Direct expenditures related to otitis media diagnoses: Extrapolations froma pediatric medicaid cohort

Background. Treatment of otitis media in children is associated with substa ntial expenditures because of its high frequency during childhood. Vaccines against respiratory pathogens causing otitis media are now being developed . Information about otitis media-related medical expenditures will be neede d to determine the cost-effectiveness of these preventive interventions. Methods. This study used utilization data from claims to impute otitis medi a-related expenditures for medical visits, pharmaceuticals, and surgical pr ocedures for 87 057 children 13 years of age and younger who were continuou sly enrolled in Colorado's fee-for-service Medicaid program during 1992. In ternational Classification of Disease, Ninth Revision diagnostic codes were used to identify visits for otitis media. An antibiotic was considered to have been prescribed to treat otitis media if it was dispensed up to 24 hou rs before or within 48 hours after a physician encounter showing a diagnosi s of otitis media. All tympanostomies, mastoidectomies, and adenoidectomies were assumed to be related to otitis media. Expenditures were imputed from utilization using a Medicaid fee schedule. National expenditures for 1992 to treat otitis media were extrapolated from Colorado's Medicaid data. We adjusted for differences between Colorado and the United States as a whole in terms of price, number, and intensity of s ervices; for differences in reimbursement rates by service between Medicaid and private insurance; and for differences in utilization between Medicaid enrollees and the uninsured. To provide a more current expression of medic al expenditures for otitis media, we inflated the 1992 expenditure estimate s to 1998 dollars using the Consumer Price Index published by the US Bureau of Labor Statistics. Results. Twenty-eight percent of children experienced at least 1 episode of diagnosed otitis media. The proportion of children with a diagnosis of oti tis media was highest (42%-60%) in the 7-month to 36-month age range. The p roportion was also higher among white (34.5%) and Hispanic (25.3%) children than among black children (18.5%), as well as among rural (34.5%) compared with urban children (27.2%). Children 19 to 24 months of age incurred the highest total annual expenditu res per child with otitis media ($239.68). Expenditures for drugs, visits, and procedures were all highest for this group. The per-patient cost to Med icaid was greater for visits than for drugs or procedures across all age gr oups. Total per-patient expenditures were higher for males ($174.67) than for fem ales ($154.47) and higher for white children ($176.59) than for Hispanic ($ 154.12) or black children ($134.44). The differences among the ethnic group s can be attributed almost entirely to differences in expenditures for proc edures and drugs. Although mean expenditures per patient varied substantial ly by some patient characteristics (eg, race), these differences accounted for only a small fraction of the enormous variation in costs per patient. Including children with and without otitis media, age-specific estimated ex penditures per child peaked among children 1 ($132.94) and 2 years of age ( $88.72). Children 3 to 6 years of age incurred expenditures only one third as great as those incurred by children 1 year of age. Total national expenditures were estimated to have been approximately $4.1 billion in 1992 dollars and $5.3 billion in 1998 dollars. Over 40% of natio nal expenditures to treat otitis media in children younger than 14 years of age were incurred for children between 1 and 3 years of age ($453 per capi ta in 1992 dollars over these 2 years vs $1027 for all years of age from 2 to 13). Nationally, expenditures for visits remained the largest component of expenditures. Limitations. This study assessed expenditures from the point of view of the health care system; that is, no social costs, such as lost work time, or e xpenditures not normally covered by insurance, such as those for transporta tion, were included. The study captured expenditures to treat otitis media during a calendar year and should not be interpreted as the cost to treat e pisodes of otitis media. Our reported expenditures may have captured only p art of an episode straddling 2 calendar years, or, alternatively, they may cover several episodes. The figures reporting 1992 expenditures expressed in 1998 dollars should no t be taken as an estimate of 1998 expenditures to treat otitis media. The a pproach used to adjust the expenditures did not take into account changes i n the medical practice environment, such as would occur with a movement of the population from predominantly fee-for-service practice to managed care or the introduction of new treatment practices. It also did not account for changes in insurance status, eg, an increase in the proportion of uninsure d children, or for population increases. Most importantly, our estimates of expenditures are based on treatment of o titis media as it was practiced in 1992, before the current practice guidel ines were promulgated. The effect of the guidelines on physician practice i n 1992 may, however, not have been substantial. In 1998, Christakis and Riv ara found that only 50% of pediatricians were aware of the otitis media gui delines, and of these, only 28% believed that they had changed their practi ce as a result of the guidelines. It is important to remember that our esti mates are based on 1992 Medicaid utilization. Given Medicaid's low reimburs ement to primary care physicians at that time, doctors would have had littl e financial incentive to see patients more often than necessary. Thus, inso far as practice guidelines encouraged fewer visits, Medicaid utilization ma y already reflect close adherence to the practice guidelines. Conclusions. Because 40% of expenditures to treat otitis media are incurred between 1 and 3 years of age, vaccines designed to reduce the incidence of otitis media are most likely to be cost-effective if they can be administe red before the child's first birthday. Because visits are the most costly category of service for all payers, otit is media case management guidelines should emphasize reducing unnecessary v isits, for instance, by improving physician training in pneumatic otoscopy, which has been shown to be critical to an accurate diagnosis of otitis med ia, and by scheduling follow-up visits for children who have become asympto matic 3 to 4 weeks after diagnosis rather than after 10 to 14 days, allowin g time for resolution of the middle ear effusion.