DOI: 10.2337/dc05-1709 © 2006 by the American Diabetes Association
An Evaluation of Cost Sharing to Finance a Diet and Physical Activity Intervention to Prevent Diabetes
1 Department of Medicine, Indiana University School of Medicine, Indianapolis, Indiana Address correspondence and reprint requests to Ronald T. Ackermann, MD, MPH, 250 University Blvd.,Suite 122, Indianapolis, IN 46202. E-mail: rtackerm{at}iupui.edu
OBJECTIVEThe Diabetes Prevention Program (DPP) lifestyle intervention is a cost-effective strategy to prevent type 2 diabetes, but it is unclear how this intervention could be financed. We explored whether this intervention could be offered in a way that allows return on investment for private health insurers while remaining attractive for consumers, employers, and Medicare. RESEARCH DESIGN AND METHODSWe used the DPP and other published reports to build a Markov simulation model to estimate the lifetime progression of disease, costs, and quality of life for adults with impaired glucose tolerance. The model assumed a health-payer perspective and compared DPP lifestyle and placebo interventions. Primary outcomes included cumulative incidence of diabetes, direct medical costs, quality-adjusted life-years (QALYs), and cost per QALY gained. RESULTSCompared with placebo, providing the lifestyle intervention at age 50 years could prevent 37% of new cases of diabetes before age 65, at a cost of $1,288 per QALY gained. A private payer could reimburse $655 (24%) of the $2,715 in total discounted intervention costs during the first 3 intervention years and still recover all of these costs in the form of medical costs avoided. If Medicare paid up to $2,136 in intervention costs over the 15-year period before participants reached age 65, it could recover those costs in the form of future medical costs avoided beginning at age 65. CONCLUSIONSCost-sharing strategies to offer the DPP lifestyle intervention for eligible people between ages 50 and 64 could provide financial return on investment for private payers and long-term benefits for Medicare.
Abbreviations: DPP, Diabetes Prevention Program IGT, impaired glucose tolerance QALY, quality-adjusted life-year ROI, return on investment
The Diabetes Prevention Program (DPP) demonstrated that weight loss and moderate physical activity can delay or prevent the development of diabetes by 58% in high-risk people (1). We recently reported that, from a societal perspective and over the lifetime of eligible participants, the DPP lifestyle intervention cost $8,790 per quality-adjusted life-year (QALY) gained compared with placebo (2). From a single-payer perspective, the intervention cost $1,124 per QALY gained. These estimates were developed using methods recommended by the U.S. Public Health Service Panel on Cost-Effectiveness in Health and Medicine and should offer the best guidance for policy decisions about setting funding priorities for the allocation of resources for health services (3). Although these estimates suggest that the DPP lifestyle intervention can provide considerable benefits at reasonable costs, it is still unclear how the intervention could be financed. The financing of health care in the U.S. involves multiple payers. Before the age of 65 years, 73% of Americans have private, employment-based health insurance (4). Because the duration of enrollment in such plans may be short, private payers are often reluctant to cover preventive interventions that have substantial initial costs and delayed benefits (5). Coverage decisions in the private sector are often based on a strong business case, defined as the promise for financial return on investment (ROI) in the form of avoided costs within a reasonable time frame (5). After the age of 65, essentially all Americans receive health care coverage through Medicare (4). Although implementation of preventive interventions before age 65 might reduce costs and improve length and quality of life in later years, Medicare does not pay for such interventions. An essential step in delivering the benefits of the DPP lifestyle intervention to high-risk, middle-aged Americans is to determine whether there are tangible benefits for health insurers that offer the intervention. To explore this issue, we analyzed the health and economic outcomes associated with the DPP lifestyle intervention from a health-payer perspective that distributed direct intervention costs across different payers. Our goal was to determine whether this intervention can be offered in a way that provides financial ROI for private health insurers, while remaining attractive for consumers, employers, and Medicare.
The DPP enrolled 3,234 participants with impaired glucose tolerance (IGT) who were at least 25 years of age and had a BMI of 24 kg/m2. At baseline, the mean participant age was 51 years; 68% were women, and 45% were nonwhite.
The DPP lifestyle intervention
Simulation model
Disease progression, complications, and comorbidities
Direct medical costs The model used DPP data to estimate annual nonintervention direct medical costs for people with IGT who do not develop diabetes within 3 years (9). These costs included hospital, emergency room, urgent care, and outpatient services, as well as costs of prescription medications and telephone calls to health care providers. For people who developed diabetes, we applied an empirically derived, multiplicative prediction model that estimates annual direct medical costs according to demographic characteristics, diabetes and hypertension treatments, and the acute and ongoing costs of microvascular and macrovascular complications (10). The model applied multipliers for each of these states to the baseline cost for a nonobese white man with type 2 diabetes treated with diet and exercise and with no cardiovascular risk factors or microvascular, neuropathic, or cardiovascular complications ($1,684) (10). For people who developed nondiabetes complications before developing diabetes, the model estimated direct medical costs by applying the same multipliers to the average baseline cost of a male DPP participant ($1,296) (10). We discounted all future costs and QALYs at 3% per year, and all costs were expressed in year 2000 U.S. dollars.
Health state utilities For people with IGT who developed diabetes, we used an empirically derived, additive prediction model that estimated quality of well-being index scores by applying penalty scores for demographic, treatment, and disease state variables to a baseline health utility score of 0.69 (12). For those developing hypertension, coronary heart disease, or cardiovascular disease before developing diabetes, we used the mean year 3 health utility score for a male DPP participant as a baseline (0.73) and applied the same penalty scores for different demographic, treatment, and disease-state variables.
Analyses of single-payer financing of the lifestyle intervention
Analyses of cost-sharing strategies to finance the lifestyle intervention Next, we explored cost-sharing strategies. We calculated the maximum discounted, direct intervention costs that a private insurer could pay and still achieve complete ROI in 3 years time. We used the present value of this maximal, 3-year contribution to calculate a fixed, monthly payment that the private insurer could pay. We then calculated the remaining average monthly intervention costs for participants 5064 years of age (i.e., the amount the private payer would have to receive from other payers to provide the intervention), and we explored several scenarios that distributed remaining costs to Medicare and other payers.
Sensitivity analyses
Analyses of financing by a single payer Table 1 summarizes lifetime health and economic benefits of the lifestyle intervention compared with placebo. For people initiating the intervention at age 50 years, the lifetime risk for developing diabetes was reduced from 87 to 65% and the incremental cost-effectiveness ratio was $1,288 per QALY gained. A 15-year delay in the intervention increased the lifetime risk for developing diabetes from 65 to 83%, and the risk reduction attributable to the intervention decreased from 22 to only 4%.
Analyses of financing by two sequential payers Table 2 summarizes health and economic outcomes when a private insurer paid all direct intervention costs before age 65 years, and Medicare paid all costs beginning at age 65. For every 100 people beginning the intervention at age 50, 28 fewer people were living with diabetes at age 65. In addition, Medicare experienced lifetime cost savings. After age 65, direct medical costs were $2,136 lower for participants who began the intervention at age 50, compared with placebo recipients. For the private payer, these benefits were associated with a 15-year incremental cost of $2,894 and an incremental cost-effectiveness of $9,647 per QALY gained.
Analyses of cost-sharing strategies We modeled a financing strategy in which costs of the one-on-one intervention for people <65 years of age were shared by different payers. Under this scenario, Medicare achieved complete recovery of invested costs over a lifetime if it contributed $2,136 (30%) of intervention costs for each participant from 50 to 64 years of age and all intervention costs from age 65 and beyond (Table 3). If we assumed that Medicare paid this amount to a private payer in the form of a fixed, monthly payment over 15 years, the cost to Medicare for each participant was $15 per month. A private payer could contribute 24% of total discounted intervention costs and achieve complete ROI after 3 years. Each year of coverage beyond this (i.e., years 415) resulted in cost savings. This translated to a fixed payment by the private payer of $19 per month. Under this scenario, the residual payment for an individual consumer and/or employer amounted to $44 per month.
Sensitivity analyses If the intervention were offered in a group format that achieved similar effectiveness, the private-payer contribution allowing complete ROI after 3 years now comprised 58% of the intervention costs. In this scenario, Medicare could contribute all remaining intervention costs and would achieve lifetime cost savings, with no residual cost for other payers (Table 3). If the group format were only 50% as effective, the allowable monthly payment decreased to $9 for Medicare and $15 for the private payer. This resulted in a residual payment of $7 per month for other payers. If the intervention were offered in a one-on-one format that was only 50% as effective, Medicare could now only contribute $1,543 (10%) of intervention costs over 15 years, and the monthly cost for other payers would increase to $57. With a 10% annual drop-out rate by eligible participants, maximum allowable contributions decreased only modestly ($2-$5 per month) for all payers, compared with the one-on-one format with full participation (Table 3).
Compared with standard lifestyle advice, providing the DPP lifestyle intervention to eligible adults at age 50 years could prevent 37% of new cases of diabetes before age 65, at a cost of $1,288 per QALY gained. Although intervention costs are reduced by delaying the program until after age 65, the benefit of diabetes prevention is essentially lost. These estimates offer a compelling argument for policy makers to make this intervention available to eligible Americans before the age of 65. Because 73% of Americans between 50 and 64 are insured by private, employment-based health insurers (4), the private sector may need to champion efforts to make the DPP lifestyle intervention available to Americans before the age of Medicare eligibility. As a health care payer for 96% of Americans age 65 years and older (4), Medicare stands to benefit considerably if private payers offer the DPP lifestyle intervention at earlier ages. If eligible adults receive the intervention from ages 50 to 64, Medicare would experience cost savings. Because Medicare does not currently have authority to pay for services offered to non-Medicare beneficiaries, the viability of a strategy to offer this intervention at age 50 may rely on the presence of a strong business case for a private payer. Our model estimates that a private payer could reimburse up to $655 (24%) of the $2,715 in intervention costs during the first 3 years of the program and still achieve complete ROI.
Although strategies to reduce intervention costs for private insurers could create a business case for offering the DPP lifestyle intervention, it is unclear how this should be achieved. One approach is to offer the intervention in a lower-cost group-delivery format (2). Offering the intervention to a group of 10 could reduce year 1 costs by
Another strategy for reducing private payer costs is for other payers to share intervention costs. During the DPP, Our study has some limitations. Our base-case analyses assumed that the intervention would be applied as it was during the DPP until a participant developed diabetes or died. In addition, intervention costs were the same as in the DPP, and the programs effectiveness remained constant over time. Because an intervention might be less effective in the real world, we explored a scenario in which the intervention achieved only 50% of the effectiveness observed in the DPP. In this scenario, a private payer could pay 20% and Medicare could pay 10% of intervention costs for participants 5064 years of age, and this would allow the private payer to achieve complete ROI in 3 years and Medicare to recover all costs over a participants lifetime. This left an average of $57 per month in residual costs for payment by individual participants and/or employers. However, if offered in a reduced-cost group format, a 50% less-effective intervention could allow the private payer to achieve complete ROI in 3 years and Medicare to recover all costs over a participants lifetime with only $7 per month in residual costs for other payers. Our estimates assumed that cost sharing by Medicare, employers, and individual purchasers could allow the intervention to be widely adopted as a benefit across different private payers, so that changes in private health plan coverage for people 5064 years of age would not lead to loss of intervention access. Thus, when we modeled the impact of a 10% annual intervention drop-out rate by eligible participants, we assumed that private payers would still experience a healthier future member population with lower overall health care costs because of intervention participation in earlier years. Because a payer also spends less on intervention costs as members stop participating, we found that a 10% annual drop-out rate had only a modest effect on overall cost recovery for any payer. Recent health policy changes have directed Medicare to reimburse for screening tests that would identify DPP-eligible participants and will allow the DPP lifestyle intervention to be considered as a future Medicare benefit (18,19). In this context, our findings suggest that Medicare should also consider seeking authority to offer the DPP lifestyle intervention to eligible adults before age 65 years. Our findings also justify strong efforts to define real-world strategies for making the DPP lifestyle intervention accessible to a rapidly growing population of Americans who might benefit. Cost sharing of program expenses for people between ages 50 and 64 could provide both long-term benefits for Medicare and a strong business case for private payers. In addition, this could be achieved without prohibitively high residual costs for individual consumers or employers. The extent to which program costs should be divided among different payers to maximize long-term sustainability of strategies to offer this intervention remains unclear. Conversion to a group-delivery format could decrease intervention costs and reduce the need for significant out-of-pocket contributions by individuals or their employers. Future studies that demonstrate whether intervention effects are preserved after conversion to a group format and that describe patterns of program utilization in the setting of different cost-sharing models will help private and public health payers to make essential decisions regarding coverage for a lifestyle intervention to prevent diabetes.
We acknowledge the support and resources of the Centers for Disease Control and Prevention, RTI International, and the Indiana University School of Medicine. We also thank the Diabetes Prevention Program Research Group for performing the DPP trial.
Additional information for this article can be found in an online appendix at http://care.diabetesjournals.org. A table elsewhere in this issue shows conventional and Système International (SI) units and conversion factors for many substances. The costs of publication of this article were defrayed in part by the payment of page charges. This article must therefore be hereby marked "advertisement" in accordance with 18 U.S.C. Section 1734 solely to indicate this fact. See accompanying editorial, p. 1447. Received for publication September 12, 2005. Accepted for publication January 27, 2006.
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