By Taruja Karmarkar, PhD, MHS, NPC/Duke-Margolis Health Policy Fellow
As health care professionals across the country work tirelessly to treat the clinical consequences of COVID-19, many of us have transitioned to full-time remote work to limit the public health impact of infection spread. In this new reality, we, as a society, are quickly realizing the impact of our health on our ability to work and provide for our loved ones. Any loss in productivity due to ill health can come at a cost to the individual, employer and overall society. Conversely, any gains in productivity due to improved health can benefit not only the individual, but also the employer and society. Health policy and economics experts advise that the full benefits and costs — including productivity impacts — should be included when assigning value to health care interventions.
Payers in the U.S. are increasingly turning to value assessment frameworks (VAFs) to help navigate the tradeoffs involved in making health care coverage decisions. Some VAFs, such as those developed by the Institute for Clinical and Economic Review (ICER), quantitatively estimate the health care costs and benefits of one health care intervention in comparison to another to determine a value estimate. This estimate is compared to a threshold – or a cutoff – that signals the relative value of a given intervention. In this comparison, VAFs typically include the direct health care costs and benefits of each intervention, but experts emphasize that including indirect costs, like work productivity, is also important to comprehensively measure a therapy’s value. If payers are going to use VAFs to make coverage decisions, which impact patient access to treatments, those estimates of value should include all factors that may drive value.
In new research published in the Journal of Managed Care & Specialty Pharmacy, we sought to assess 1) if productivity is included in VAF analyses, 2) when included, does it change the value assessment of an intervention, and 3) if including productivity could change health care decisions.
We found that productivity is often included in assessments of value, but usually included as a sensitivity, or secondary, analysis, not immediately visible to payers who may refer to VAF reports to inform coverage decisions. When productivity is not included, the value of a health intervention is often underestimated. After including productivity, the value estimate may change by up to 80%.
Importantly, the study demonstrated that productivity could change health care decisions, depending on how payers use VAF reports. Payers considering using a value threshold – or cutoff – to assign value and determine coverage commonly reference the $100,000/QALY and the $150,000/QALY used by VAF developers. A quality-adjusted life-year, or QALY, is a measure of effectiveness of a health care intervention sometimes used in VAF methodology. While the decision-making process includes multiple inputs, the use of a value threshold indicates “good value” and can indicate coverage for therapies with a value estimate that fell below that threshold. While we found that value estimates may change by up to 80%, payer coverage decisions could change up to 10% of the time based on the threshold for value the payer references.
Any loss of productivity impacts both the employee and employers. Because employers rank productivity measures – like absenteeism, improvements in quality of life and presenteeism – as important, employers should be wary of use of value assessments that do not include the impact of productivity. For these reasons, payers need to make payment decisions that reflect what matters to patients and their ultimate customer – employers. It is worth noting, however, limited evidence to estimate productivity costs can be a barrier to inclusion.
There is a risk to leaving this indirect cost out of the calculation: underestimating the value of a therapy. As the health care system today faces unprecedented tradeoffs in care delivery, we should make sure decisions impacting coverage and access for patients are driven by all components of value.
Read the NPC study online in the Journal of Managed Care & Specialty Pharmacy to learn more.