H. Patient Incurred Cost

1. How Should Patient-Incurred Costs be Measured?

Patients incur costs for care in several forms: payments for transportation, copayments for care itself, and in the time spent traveling to obtain care. Here we present a brief discussion of how to measure these costs.

Transportation costs may be captured in several ways. In many cases it makes sense simply to survey patients directly about expenditures for public transportation or taxicabs. The average for a few visits may be used to estimate the cost of remaining trips. A second approach estimates costs based on the actual travel distance. Patients are surveyed to determine the number of miles traveled, and a cost is assigned at a constant rate per mile. A commonly used rate is published by the IRS; for the latest rate, visit the IRS web site and search for 'standard mileage rate.' A related method involves measuring the straight-line distance between the patient's home and the place of service, or between the centroids of the zip codes of the patient's home and the place of service. For further discussion of this method, see the FAQ H2 - "How Do I Estimate Travel Costs?". Finally, note that the VA reimburses patients for some care-related transportation. From a societal perspective, reimbursed travel expenses should not be counted as a patient cost. Reimbursements may also be captured through patient surveys.

Some veterans make copayments for VA care.  Although copayments can be estimated based on the types of care received and the veteran's priority status, in practice such costs are usually ignored because they are not of interest.  An exception is medication copayments; at least two studies have investigated how increases in VA pharmacy copayments affect use of particular medications (e.g., Yu et al., 2001).  

Interventions have a time cost even when services are provided at no charge. Patients must spend time to receive an intervention and for transportation to and from the place where it is received. Time spent by patients carries an "opportunity cost" based on the notion that time is limited. Absent the intervention patients and others would use their time for other purposes. Although the VA does not reimburse patients for their time, a cost-effectiveness analysis from a societal perspective must take patients' time costs into account. For employed persons the hourly wage is a reasonable measure of time cost; this information may be gathered by survey. Many VA patients are not employed, however, and so a wage is often unavailable. There are a number of issues to consider in determining a fair time value for persons who are not currently employed. An overview and recommendations are found in Garber et al. (1996).

References

Garber A., Weinstein M.C., Torrance G.W., and Kamlet, M.S. Theoretical foundations of cost-effectiveness analysis. In: Gold, M.R., Siegel J.E., Russell L.B., and Weinstein M.B., eds. Cost-effectiveness in health and medicine. New York: Oxford University Press, 1996.

Yu EI, Glassman PA, Asch SM, Paige NM, Passman LJ, Shekelle PG. Cost-sharing for prescriptions of sildenafil and finasteride: a case study in veteran patients. American Journal of Managed Care 2001;7(4):345-353.