International lessons in new methods for grading and integrating cost effectiveness evidence into clinical practice guidelines.

Economic evidence is influential in health technology assessment world-wide. Clinical Practice Guidelines (CPG) can enable economists to include economic information on health care provision. Application of economic evidence in CPGs, and its integration into clinical practice and national decision making is hampered by objections from professions, paucity of economic evidence or lack of policy commitment. The use of state-of-art economic methodologies will improve this. Economic evidence can be graded by 'checklists' to establish the best evidence for decision making given methodological rigor. New economic evaluation checklists, Multi-Criteria Decision Analyses (MCDA) and other decision criteria enable health economists to impact on decision making world-wide. We analyse the methodologies for integrating economic evidence into CPG agencies globally, including the Agency of Health Research and Quality (AHRQ) in the USA, National Health and Medical Research Council (NHMRC) and Australian political reforms. The Guidelines and Economists Network International (GENI) Board members from Australia, UK, Canada and Denmark presented the findings at the conference of the International Health Economists Association (IHEA) and we report conclusions and developments since. The Consolidated Guidelines for the Reporting of Economic Evaluations (CHEERS) 24 item check list can be used by AHRQ, NHMRC, other CPG and health organisations, in conjunction with the Drummond ten-point check list and a questionnaire that scores that checklist for grading studies, when assessing economic evidence. Cost-effectiveness Analysis (CEA) thresholds, opportunity cost and willingness-to-pay (WTP) are crucial issues for decision rules in CEA generally, including end-of-life therapies. Limitations of inter-rater reliability in checklists can be addressed by including more than one assessor to reach a consensus, especially when impacting on treatment decisions. We identify priority areas to generate economic evidence for CPGs by NHMRC, AHRQ, and other agencies. The evidence may cover demand for care issues such as involved time, logistics, innovation price, price sensitivity, substitutes and complements, WTP, absenteeism and presentism. Supply issues may include economies of scale, efficiency changes, and return on investment. Involved equity and efficiency measures may include cost-of-illness, disease burden, quality-of-life, budget impact, cost-effective ratios, net benefits and disparities in access and outcomes. Priority setting remains essential and trade-off decisions between policy criteria can be based on MCDA, both in evidence based clinical medicine and in health planning.

Risk adjustment policy options for casemix funding: international lessons in financing reform.

This paper explores modified hospital casemix payment formulae that would refine the diagnosis-related group (DRG) system in Victoria, Australia, which already makes adjustments for teaching, severity and demographics. We estimate alternative casemix funding methods using multiple regressions for individual hospital episodes from 2001 to 2003 on 70 high-deficit DRGs, focussing on teaching hospitals where the largest deficits have occurred. Our casemix variables are diagnosis- and procedure-based severity markers, counts of diagnoses and procedures, disease types, complexity, day outliers, emergency admission and "transfers in." The results are presented for four policy options that vary according to whether all of the dollars or only some are reallocated, whether all or some hospitals are used and whether the alternatives augment or replace existing payments. While our approach identifies variables that help explain patient cost variations, hospital-level simulations suggest that the approaches explored would only reduce teaching hospital underpayment by about 10%. The implications of various policy options are discussed.

The risk-adjusted vision beyond casemix (DRG) funding in Australia. International lessons in high complexity and capitation.

Hospitals throughout the world using funding based on diagnosis-related groups (DRG) have incurred substantial budgetary deficits, despite high efficiency. We identify the limitations of DRG funding that lack risk (severity) adjustment for State-wide referral services. Methods to risk adjust DRGs are instructive. The average price in casemix funding in the Australian State of Victoria is policy based, not benchmarked. Average cost weights are too low for high-complexity DRGs relating to State-wide referral services such as heart and lung transplantation and trauma. Risk-adjusted specified grants (RASG) are required for five high-complexity respiratory, cardiology and stroke DRGs incurring annual deficits of $3.6 million due to high casemix complexity and government under-funding despite high efficiency. Five stepwise linear regressions for each DRG excluded non-significant variables and assessed heteroskedasticity and multicollinearlity. Cost per patient was the dependent variable. Significant independent variables were age, length-of-stay outliers, number of disease types, diagnoses, procedures and emergency status. Diagnosis and procedure severity markers were identified. The methodology and the work of the State-wide Risk Adjustment Working Group can facilitate risk adjustment of DRGs State-wide and for Treasury negotiations for expenditure growth. The Alfred Hospital previously negotiated RASG of $14 million over 5 years for three trauma and chronic DRGs. Some chronic diseases require risk-adjusted capitation funding models for Australian Health Maintenance Organizations as an alternative to casemix funding. The use of Diagnostic Cost Groups can facilitate State and Federal government reform via new population-based risk adjusted funding models that measure health need.