Evaluating Direct Medical Expenditures Estimation Methods of Adults Using the Medical Expenditure Panel Survey: An Example Focusing on Head and Neck Cancer

Objective: To inform policymakers of the importance of evaluating various methods for estimating the direct medical expenditures for a low-incidence condition, head and neck cancer (HNC). Methods: Four methods of estimation have been identified: 1) summing all health care expenditures, 2) estimating disease specific expenditures consistent with an attribution approach, 3) estimating disease-specific expenditures by matching, and 4) estimating disease-specific expenditures by using a regression based approach. A literature review of studies (2005-2012) that used the Medical Expenditure Panel Survey (MEPS) was undertaken to establish the most popular expenditure estimation methods. These methods were then applied to a sample of 120 respondents with HNC, derived from pooled data (2003-2008). Results: The literature review shows that varying expenditure estimation methods have been used with MEPS but no study compared and contrasted all four methods. Our estimates are reflective of the national treated prevalence of HNC. The upper-bound estimate of annual direct medical expenditures of adult respondents with HNC between 2003 and 2008 was $3.18 billion (in 2008 dollars). Comparable estimates arising from methods focusing on disease specific and incremental expenditures were all lower in magnitude. Attribution yielded annual expenditures of $1.41 billion, matching method of $1.56 billion, and regression method of $1.09 billion. Conclusions: This research demonstrates that variation exists across and within expenditure estimation methods applied to MEPS data Despite concerns regarding aspects of reliability and consistency, reporting a combination of the four methods offers a degree of transparency and validity to estimating the likely range of annual direct medical expenditures of a condition.