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Converting Health Care Utilization to Health Care Costs

If health care utilization variables are used to inform cost measures, they must be monetized post hoc. Health care utilization can be evaluated in the aggregate (i.e., gross costing) or at a microlevel (referred to as microcosting). Gross costing applies aggregate costs accounting for all the components required to deliver the health care service. A common approach to gross costing is to apply published reimbursement rates to the utilization that was reported. For example, in a study, an individual may visit the doctor’s office for an evaluation. To evaluate the cost of this visit using the gross costing approach, the cost of this service would be based on the reimbursement for the visit, using the appropriate physician billing code (e.g., current procedural terminology [CPT] code 99211, which applies to a low-level visit for evaluation and management). Gross costing can be completed in the analysis phase of the project by applying reimbursements to the health care services utilized. Determination of the appropriate billing codes and, consequently, reimbursement rates can be difficult and subjective, but is considered a reasonable proxy for health care costs where the perspective of the analysis is the health plan, health care payer, or a societal perspective. Billing codes and associated reimbursements can be obtained from published sources such as the U.S. Agency for Healthcare Research and Quality Healthcare Utilization Project Network (HCUPnet) and the National Fee Analyzer (2014).

Microcosting consists of disaggregating the utilization into all its parts. For example, to determine the cost of a hospitalization, an evaluation of all of the resources used during the hospitalization (e.g., the hospital bed, staff time, meals, medication, surgical equipment, diagnostic tests and procedures performed) would need to be performed. Although the microcosting method more closely approximates the true costs of delivering an intervention, this method requires a considerable amount of time and effort for the researcher, since each cost item must be captured and monetized.

Gross costing and microcosting can be used to evaluate separate components in a single analysis. For example, in the Get Busy Get Better cost-effectiveness study, microcosting was used to determine the cost of the intervention, and gross costing was used to determine health care utilization (Gitlin et al., 2012).

 
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