CONDUCTING THE COST ANALYSIS
Comparison of Approaches for Estimating Incidence Costs
of Care for Colorectal Cancer Patients
K. Robin Yabroff, PhD,* Joan L. Warren, PhD,* Deborah Schrag, MD,† Angela Mariotto, PhD,*
Angela Meekins,‡ Marie Topor,‡ and Martin L. Brown, PhD*
Background: Estimates of the costs of medical care vary across
patient populations, data sources, and methods. The objective of this
study was to compare 3 approaches for estimating the incidence
costs of colorectal cancer (CRC) care using similar patient popula-
tions, but different data sources and methods.
Methods: We used 2 data sources, linked SEER-Medicare and
Medicare claims alone, to identify newly diagnosed CRC patients
aged 65 and older and estimated their healthcare costs during the
observation period, 1998 to 2002. Controls were matched by sex,
age-group, and geographic location. We compared mean net costs,
measured as the difference in total cost between cases and controls,
for: (1) a SEER-Medicare cohort, (2) a Medicare claims alone
cohort, and (3) a modeled phase of care approach using linked
SEER-Medicare data. The SEER-Medicare cohort approach was
considered the reference.
Results: We found considerable variability across approaches for
estimating net costs of care in CRC patients. In the first year after
diagnosis, mean net costs were $32,648 (95% CI: $31,826 and
$33,470) in the SEER-Medicare cohort. The other approaches un-
derstated mean net costs in year 1 by about 16%. Mean net 5-year
costs of care were $37,227 (95% CI: $35,711 and $38,744) in the
SEER-Medicare cohort, and $30,310 (95% CI: $25,894 and
$34,726) in the claims only approach, with the largest difference in
the 65 to 69 age group. Mean net 5-year costs of care were more
similar to the reference in the modeled phase of care approach ($37,701
?range: $36,972 and $38,446?). Differences from the SEER-Medicare
cohort estimates reflect misclassification of prevalent cancer patients as
newly diagnosed patients in the Medicare claims only approach, and
differences in years of data and assumptions about comparison groups
in the modeled phase of care approach.
Conclusions: CRC incidence cost estimates vary substantially de-
pending on the strategy and data source for identifying newly
diagnosed cancer patients and methods for estimating longitudinal
costs. Our findings may inform estimation of costs for other cancers
as well as other diseases.
Key Words: health care costs, health services research, cost and
cost analysis, neoplasms, medicare, SEER program
(Med Care 2009;47: S56–S63)
policy makers in decision-making about resource allocation
and coverage of specific treatments. Cost-effectiveness anal-
yses of interventions to prevent or treat disease also rely on
incidence cost estimates. Sources of cost data for these
estimates in the United States include insurance claims,
hospitals, billing systems, hospital discharge data, and sur-
veys.1–3These sources of cost data generally do not have
information about the date of diagnosis with disease, how-
ever, complicating estimation of incidence costs.
To address this limitation, cancer researchers have
linked cancer registry data that include date of diagnosis with
health insurance claims or encounter data, to estimate costs of
cancer care for incident cohorts4or to model long-term costs
of care following diagnosis.1,2,4–7Modeling approaches typ-
ically divide care into clinically relevant periods or phases of
care—the initial period after diagnosis, the end of life, and the
intervening or continuing period, and allow estimation of
long-term costs when applied to survival life tables.7This
phase of care approach is a more efficient use of data than a
cohort approach and can lead to more robust estimates,
particularly for less common tumor sites. In the absence of
registry linkage, algorithms using diagnosis codes have been
developed to identify newly diagnosed cancer patients in
claims data, but the sensitivity and positive predictive value
of these algorithm approaches are generally poor.8,9
In addition to issues with identifying incident cases,
variation in study design may also influence the estimates of
the costs of cancer care. A recent systematic review of studies
of the costs of cancer care in the United States found signif-
icant heterogeneity across the studies in care settings, popu-
lations studied, types of services included, measurement of
costs, and study methods.10Because all of these factors can
affect cost estimates, this heterogeneity makes comparisons
across studies difficult, even when evaluating the same type
of cancer. Without comparisons using the same time period,
ncidence cost estimates or longitudinal estimates of medical
costs after diagnosis with disease, can be useful inputs for
From the *Division of Cancer Control and Population Sciences, National
Cancer Institute, Bethesda, Maryland; †Massachusetts General Hospital
Cancer Center, Harvard Medical School, Boston, Massachusetts; and
‡Information Management Services, Inc. Rockville, Maryland.
Reprints: K. Robin Yabroff, PhD, MBA, Health Services and Economics
Branch/Applied Research Program, Division of Cancer Control and
Population Sciences, National Cancer Institute, Executive Plaza North,
Room 4005, 6130 Executive Blvd., MSC 7344 Bethesda, MD 20892.
Copyright © 2009 by Lippincott Williams & Wilkins
Medical Care • Volume 47, Number 7 Suppl 1, July 2009
S56 | www.lww-medicalcare.com
supplemental insurance, and the Veterans Administration.
Estimates do not include out of pocket expenses or copay-
ments. Medicare payments have been reported to represent
approximately 51% to 65% of all health care costs, including
other payors and out-of-pocket expenses.26–28Our estimates
were based on the approximately 85% of Medicare enrollees
in fee-for-service plans. CRC stage at diagnosis29and sur-
vival30have been reported elsewhere to vary between Medi-
care managed care and fee-for-service settings. Exploration
of potential selection biases and differences in the costs of
cancer care by delivery setting will be an important area for
In summary, incidence approaches to the estimation of
disease-specific medical costs can be useful for descriptive
and analytical purposes. However, such estimates can vary
substantially depending on the method and source of data that
is used to identify newly diagnosed patients, date of diagno-
sis, and cost elements. We found that using Medicare claims-
only to identify incidence cases may result in substantial under-
estimations of both short- and longer-term costs. Longer-term,
net estimates of cost from the SEER-Medicare modeled
phase-of-care approach are comparable to estimates obtained
directly from a SEER-Medicare cohort.
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Medical Care • Volume 47, Number 7 Suppl 1, July 2009 Comparison of Incidence Cost Approaches
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