COST-EFFECTIVENESS OF CAPITATED MANAGED CARE FOR CHRONIC DISEASE MANAGEMENT: A 25-YEAR MARKOV MODELING APPROACH
Author(s)
Neenah Young, MHS1, Daniel Gedeon, MPH1, Jangho Yoon, PhD2, Olivia Rodrigue, BS1, Diana Luan, PhD1, Richard Shoge, PhD3, Patrick Richard, PhD2.
1Henry M. Jackson Foundation for the Advancement of Military Medicine, Inc., Bethesda, MD, USA, 2Preventive Medicine and Biostatistics, Uniformed Services University of the Health Sciences, Bethesda, MD, USA, 3DoD Defense Health Agency, Falls Church, VA, USA.
1Henry M. Jackson Foundation for the Advancement of Military Medicine, Inc., Bethesda, MD, USA, 2Preventive Medicine and Biostatistics, Uniformed Services University of the Health Sciences, Bethesda, MD, USA, 3DoD Defense Health Agency, Falls Church, VA, USA.
OBJECTIVES: One of the ways that the Military Health System (MHS) has been trying to improve outcomes for its high-risk beneficiaries while containing medical care costs is through a capitated arrangement with the US Family Health Plan (USFHP). This study evaluated the cost-effectiveness of the capitated USFHP versus TRICARE Prime for chronic disease management from the US Defense Health Agency (DHA) perspective, determining if higher upfront capitation rates provide long-term economic value.
METHODS: Using 2021-2025 MHS Data Repository (MDR) data from a well-balanced propensity score matched sample, a series of state-transition Markov cohort simulation models were developed to evaluate the 25-year cost-effectiveness of the USFHP versus TRICARE Prime across six distinct providers. The analysis encompassed five conditions of interest: Diabetes (3-state annual), Hypothyroidism (3-state annual), Chronic Pulmonary Disease (CPD; 4-state annual), Hypertension (5-state annual), and Depression (5-state quarterly; 100 cycles). Real-world baseline disease severity variations were captured at model initialization. Counterfactual baseline costs for the USFHP population were generated using probabilistic Monte Carlo simulations to simulate what the USFHP population would have cost the DHA under standard Prime care. Health state utility values and transition probabilities were derived from the published literature. Costs and Quality-Adjusted Life Years (QALYs) were discounted at 3% annually.
RESULTS: At a $100,000/QALY threshold, USFHP was cost-effective versus Prime for CPD [incremental cost-effectiveness ratio (ICER): $14,879/QALY; ΔC: $8,481, ΔE: 0.57 QALYs], hypertension (ICER: $67,189/QALY; ΔC: $6,047, ΔE: 0.09 QALYs), and depression (ICER: $75,010/QALY; ΔC: $7,501, ΔE: 0.10 QALYs). Conversely, USFHP was dominated in diabetes (ΔC: $7,082, ΔE: -0.39 QALYs). For hypothyroidism, USFHP was cost-saving (ΔC: -$30,790) but reduced effectiveness (ΔE: -5.84 QALYs), rendering Prime cost-effective compared to USFHP (ICER: $5,272/QALY).
CONCLUSIONS: USFHP care management delivers variable, condition-specific economic value. These results provide health system leadership with crucial, data-driven evidence for managed care contract restructuring, benefit design, and resource allocation.
METHODS: Using 2021-2025 MHS Data Repository (MDR) data from a well-balanced propensity score matched sample, a series of state-transition Markov cohort simulation models were developed to evaluate the 25-year cost-effectiveness of the USFHP versus TRICARE Prime across six distinct providers. The analysis encompassed five conditions of interest: Diabetes (3-state annual), Hypothyroidism (3-state annual), Chronic Pulmonary Disease (CPD; 4-state annual), Hypertension (5-state annual), and Depression (5-state quarterly; 100 cycles). Real-world baseline disease severity variations were captured at model initialization. Counterfactual baseline costs for the USFHP population were generated using probabilistic Monte Carlo simulations to simulate what the USFHP population would have cost the DHA under standard Prime care. Health state utility values and transition probabilities were derived from the published literature. Costs and Quality-Adjusted Life Years (QALYs) were discounted at 3% annually.
RESULTS: At a $100,000/QALY threshold, USFHP was cost-effective versus Prime for CPD [incremental cost-effectiveness ratio (ICER): $14,879/QALY; ΔC: $8,481, ΔE: 0.57 QALYs], hypertension (ICER: $67,189/QALY; ΔC: $6,047, ΔE: 0.09 QALYs), and depression (ICER: $75,010/QALY; ΔC: $7,501, ΔE: 0.10 QALYs). Conversely, USFHP was dominated in diabetes (ΔC: $7,082, ΔE: -0.39 QALYs). For hypothyroidism, USFHP was cost-saving (ΔC: -$30,790) but reduced effectiveness (ΔE: -5.84 QALYs), rendering Prime cost-effective compared to USFHP (ICER: $5,272/QALY).
CONCLUSIONS: USFHP care management delivers variable, condition-specific economic value. These results provide health system leadership with crucial, data-driven evidence for managed care contract restructuring, benefit design, and resource allocation.
Conference/Value in Health Info
2026-11, ISPOR Europe 2026, Vienna, Austria
Value in Health, Volume 29, Issue 12S
Code
EE499
Topic
Economic Evaluation