Cost-sharing for the DPP benefits private payers, Medicare

The lifestyle intervention at age 50 can prevent 37% of new cases of diabetes before age 65.

Issue: July 2006

An analysis of the costs of the Diabetes Prevention Program lifestyle intervention found that private payers helping to finance the program could get a complete return on investment in the form of avoided future medical costs. Medicare would also benefit significantly, as the program has been shown to prevent a significant number of new cases of diabetes.

“The Diabetes Prevention Program [DPP] demonstrated that weight loss and moderate physical activity can delay or prevent the development of diabetes by 58% in high-risk people,” investigators wrote in Diabetes Care. “Our goal was to determine whether this intervention can be offered in a way that provides financial [return on investment] for private health insurers, while remaining attractive for consumers, employers, and Medicare.”

Ronald T. Ackermann, MD, MPH, an assistant professor of medicine at Indiana University School of Medicine in Indianapolis, and colleagues conducted a study of methods of financing the DPP. Previous research has shown that the DPP costs $8,790 per quality-adjusted life-year (QALY) gained vs. placebo from a societal perspective over the lifetime of the participants. It costs $1,124 per QALY gained from a single-payer perspective.

Financing issues

Although researchers called these costs “reasonable,” it has been unclear how the DPP could be financed. “The financing of health care in the U.S. involves multiple payers,” investigators wrote. “After the age of 65, essentially all Americans receive health care coverage through Medicare. Although implementation of preventive interventions before age 65 might reduce costs and improve length and quality of life in later years, Medicare does not pay for such interventions.”

Researchers used a simulation model to assess the lifetime progression from impaired glucose tolerance to diabetes to complications and death. The model also tracked costs and QALYs.

The researchers noted that an earlier study had enrolled 3,234 participants with impaired glucose tolerance in the DPP, and had found a 55.8% risk reduction in the annual risk of diabetes onset. The most risk reduction was found if the intervention was started at age 50.

Researchers tested the difference between this and starting the intervention 15 years later, when Medicare might be more likely to cover its costs. The delay to age 65 increased the lifetime risk for developing diabetes from 65% to 83%, and the “risk reduction attributable to the intervention decreased from 22% to only 4%.”

Separate payment vs. sharing

Two analyses of financing were conducted, the first of which examined payment by private insurers up until the age of 65 with Medicare covering all costs beyond that point. For every 100 people who began the intervention at age 50, approximately 28 fewer people would have diabetes at age 65. Direct medical costs after age 65 were $2,136 lower for those who began the intervention at age 50 vs. placebo recipients.

“For the private payer, these benefits were associated with a 15-year incremental cost of $2,894 and an incremental cost-effectiveness of $9,647 per QALY gained,” the researchers wrote.

The second analysis examined cost-sharing strategies. If Medicare contributed $2,136 (30%) of the cost of the intervention per participant from age 50 to 64 and all costs beyond age 65, it would achieve a complete recovery of invested costs. If this was paid to a private payer each month, the cost would be approximately $15 per month per participant.

A private payer, meanwhile, could contribute 24% of the intervention costs (approximately $19 per month per participant) and achieve a complete return on investment after three years. For every year after that up until age 65, the private payer would experience cost savings. This would leave a residual payment of approximately $44 per month for the individual consumer.

“These estimates offer a compelling argument for policy makers to make this intervention available to eligible Americans before the age of 65,” researchers wrote. “Because 73% of Americans between 50 and 64 are insured by private, employment-based health insurers, the private sector may need to champion efforts to make the DPP lifestyle intervention available to Americans before the age of Medicare eligibility.” – by Dave Levitan

For more information:

Ackermann RT, Marrero DG, Hicks KA, et al. An evaluation of cost sharing to finance a diet and physical activity intervention to prevent diabetes. Diabetes Care. 2006;29:1237-1241.