the findings on injury patterns and the recommendations on injury prevention. Proposals for injury prevention and public education, several of which have been designed by national interest groups, are included.