Provider Update

Volume 19, Issue 1 

February/March 2002

DHH Expands CommunityCARE Statewide Provides Medicaid Patients with Primary Care Physician

In an effort to make late diagnosis of health problems and emergency room visits for minor ailments a thing of the past, the Louisiana Department of Health and Hospitals is now in the process of enrolling primary care physicians into the CommunityCARE Program. This program will link approximately 600,000 (83%) of Louisiana's Medicaid patients to a "medical home" where they have 24-hour access to a primary care doctor. 

CommunityCARE was initially implemented in 20 parishes throughout the state and has been operating for the past eight years. DHH is now expanding this program statewide on a region-by-region basis. By December of 2003, the program will be operational in all regions of the state. 

DHH encourages provider participation in order to ensure that all Medicaid recipients have a physician who can provide them with continuity of care. It is important to enroll now in order for providers to continue to serve their existing patients or to acquire new Medicaid patients.

In an effort to attract more primary care physicians into the Medicaid program, DHH Secretary David Hood says that the Department is committed to improving reimbursement rates for physicians and reducing paperwork.

The CommunityCARE expansion is one component of DHH's BLUEPrint for Health, a 7-point plan to improve Louisiana's health care system by placing greater emphasis on primary and preventive care instead of more costly hospitalization or inpatient care.

DHH has started to enroll primary care physicians who will participate in the Medicaid program as CommunityCARE physicians. These doctors will agree to accept responsibility for assuring access to primary care for Medicaid enrollees. Following this physician enrollment, patients will be advised of the participating doctors, and then be given a chance to choose their own primary care physician.

CommunityCARE is a physician-directed managed care program. Unlike typical managed care where a health maintenance organization coordinates care, a primary care physician provides that coordination. This primary care physician (or clinic) is paid a monthly management fee in addition to the regular fee-for-service payments for the care that is provided.

The primary care physician provides basic primary and preventive care, and makes referrals to specialists. He/she is available or will arrange medical care coverage 24-hours a day, seven days a week.

CommunityCARE includes physicians who specialize in family practice, general practice, pediatrics, internal medicine, and obstetrics/gynecology. Physician groups, individual physicians, federally qualified health centers, and rural health clinics may enroll in CommunityCARE.

Secretary Hood says the program strengthens the patient/doctor relationship because the doctor is familiar with the patient's health care needs and can educate the patient in regard to his responsibility to maintain good health habits, such as paying attention to diet, exercising, and appropriate use of the health care system.

Other benefits of CommunityCARE include promoting preventive health care such as KIDMED screenings, immunizations and health education, and encouraging the Medicaid patient to make responsible decisions about his/her health care needs.

The following is a listing of important facts about how the CommunityCARE program works:
� DHH links Medicaid recipients to a primary care provider (PCP) who is responsible for providing the full
scope of primary care services including health education and referral for specialty care. 
� Providers are paid a monthly management fee of $3 per member per month in addition to the regular fee-
for-service reimbursement to manage the recipient's care.
� Medicaid recipients receive a letter advising them to choose a primary care provider in their parish of 
residence or a contiguous parish within approximately 10 working days.
� The letter to recipients will include a list from which to choose a CommunityCARE enrolled provider in their 
parish of residence and contiguous parishes. 
� Participation in the CommunityCARE program is mandatory for recipients, and if a choice is not made, the 
state will assign them a physician. 

Parishes where CommunityCARE is now in place:
Allen, Assumption, Beauregard, Bienville, Calcasieu, Cameron, Claiborne, DeSoto, East Carroll, Jackson, Jefferson Davis, Lafourche, Madison, Morehouse, Natchitoches, Red River, Richland, Sabine, St. Charles, St. James, St. John the Baptist, St. Mary, Terrebonne, Union, Vernon, Webster, West Carroll

In order to be listed on Recipient Choice Letters in the remaining parishes around the state, providers need to be enrolled into CommunityCARE by:

Mandeville Region January 31, 2002
Baton Rouge Region April 15, 2002 
Alexandria Region July 15, 2002 
Orleans Parish December 15, 2002 
Orleans Regions (non-metro) April 15, 2003
Lafayette Region July 15, 2003
Shreveport and Monroe Regions October 15, 2003

Physicians may request a CommunityCARE enrollment package by calling 1-800-473-2783 or (225)924-5040 (Baton Rouge only).

Reminders to Providers

Attachment Size 
All claim attachments should be standard 8 1/2 X 11 sheets. Any attachments larger or smaller than this size should be copied onto standard sized paper.

Highlighting Specific Information (RA Message - 1/15/02) 
Providers who want to draw the attention of a reviewer to a specific part of a report or attachment are asked to circle that particular paragraph or sentence.

Billing Antiretroviral Drug Resistance Testing
(RA Message - 1/29/02)

When billing for antiretroviral drug resistance testing in adult HIV-1 infection, the following are necessary for review of payment:

� Results of the testing
� Patient history which will justify the testing. Testing is recommended only when the patient presents with virologic failure during highly active antiretroviral therapy (HAART), when the patient has suboptimal suppression of viral load after initiation of antiretroviral therapy, or in pregnancy. Testing may also be considered in a newly diagnosed HIV patient when the contact person is known and is resistant to specific drug(s).

Clarification of Office Visit Policy for Vision Services and Eye Care Providers
(RA Message 1/15/02 and 1/29/02 - FIMS # 6479)

A separate same-day or subsequent-day follow-up office visit is allowed for the delivery and final adjustment to the visual axes and anatomical topography of Medicaid-covered eyeglasses, cataract glasses or contact lenses. A physician is not required to be present. If the visit meets these criteria, the procedure code 99211 should be billed. Documentation in the patient's record should reflect that he/she returned for a separate visit on the same day or subsequent day for the delivery and final adjustment of the eye wear as well as a description of the services provided. If the patient returns on the same day or subsequent day to pick up his/her eye wear and no final adjustments to the visual axes and anatomical topography are performed, this service can not be billed. Should you have any further questions regarding this policy, you may contact Unisys Provider Relations by calling 1-800-473-2783.

Question Corner

Consult Codes
1. What length of time, if any, is usually associated with the performance of the consultation or other direct care intervention by a registered nurse or a physician assistant?

There is no length of time associated with a consult code. It is the length of time needed to
accomplish one medically necessary intervention for that particular child and that intervention must be documented fully in the record.

2. Please define the number of units assigned to code X0187.

One unit is one contact. The maximum number of units that may be billed in one day is three. This is intended to cover legitimate services that may be needed for more than one contact a day. Examples of this would be a school nurse that sees a child that requires a dressing change more than once a day, an asthmatic that has multiple attacks in a school day, a conference with a teacher regarding the behavior or health of a student and then a subsequent consult with the student, etc.

3. Does an edit exist to deny consultation claims when multiple units are billed by the KIDMED providers for the same face-to-face contact? If not, why?

The only method to determine if multiple units are billed for the same face-to-face contact is through record review. Therefore, no edit exists. Three units are allowed. The definition of a contact is one-on-one, face-to-face. For reimbursement for more than one unit a day, there must be separate and distinct contacts and documentation in the record. Post-payment review is the method to determine if the documentation justifies the billing. 

4. Please define what is meant by "ongoing therapy."

Ongoing therapy is defined as continuous visits on a single issue that are beyond the scope of consults and require a more intense and specialized regimen to provide positive outcomes that can be documented. If ongoing therapy is necessary, a referral to a mental health rehab agency, to a psychiatrist, or to another provider appropriate to render services in a therapy setting should be documented. Short term "therapy" appropriate for consults, if medically necessary and documented, is not more than six weeks in duration.

Duplication of Therapy Claim Denial for Selected Classes of Drugs

As of November 11, 2001, the Medicaid Pharmacy Program has denied pharmacy claims for oral formulations of drugs in the following classes if the patient has an ACTIVE paid claim on file for another drug in the same therapeutic class:

1. Tricyclic antidepressants, if the daily doses of both drugs are greater than 100mg 
2. Selective seritonin reuptake inhibitors
3. Second generation antihistamines and Second-generation antihistamine combination agents
4. Calcium channel blockers
5. Potassium replacement 
6. Non-steroidal anti-inflammatory drugs

Lists of the specific drugs that are currently included in each class are listed at the end of the article for your reference. The Department may add drugs to these lists as new drugs appear on the market.

Therapeutic duplication claim denials will be identified by the denial edit code NCPDP code #88 (DUR Reject Error) and the correlating link EOB code #482 (Therapeutic Duplication-denial-limited to specific class). 

Override provisions will be allowed after contacting the prescriber if the claim is re-submitted as follows:

NCPDP field 439 DUR Conflict Code TD Therapeutic Duplication
NCPDP field 440 Intervention Code M0 (M zero) Prescriber Consulted
NCPDP field 441





Outcome Code Options:





1A Filled as is, False positive
1B Filled prescription as is
1C Filled, with Different Dose
1D Filled, with Different Directions
1E Filled, with Different Drug
1F Filled, with Different Quantity
1G Filled, with Different Approval

If an override is determined appropriate, additional hard-copy documentation of the conflict, intervention and outcome on the new prescription is required for audit purposes. 


1. Tricyclic antidepressants (applicable if the daily doses of both drugs exceed 100mg)

Doxepin HCl Amitriptyline HCl Protriptyline HCl
Desipramine HCl Nortripryline HCl  Amoxapine
Trimipramine maleate Imipramine HCl Maprotiline HCL
Clomipramine HCl Imipramine pamoate  

2. Selective seritonin reuptake inhibitors

Citalopram HBr Fluoxetine HCl Sertraline HCl
Fluvoxamine maleate Paroxetine HCl   

3. Second-generation antihistamines and Second-generation antihistamine combination agents

Fexofenadine HCl Loratadine Cetirizine HCl
Fexofenadine HCl with pseudoephedrine  Loratadine with pseudoephedrine  Cetirizine HCL with pseudoephedrine 

4. Calcium channel blockers

Diltiazem HCl  Bepridil  Isradipine
Verapamil HCl Nisoldipine  Nicardipine HCl
Nifedipine Diltiazem maleate Amlodipine besylate 
Nimodipine Felodipine

5. Potassium replacement

Potassium bicarb / citric acid  Potassium chloride / potassium 
cit / ca
Potassium bicarbonate
Potassium chloride Potassium chloride / potassium bicarb Potassium chloride / potassium bicarb / citric acid
Potassium gluconate      

6. Non-steroidal anti-inflammatory drugs

Diclofenac potassium Ibuprofen Ketorolac tromethamine
Diclofenac sodium Indomethacin Nabumetone
Tolmentin sodium Naproxen Diclofenac sodium / misoprostol
Sulindac Meclofenemate sodium Rofecoxib
Naproxen sodium Ketoprofen Celecoxib
Piroxicam Meloxicam 
Etodolac Oxaprozin
Fenoprofen calcium

Claim Denial For FDA Pregnancy Category X Drugs For Pregnant Women

Effective November 11, 2001, the Medicaid Pharmacy Program began denying pharmacy claims for FDA Pregnancy Category X drugs for pregnant women. Pharmacy claims submitted for a drug in this category for recipients with a copay designation of pregnancy (NCPDP field 416 � Pregnant patient coding) will be denied. 

Lists of the specific drugs that are currently included in FDA Pregnancy Category X are attached for your reference. The Department may add drugs to these lists as new drugs appear on the market.

Pregnancy precaution claim denials will be identified by the denial edit code NCPDP code #88 (DUR Reject Error) and the correlating link EOB code #483 (Pregnancy Precaution- Denial-FDA Category X). 

There will be no override option for claims with EOB code #483.

We appreciate your continued participation in the Louisiana Medicaid Pharmacy Benefits Management Program. Should you have any questions concerning the adjudication of pharmacy claims, please call the Pharmacy Point-of-Sale (POS) Help Desk at 1-800-648-0790 or (225) 237-3381.
















































































General Medicaid Enrollment Guidelines for Dentists and Dental Groups 

General Information:
A dentist must enroll as a Louisiana Medicaid dental provider in order to receive reimbursement from the Medicaid Program for dental services performed on eligible Medicaid recipients. Individual dentists not enrolled in the Louisiana Medicaid program may not use the name and/or provider number of an enrolled dentist in order to bill Medicaid for services rendered.

Dental Groups:
For Louisiana Medicaid purposes, a dental group consists of two or more dentists offering dental services to the Louisiana Medicaid recipient population. Dental groups must be enrolled in the Louisiana Medicaid program prior to rendering services to a Medicaid recipient.

Dental groups must complete an enrollment packet for the group, which includes information for the group as well as the individual dentists comprising the group.

When billing, the group must bill for services rendered by the individual providers using the group name and group provider number. On these claims, the individual dentist�s provider number would be entered as the attending dentist in the claim form. The attending dentist must sign and date the claim form and provide his/her individual provider number on the signature line of the claim form. Dentists should use the American Dental Association claim form when billing Medicaid for services rendered.

A dentist, using his individual provider number, cannot bill the Louisiana Medicaid program for services rendered under the group that is enrolled in the Louisiana Medicaid Program. If the group chooses not to enroll as a Louisiana Medicaid provider, the individual dentist must enroll and bill the Medicaid program for services performed in the group using the individual provider number.

Individual Dentists:
The Louisiana Medicaid Program will assign only one provider number per individual provider type. For this reason, an individual dentist may have only one �Pay To� address regardless of the number of locations where individual services are rendered. For example, if an individual dentist practices at multiple locations, Medicaid payments will be sent to only one address for all services provided.

However, if an individual dentist practices with an enrolled group and maintains a private practice, the group must bill for services performed in the group setting and the individual dentist must bill individual services rendered in the private practice. This is the only situation in which payment for services provided by one dentist would be made to more than one address. Payment would be made to the group at its address and to the individual dentist at the private address.

All changes of address, group affiliation, contract statuses, etc. must be reported in writing to:

Provider Enrollment Unit
P.O. Box 80159
Baton Rouge, LA 70898-0159

Louisiana Drug Utilization Review (LADUR) Education

An Introduction to Pharmacoeconomics

Sandra Blake, Ph.D. Assistant Professor College of Pharmacy University of Louisiana at Monroe


� Today, a drug or medical intervention must be efficient and effective, and also economically efficient.

� Pharmacoeconomics is simply the branch of health economics specifically focused upon the evaluation of pharmaceutical consequences and/or costs.2

� A health economic analysis is the evaluation of the consequences and/or costs of health care therapies and services


In the current health care environment, it is no longer sufficient for a drug or a medical procedure to be safe and efficacious, it must also be effective and economically efficient. Efficacy is the ability of a drug or other medical intervention to work under the conditions of a well-controlled clinical trial. The results of the clinical trial provide that information. The effectiveness of a drug is its performance in the real-world in which it is prescribed and consumed; effectiveness is impacted by the desires and actions of the patient and the physician.1 But not only must a drug or medical intervention demonstrate efficacy and effectiveness, today, that drug or medical intervention must be economically efficient. Economic analyses (or pharmacoeconomics) provide that information.

A health economic analysis is the evaluation of the consequences (outcomes) and/or costs (inputs) of health care therapies and services with the goal of obtaining the highest possible value for health care expenditures.2 In economic terms, these analyses are used to try to improve the efficiency by which we produce health outcomes.1,3 They may evaluate different types of interventions including screening and diagnostic tests, procedures, medical and surgical interventions, pharmacotherapies or even health information and education programs.4,5 These types of analyses differ from clinical trials in that the setting is natural versus artificial. There may be a large sample with minimal blinding and, while compliance is monitored, it is usually not forced.6 The research observes the outcome without impacting it.5 Many studies are retrospective or statistical modeling techniques are employed. 

Pharmacoeconomics is simply the branch of health economics specifically focused upon the evaluation of pharmaceutical consequences and/or costs.2 A well-constructed pharmacoeconomic (PE) study identifies, measures and compares the benefits and costs of various treatment alternatives; it looks beyond the direct acquisition costs by including the impact of the drug on total health resource utilization and costs.1,7 Pharmacoeconomic studies can be used to evaluate many different types of alternative treatments: 

� Outpatient drug treatment versus hospitalization, 
� A drug dosed multiple times a day versus a drug dosed once a day, 
� Drugs with different side effect profiles,
� Drugs administered i.v. versus orally, or
� Drugs used prophylactically versus drugs used in treatment of the disease.7

Although health economic analyses and pharmacoeconomics appear to be recent trends, the first article discussing pharmacoeconomics appeared in the literature in 1978 and the first pharmacoeconomic research was published in 1979.8-10 

Before any pharmacoeconomic study can commence, it is important to determine from whose perspective the study will be conducted. A study can be conducted from the perspective of the patients, providers, payers or society. Any one group can choose to fund or not fund a treatment or program and each may have a different opinion as to the value of the outcome and what they are willing to pay to achieve that outcome.2 Thus, a study performed from one perspective that reaches a decision could reach a contradicting decision if performed from a different perspective.2 Of course, the societal perspective is the broadest and encompasses all associated costs.4

Perspective is important also because it determines the types of costs to be included in the study and unit costs. There are two major categories of cost, those of the health care resources consumed (direct medical costs) and those of patient and family resources which would include transportation, meals, housing, and the value of patient and caregiver time.4 For example, a self-insured employer not only incurs the direct medical costs but also incurs the costs of lost productivity and therefore has an incentive to have an employee return to work as soon as possible. Generally, these employers desire therapies that shorten hospital stay and recovery time and may be willing to pay for more expensive therapies that allow that.2 

Perspective may also determine the time frame for the study. For example, once a person is in the Medicare system, Medicare is likely to be the sole (or at least the primary) payer for that person for life. However, the average HMO enrollee may only stay with a plan for 4-5 years or less.2 Therefore, pharmacoeconomic studies conducted from the Medicare perspective might encompass a longer term than those conducted from the HMO perspective. 

In economic analyses of medical care there are four major categories of costs:

� Direct medical costs which are the costs of the specific health care service, treatment or 
pharmaceutical agent,
� Direct non-medical costs which are those costs necessary for a patient to receive the medical care 
such as transportation or housing,
� Indirect costs that measure a patient�s lost productivity plus the lost productivity of all unpaid 
caregivers, and
� Intangible costs that are the costs of pain and suffering and reduction in quality of life.2

Which of the above costs should be included depends on the perspective of the study. It should also be noted that, in a pharmacoeconomic analysis, the above costs include not only those incurred in acquiring, producing and/or administering the therapy, but also those costs incurred in treating side effects, adverse reactions, and the costs of treating illnesses if life is extended. Benefits of treatment should likewise include future medical costs avoided by successful treatments and increases in productivity due to reduced morbidity, disability and mortality.11

Several different costing methods are used in conducting pharmacoeconomic and health economic studies. When a study is conducted from the provider perspective, actual cost data obtained from a cost-accounting is optimal. When charge data is not available, cost-to-charge ratios may be used to adjust charges providing an estimate of costs.4,11-12 In studies conducted from the payer perspective, actual charges paid are the appropriate costs to be utilized. When costs are not available, Medicare payment schedules are frequently used as they are readily available from the Centers for Medicare and Medicaid Services (formerly HCFA). In studies from the patient or societal perspective, the intangible costs of pain and suffering and limitations on quality of life are often appropriately included, however, they are the most difficult to quantify.2

Given a choice, an individual would rather receive $1 today than $1 a year from now since money received now can generate additional future returns. Thus, individuals have a time preference for money. Discounting (Present Value) is a method that incorporates that time preference for money and adjusts the current (present) value of future costs and benefits accordingly.11 Any pharmacoeconomic and/or health economic analysis with a time horizon over one year should incorporate discounting. The exact rate depends on an institution�s yearly charge inflation rate, the national inflation rate, the Consumer Price Index, the Consumer Price Index for Medical Care or other rates that affect the operation of the individual or group from whose perspective the study is conducted.4

Types of Pharmacoeconomic Studies
There are five basic types of pharmacoeconomic/health economic studies:
� Cost of illness
� Cost minimization
� Cost effectiveness
� Cost benefit
� Cost utility

Cost-of-illness studies quantify the value of the resources consumed in treating a disease or condition. To conduct this type of evaluation, direct and indirect costs of a particular disease must be identified and evaluated.8 This information can provide a baseline measure of the total impact of an illness11 and assist policy makers in allocating prevention and education dollars. The cost of the illness is usually expressed in dollars spent on medical care plus dollars lost due to morbidity and premature mortality. Often, a cost-of-illness study conducted from the societal perspective is referred to as a burden-of-illness study and includes all direct and indirect costs.2
Again, perspective is important in determining which direct/indirect costs are relevant to the current study.

Cost minimization
Cost minimization analyses (CMA) are the simplest type of pharmacoeconomic analysis and used to compare the cost differences between alternative therapies when the outcomes are known to be or assumed to be equal.1-2, 4, 11-13 CMA studies typically track direct medical costs, with or without direct non-medical costs and indirect costs, depending upon clinical situation and perspectives considered.2 As the outcomes are equal, the least costly alternative is chosen. However, it is important that all outcomes be equal including the risk of adverse events. This type of analysis is frequently used to compare generic equivalents of drugs that may have different dosing and/or administration.13 

Example of CMA
Howard, Blumenschein and Rapp conducted a CMA to compare the costs of i.v. erythromycin and azithromycin when these drugs were used with other microbials to treat community-acquired pneumonia (CAP) in a Kentucky hospital. Retrospective chart reviews were conducted from the institutional perspective. Both macrolides were determined to be equally effective. Costs included drug acquisition cost, drug preparation, supplies, administration, and the costs of managing complications. The study did not find any significant cost differences between the two drugs.14 

Cost-effectiveness analyses (CEA) are used when the costs and the consequences of alternative therapies are different. The costs can be measured in dollars and the outcome is measured in some natural or clinical unit.2 The outcomes may not be equivalent, but they must be able to be measured in the same units.13 For example, in a CEA to evaluate two different antihypertensives, the outcomes might be number of millimeters of mercury (mmHg) decrease and the CEA ratio for each of the alternatives would be expressed as dollars per mm of Hg decrease. The decision maker would select the antihypertensive with the lowest cost per mm of Hg decrease. Or a CEA could evaluate the different therapies for treating gastric ulcers. The costs for each of the therapeutic alternatives would be calculated including costs of monitoring and treating adverse events, costs of treatment failures and cost of the therapies themselves. The outcome measure might be gastric episode avoided. In a study of antihyperlipidemics, the outcome measure might be stroke avoided or surgical procedure avoided. A common outcome measured in CEA studies is �years of life saved.� One weakness of CEA studies is that they cannot be used to compare medical interventions to treat two different diseases as they would not have a common outcome measure.4

Example of CEA
A classic example of CEA is the study conducted by Reves et al in which the authors determined the cost-effectiveness of prophylaxis of travelers� diarrhea. There were three options: 

� No treatment/no prophylaxis (natural history); 
� Treatment with sulfamethoxazole-trimethoprim; or 
� Prophylaxis with either sulfamethoxazole-trimethoprim or doxycycline. 

Costs included in the model were not only the costs of the drugs but also the medical expenses due to complications and adverse drug reactions and the estimated costs of the inconvenience resulting from the illness. Estimates of the likelihood of various events like an occurrence of travelers� diarrhea and associated costs were obtained from a panel of experts. The costs obtained for each option were: $198 for natural history option, $66 for treatment option, $23 for sulfamethoxazole-trimethoprim prophylaxis, and $22 for doxycycline prophylaxis. The major cost driver was the daily cost due to incapacitation. Results indicated that prophylaxis with either agent was more cost-effective than either the treatment or the natural history options. The authors varied the risk of travelers� diarrhea to determine at what point prophylaxis ceased to be cost-effective and determined that the two prophylaxis options were cost-effective until the risk of travelers� diarrhea fell below 0.05 per person per week.15

Cost-Benefit Analysis
In cost-benefit analysis (CBA) all outcomes are expressed in dollars.1-2, 11-13 The results of the express findings as:

� Benefit-to-cost ratio, the ratio of dollars gained in benefits to dollars spent in costs, or 
� Net benefits, the dollar amount of benefits less the dollar amount of costs.

As this type of analysis uses only monetary values, it can be used to compare treatment alternatives or health programs that have dissimilar goals. Because it can compare totally different programs and strategies, this type of analysis is particularly useful for decisions at the public policy level.2 For example, should the State of Louisiana spend $1,000,000 providing anti-diabetic agents to indigent citizens obtaining care at LSU Medical Centers throughout the state or drug treatment centers for substance abusers? One of the major difficulties of this type of analysis is that all outcomes must be expressed in monetary terms and some variables are by nature very difficult to monetize.

Example of CBA
Joish, Limcangco and Armstrong performed a CBA is determine the financial advisability of implementing a pharmacist-advocated pneumococcal vaccination program for HMO enrollees over 65. The study was conducted from the perspective of the third party payer and so only the direct costs that would be incurred by the managed care organization were included. In this, the pharmacy program would conduct an educational mailing to enrollees informing them of the vaccination program. Patients could be vaccinated either by physician or pharmacist. In order to conduct this study, the authors made the following assumptions:

� The percentage of patients who receive immunization through pharmacist-advocated program 
would be 85%,
� The percentage of patients who would receive immunization through traditional immunization 
program would be 50%,
� The primary vaccine efficacy rate of .68 is equal for both programs; and,
� The probability of developing pneumococcal disease is assumed to be 0.3 in one year. 

The costs of the vaccine and the medical cost to manage the pneumococcal illness were the same for both programs; however, physician reimbursement was modeled to be $8/immunization while pharmacist reimbursement was modeled to be $1/immunization. The pharmacy program incurred costs of the mailing to inform enrollees of the program. Based on a hypothetical cohort of 100,000 enrollees, the net benefit of the pharmacist-advocated program was determined to be $32,979,500 (benefit:cost ratio was 4.18:1) while the net benefit of the traditional program was determined to be $9,987,500 (benefit:cost ratio was 1.64:1). The authors repeated the analysis varying the assumptions of response rates and concluded saying that while the initial model showed that the pharmacist-advocated pneumococcal vaccination program was found to return a greater benefit per dollar of costs, the results were highly dependent on the assumptions of cost and enrollee response to mailing.15

Cost Utility Analysis
Cost utility analysis (CUA) is the only type of pharmacoeconomic analysis that takes into account patient preferences for certain health states (called utilities).2-3 The consequence of the treatment (outcome of the treatment) is measured in terms of quantity and quality of life and expressed as a utility score.3,11 A utility score is a single score that measures the strength of a patient�s preference for a given health state or outcome; it summarizes all of health-related quality of life.3 For example, suppose one of the drugs in an evaluation results in a skin rash 25% of the time. In order to perform a CUA, it must be determined how much the skin rash decreases health from ideal health and how much a patient would be willing to pay to forgo this unpleasantness.

The results of CUA are often expressed as cost per Quality-Adjusted Life Year (QALY).
A QALY is a unit that captures the notion of one year of survival in perfect health. By using QALY, quantity and quality of life are combined into single outcome.2 For example, 2 years of perfect health equal 2 QALYs. If a person feels that their health has so impacted their quality of life that they would be willing to trade a 50% decrease in quantity of years, then they gain only .%) QALY per actual year of life. They would then be indifferent between two years,e ach value at .50 QALY, and one year at perfect health (one year at 1.0 QALY). There are a number of scales that are used to measure quality of life such as the Health Utilities Index, Quality of Well-Being Scale, and the Disability/Distress Index.3 

There are other methods that are used to assess utilities discussed in references 11, 12 and 13.

CUA studies are quite useful when it is desirable to incorporate the positive effects of the treatments minus burdens of adverse effects. Studies to evaluate drugs that substantially affect quality of life such as cancer therapies where the severity of treatment-related toxicities would influence patient preference for the treatment alternatives often need to employ CUA methodologies.3 Major disadvantages of this type of analysis are: utility data are usually not collected in clinical trials and are frequently unavailable and the complexity of the methods. 

CUA Example
Yee used CUA analysis to evaluate docetaxel versus paclitaxel in patients with anthracycline-resistant metastatic breast cancer. This was a United Kingdom study and the perspective was that of the government. A theoretical model was developed to compare 2 therapies: docetaxel 100mg/m2 as 1-hr infusion and paclitaxel 175mg/m2 as 3-hr infusion. The model assumed no difference in survival between the two therapies. The model that was developed described the disease as a set of mutually exclusive health states. As a patient�s health improves or declines, that patient moves into and out of each health state. Different treatments may result in more or less time spent in one of the health states. Each of the health states was associated with a different cost and utility score. The differences in costs and outcomes from the different therapies resulted from the length of time the patient would spend in a health state. Response rates, frequencies of major treatment-related toxicities and response durations were obtained from package inserts, a review of the clinical literature, and expert opinion. Resource utilization for each treatment and health state were based on expert opinion. Utility scores were obtained from oncology nurses as it was determined to be impractical to follow patients prospectively through metastatic breast cancer. The CUA showed that the total cost of docetaxel was higher because drug acquisition cost was slightly higher and because the patient who responds or is stable will continue to be treated for a longer period (more courses of chemotherapy) resulting in higher treatment costs. In this study, the higher cost of docetaxel was associated with a gain of 0.0905 QALY per patient, which is equivalent to 33 days in perfect health. The incremental cost-utility ratio (the cost for one additional QALY) associated with docetaxel was estimated to be $4011/QALY ($363/0.0905 QALY), well below the generally accepted level.3 

This brief article was intended to introduce the reader to some of the concepts used in pharmacoeconomics and provide examples from the literature of each type of evaluation. For a more complete discussion of pharmacoeconomics see references 11, 12 and 13.

The reader should remember that not all pharmacoeconomic analyses were created equal and the assumptions and methods of a particular study may significantly impact the validity of the conclusions and would definitely impact the generalizability of the results. Often probabilities of adverse events and outcomes in published studies were obtained from clinical trial data and may not apply to another population. Nor are costs the same from institution to institution, population to population. 


1. Reeder CE. Overview of Pharmacoeconomics and pharmaceutical outcomes evaluations. Am J Health-Syst Pharm 1995; 52(Suppl 4): S5-8.

2. McDonald RC. An Introduction to Health Economics Eli Lilly and Company 1993, p.3.

3. Yee GC. Cost-utility analysis of taxane therapy. Am J Health-Syst Pharm 1997; 54 (Suppl 2): S11-15.

4. Beltz SE, Yee GC. Pharmacoeconomics of cancer therapy. Hospital Pharmacist Report. 1999(July): 34-41.

5. Rajagopalan r, Kallal JE, Fowler JF, Sherertz EF. Practical Issues in Conducting Pharmacoeconomic Studies. Clin Ther 1996; 18: 1298-1306.

6. Arikian SR, et al. The demand for pharmacoeconomic research is on the rise. Medical marketing & Media 1992; 27(11): 60-67.

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