PURPOSE: To train to consider linkages between cost-effectiveness thresholds and opportunity costs, and how value assessments can be used to minimize opportunity costs for high-need patients and public health purposes.

DESCRIPTION: The U.S needs to weigh how increasing healthcare costs draw from its ability to serve many individuals. Commercial payers and Medicaid face budget constraints, yet have to manage the health of multiple priority populations. These tradeoffs about how money is spent can lead to opportunity costs for certain beneficiaries, and opportunity costs create consequences. First, payers investing in technologies with rising costs for some patients limit healthcare budgets to deliver medically necessary services for other patients, or vice versa. Second, payers can overcome these budget constraints by pushing payer costs to the point of service or to all payers entailing cross-subsidization, which may reduce demand. Third, rising costs of health services and technologies create budget constraints on public health and primary care interventions that can reduce future dependence on high-cost alternatives. Fourth, healthcare costs could withdraw funds from other services that improve social welfare, such as housing, education and employment.

These opportunity costs need to be considered in balance with healthcare benefits. Economic evaluation is designed to identify decisions which maximize benefits and identify direct and indirect costs; for example, by establishing ‘cost-effectiveness thresholds’ that represent the maximum a system can spend on a particular alternative before its benefits are outweighed by its opportunity costs.

Sculpher (session chair) will provide an overview of value assessment's important in managing healthcare programs. Padula will explore the multi-level construct of opportunity costs connected to patient-level and public health decision-making. Vanness will provide a 15-minute tutorial empirical derivations of opportunity costs and cost-effectiveness thresholds. Conti will extrapolate the impact that opportunity costs can have on decision-maker’s actions such as through the influence of ICER reviews.