D. Using the "Pseudo Bill" to Find VA Healthcare Cost

4. Where can I find the cost of pharmacy?

This FAQ response briefly describes cost data in several VA pharmacy data sources: the Pharmacy Benefits Management V3.0 database, the Decision Support System (DSS) National Data Extracts, the DSS National Pharmacy Extract, DSS extracts at local VA facilities, the Fee Basis files, and VISTA. Additional information about these data sources appears in FAQ I8 "How can I find pharmacy data in the VA health care system," in Smith and Joseph (2003) (downloads section), and in a VIREC Research User Guide (downloads section).

PBM V3.0 Database

The Pharmacy Benefits Management Strategic Healthcare Group (PBM/SHG) maintains a database of outpatient prescriptions known as the PBM V3.0 database. It contains a single cost variable that represents the contract purchase price per unit of the prescription at the VA station where it was purchased. The total cost for the prescription is the unit cost multiplied by the quantity prescribed.

Decision Support System

The Decision Support System (DSS) creates National Data Extracts (NDEs) for inpatient care, outpatient care, and pharmacy care. Below we list the cost variables in each of these datasets. For detailed explanations of their meaning, see the HERC guidebook "Research Guide to Decision Support System National Cost Extracts 1998-2004" (downloads section) and the VIREC Research User Guide on pharmacy (downloads section). Because the DSS costs are estimates, the researcher must bear in mind that a different method of estimating costs, such as another way of allocating overhead to particular services,would yield somewhat different values, particularly for indirect costs.

The National Pharmacy Extract (or DSS NDE Pharmacy SAS Dataset) contains a single record for each pharmacy item. It features a significant amount of detail on medication and dispensing details and estimates of direct and indirect costs. The direct costs include fixed and variable direct costs. Fixed direct costs are those attributable to the pharmacy clinic regardless of the volume of prescriptions provided. Variable direct costs are those pertaining to the specific supply or medication being prescribed, including the purchase price and associated labor. Indirect costs capture the pharmacy's share in medical center overhead costs. The final cost variable is variable supply cost, calculated as the variable direct cost multiplied by a factor. The factor is particular to each station and fiscal year.

In DSS, a patient who fills an outpatient prescription will be coded as having visited the "pharmacy clinic." All visits to the pharmacy clinic on the same day are rolled into a single record in the DSS outpatient NDE. Five pharmacy cost variables are reported: fixed direct cost, variable direct cost, indirect cost, total cost, and pharmacy variable supply.

Inpatient DSS NDE records represent an entire stay (in the discharge files) or a stay in a particular bedsection in a particular month (in the treating specialty files). The pharmacy cost variable will represent all pharmacy spending during the stay (or treating specialty stay). The same five cost variables are used: fixed direct cost, variable direct cost, indirect cost, total cost, and pharmacy variable supply.

DSS NDEs are created from DSS production data. The production data feature "intermediate products," the individual supplies, procedures, and labor effort that together compose a single service or encounter. (For example, intermediate product #3850 is "general surgical service general anesthesia time," representing one aspect of a surgery encounter that required general anesthesia.) The production system is a more direct source of pharmacy data than the NDEs. Data must be extracted separately at each VA station, and the program must be approved and executed by IRMS staff. For these reasons, individual facility extracts will be most appropriate in two instances: studies requiring data from only one or two facilities, and studies for which the administrative burden of DSS data extraction can be worked into budget and time plans.

In recent years DSS has created research datasets that feature intermediate product data, one at the level of individual products (Intermediate Product Data, or IPD) and one that aggregates products to the level of departments (Intermediate Product Department Data, or IPDD). Researchers may access these directly using standard statistical software. Due to their vast size, however, the IPD and IPDD are not archived in perpetuity, and thus they will not be appropriate for long-term retrospective studies.

VISTA

VISTA is the primary repository of clinical and administrative data in VA. It consists of computer systems at each VA medical center and the national network that links them. Within each VISTA implementation is a large number of separate 'modules' or 'packages' designed to store data on a particular subject and to produce management reports. There is no prescription or pharmacy database per se within VISTA. Prescription-level data from a single facility can be obtained by creating an extract from the "pharmacy package" and other modules of the local system. Both inpatient and outpatient pharmacy data are available. Only direct costs can be extracted directly; indirect costs would have to be estimated.

Fee Basis Files

Under limited circumstances VA will pay for care at a non-VA facility. Some of these services fall under the Fee Basis program. (Notably, care provided in state veterans homes or through sharing agreements with affiliated medical schools is excluded.) Covered services include inpatient care and outpatient medical and dental care. Pharmacy payments are part of the Fee Basis program. VA will pay prospectively for medications related to the disability for which the veteran gained program eligibility. Veterans may be reimbursed for medications only if the pharmacist deems them necessary and the situation is urgent or emergent. In either case, the VA payment will be a function of the medication's Average Wholesale Price plus the state-specific Medicaid dispensing fee. In the "Payments to Pharmacies" file there is one record for each prescription. Data elements include the fill date, amount claimed, and amount paid, but not drug-specific characteristics such as NDC, drug name, or days supplied. Using the patient's scrambled Social Security Number, the Fee Basis pharmacy file can be linked to other Fee Basis files and to standard VA encounter files. Thus total outpatient prescription drug costs could be determined, although not costs for particular medications. Inpatient pharmacy spending cannot be separated from other inpatient costs. For more information on Fee Basis files, see HERC Technical Report #18 (downloads section).

Choosing a Source

Questions to consider when choosing a source of pharmacy cost data include the following: What data elements do I need? How much time and effort can I spend on obtaining the data? What other types of data need to be linked to the pharmacy data? Researchers needing details of the medication and prescription will need to use the DSS Pharmacy Extract, the PBM database, or VISTA. Obtaining VISTA data is significantly more difficult and thus is only advisable when it is the only source of needed information. There is also a trade-off between time and money. VISTA data are free but require special permissions and programs. PBM data are extracted by the PBM/SHG staff and so require relatively little effort, but funded studies may be charged for their assistance. DSS is free but has relatively little overlap with PBM on clinical or cost variables.

Access Requirements

In general, only VA employees may directly access these pharmacy data sources. The PBM/SHG gives data to non-VA researchers only if they collaborate with a VA employee or belong to an official oversight body. The time-share accounts needed to access DSS data are restricted to VA employees, as is direct access to VISTA systems. As a result, non-VA researchers will need to find a VA collaborator in order to use VA pharmacy data. Additional access requirements are described in Smith and Joseph (2003).

To ensure the protection of VA information, we have restricted access to certain files (denoted by the "lock" icon). Contact HERC to download these restricted files.

• VIREC Research User Guide: VHA Pharmacy Prescription Data

  Date: 5/1/2005 | Size: 2.16Mb

• Research Guide to Decision Support System National Cost Extracts 1998-2004

  Date: 2/8/2006 | Size: 325Kb

• Fee Basis Data: A Guide for Researchers

  Date: 11/6/2007 | Size: 701Kb

• Smith, M. W.; Joseph, G. J.. Pharmacy data in the VA health care system. Med Care Res Rev 2003;60(3 Suppl):92S-123S.