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Does Medicare Have an Implicit Cost-Effectiveness Threshold?

Author

Listed:
  • James D. Chambers

    (Health Economics Research Group, Brunel University, Uxbridge, UK, Center for the Evaluation of Value and Risk in Health at Tufts Medical Center, Boston, Massachusetts, jchambers@tuftsmedicalcenter.org)

  • Peter J. Neumann

    (Center for the Evaluation of Value and Risk in Health at Tufts Medical Center, Boston, Massachusetts)

  • Martin J. Buxton

    (Received 21 September 2008 from Health Economics Research Group, Brunel University, Uxbridge, UK)

Abstract

Background. Despite the huge cost of the program, the Centers for Medicare and Medicaid Services (CMS) has maintained a policy that cost-effectiveness is not considered in national coverage determinations (NCDs). Objective. To assess whether an implicit cost-effectiveness threshold exists and to determine if economic evidence has been considered in previous NCDs. Methods. A literature search was conducted to identify estimates of cost-effectiveness relevant to each NCD from 1999—2007 (n = 103). The economic evaluation that best represented each coverage decision was included in a review of the cost-effectiveness of medical interventions considered in NCDs. Results. Of the 64 coverage decisions determined to have a corresponding cost-effectiveness estimate, 49 were associated with a positive coverage decision and 15 with a noncoverage decision. Of the positive decisions, 20 were associated with an economic evaluation that estimated the intervention to be dominant (costs less and was more effective than the alternative), 12 with an incremental cost-effectiveness ratio (ICER) of less than $50,000, 8 with an ICER greater than $50,000 but less than $100,000, and 9 with an ICER greater than $100,000. Fourteen of the sample of 64 decision memos cited or discussed cost-effectiveness information. Conclusions. CMS is covering a number of interventions that do not appear to be cost-effective, suggesting that resources could be allocated more efficiently. Although the authors identified several instances where cost-effectiveness evidence was cited in NCDs, they found no clear evidence of an implicit threshold.

Suggested Citation

  • James D. Chambers & Peter J. Neumann & Martin J. Buxton, 2010. "Does Medicare Have an Implicit Cost-Effectiveness Threshold?," Medical Decision Making, , vol. 30(4), pages 14-27, July.
  • Handle: RePEc:sae:medema:v:30:y:2010:i:4:p:e14-e27
    DOI: 10.1177/0272989X10371134
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    References listed on IDEAS

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    1. Drummond, Michael F. & Sculpher, Mark J. & Torrance, George W. & O'Brien, Bernie J. & Stoddart, Greg L., 2005. "Methods for the Economic Evaluation of Health Care Programmes," OUP Catalogue, Oxford University Press, edition 3, number 9780198529453.
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    Cited by:

    1. Martin Buxton & James Chambers, 2011. "What values do the public want their health care systems to use in evaluating technologies?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 12(4), pages 285-288, August.
    2. Simon Walker & Mark Sculpher & Karl Claxton & Steve Palmer, 2012. "Coverage with evidence development, only in research, risk sharing or patient access scheme? A framework for coverage decisions," Working Papers 077cherp, Centre for Health Economics, University of York.
    3. Chambers, James D. & Cangelosi, Michael J. & Neumann, Peter J., 2015. "Medicare's use of cost-effectiveness analysis for prevention (but not for treatment)," Health Policy, Elsevier, vol. 119(2), pages 156-163.
    4. Alena M Pfeil & Oliver Reich & Ines M Guerra & Sandrine Cure & Francesco Negro & Beat Müllhaupt & Daniel Lavanchy & Matthias Schwenkglenks, 2015. "Cost-Effectiveness Analysis of Sofosbuvir Compared to Current Standard Treatment in Swiss Patients with Chronic Hepatitis C," PLOS ONE, Public Library of Science, vol. 10(5), pages 1-20, May.

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