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12
Societal Costs of Preterm Birth

ABSTRACT

Based on new estimates provided in this chapter, the annual societal economic burden associated with preterm birth in the United States was at least $26.2 billion in 2005, or $51,600 per infant born preterm. Medical care services contributed $16.9 billion to the total cost and maternal delivery costs contributed another $1.9 billion. In terms of longer-term expenditures, early intervention services cost an estimated $611 million, whereas special education services associated with a higher prevalence of four disabling conditions among premature infants added $1.1 billion. Finally, the committee estimates that lost household and labor market productivity associated with those disabilities contributed $5.7 billion.

While more comprehensive than any previous estimate of the cost of preterm birth in the United States, this $26.2 billion estimate is a floor, or minimum. Except for lifetime medical care costs associated with four major disabling conditions, it does not include the cost of medical care beyond early childhood. It includes special educational services and lost productivity costs only for those four conditions, and it includes no caretaker costs. It includes only maternal medical care costs associated with delivery. More comprehensive and refined estimates therefore need to be generated so that policies can be crafted and resources can be directed to obtaining a



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Preterm Birth: Causes, Consequences, and Prevention 12 Societal Costs of Preterm Birth ABSTRACT Based on new estimates provided in this chapter, the annual societal economic burden associated with preterm birth in the United States was at least $26.2 billion in 2005, or $51,600 per infant born preterm. Medical care services contributed $16.9 billion to the total cost and maternal delivery costs contributed another $1.9 billion. In terms of longer-term expenditures, early intervention services cost an estimated $611 million, whereas special education services associated with a higher prevalence of four disabling conditions among premature infants added $1.1 billion. Finally, the committee estimates that lost household and labor market productivity associated with those disabilities contributed $5.7 billion. While more comprehensive than any previous estimate of the cost of preterm birth in the United States, this $26.2 billion estimate is a floor, or minimum. Except for lifetime medical care costs associated with four major disabling conditions, it does not include the cost of medical care beyond early childhood. It includes special educational services and lost productivity costs only for those four conditions, and it includes no caretaker costs. It includes only maternal medical care costs associated with delivery. More comprehensive and refined estimates therefore need to be generated so that policies can be crafted and resources can be directed to obtaining a

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Preterm Birth: Causes, Consequences, and Prevention better understanding of the full scope of the growing economic burden of preterm birth in the United States. The proportions of the total cost accounted for by each cost category mentioned above should be considered with caution, as the estimates reflect a higher degree of precision with respect to what can be most readily assessed for categories of cost that have drawn more extensive resources for their determination, such as early inpatient care, than for cost categories that pose greater methodological challenges for determination and that have received less attention, such as caregiver and maternal costs other than those involved with delivery. While previous chapters in this report summarize and assess the literature on the causes and consequences of preterm birth, this chapter presents the results of new research undertaken by the Committee on the economic consequences of preterm birth, and places this research within the context of a select literature on the topic. A more systematic review of the literature on the cost of preterm birth can be found in Appendix D (Zupancic, 2006). Medical care costs in infancy for children born preterm, particularly those related to initial hospitalization, have received relatively extensive attention in the published literature compared with the amount of attention given to noninpatient and postinfancy medical care costs (Zupancic, 2006). Based on the Committee’s estimates, the annual societal economic burden associated with preterm birth in the United States was at least $26.2 billion in 2005, or $51,600 per infant born preterm (Table 12-1). The referent for these estimates was the resources expended on full-term infants; that is, these costs are above and beyond what would have been expended had these infants been born at term. Nearly two-thirds of the societal cost was accounted for by medical care. The share that medical care services contributed to the total cost was $16.9 billion ($33,200 per preterm infant), with more than 85 percent of those medical care services delivered in infancy. Maternal delivery costs contributed another $1.9 billion ($3,800 per preterm infant). Early intervention services cost an estimated $611 million ($1,200 per preterm infant), whereas special education services associated with a higher prevalence of four disabling conditions including cerebral palsy (CP), mental retardation (MR), vision impairment (VI), and hearing loss (HL) among premature infants added $1.1 billion ($2,200 per preterm infant). Lost household and labor market productivity associated with those disabilities contributed $5.7 billion ($11,200 per preterm infant). These new cost estimates for medical care received beyond infancy for those born preterm are among the first ever such estimates obtained in the

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Preterm Birth: Causes, Consequences, and Prevention TABLE 12-1 Estimated Cost of Preterm Birth, United States, Aggregate and Cost per Case   Medical Care Costs Cost Birth to Age 5 Years 6 years & older (4 DDs) Total Early Intervention Costs Special Education Costs (4 DDs) Lost Productivity Costs (4 DDs) Maternal Delivery Costs Total Costs Aggregate (millions) 15,887 976 16,863 611 1,094 5,694 1,935 26,197 Per case 31,290 1,920 33,210 1,203 2,150 11,214 3,812 51,589 NOTE: All amounts are in 2005 dollars. 4 DD = the four developmental disabilities.

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Preterm Birth: Causes, Consequences, and Prevention United States. Nevertheless, the estimates beyond early childhood include the costs for only a subset of those with the four disabling conditions associated with preterm birth which, in and of themselves, are likely conservative because of the limitations of the data on the level of certain rehabilitation and therapy services provided as well as the costs for long-term care. Of even greater significance, perhaps, is the paucity of evidence regarding certain entire categories of costs. The costs of the caregivers of individuals with disabling conditions, for example, can exceed medical care costs, but insufficient data were available to make reliable national estimates of such costs. Estimates of the costs of special education services were also limited by the inclusion of data for special education services for only a subset of the disabling conditions associated with preterm birth. With the exception of the incremental services associated with delivery, maternal care costs were not tabulated. The relative concentration of medical care costs among extremely preterm infants (less than 28 weeks of gestation) is noteworthy. Although extremely preterm births represent just 6 percent of all preterm births, extremely preterm infants accounted for more than one-third of the total medical costs associated with preterm birth through 7 years of age. On the other hand, because of the much higher proportion of preterm infants born at 28 to 36 weeks of gestation, very preterm infants (those born at 28 to 31 weeks of gestation) and moderately preterm infants (those born at 32 to 36 weeks of gestation) together accounted for the large majority of the total societal costs of preterm birth. The concentration of costs, however, may provide insight into directing specific sets of resources toward the prevention and treatment of preterm birth in a cost-effective manner. Also of note is the high level of variation and skew underlying several of the cost estimates, even within gestational age categories. Although high rates of mortality among extremely preterm infants, in particular, affect the variance of the costs, it is not the primary driver of the variance. The upper tail of the distribution of costs for medical care—in some cases, the upper 5 percent—is primarily responsible for the higher average medical care costs for young children born preterm and becomes more dominant as they age. This likely reflects the higher average costs associated with disabling conditions among the minority of individuals with such conditions born preterm. Future research on the societal costs of preterm birth should be designed to permit more detailed investigations of the variance and tails of the cost distribution. All estimates provided here are lifetime estimates of cost, in 2005 constant dollars, associated with the cohort born preterm in the United States in 2003, the last year for which final estimates on birth by gestational age were available from the National Center on Health Statistics. Costs beyond

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Preterm Birth: Causes, Consequences, and Prevention the first year of life were discounted at a 3 percent rate back to the year of birth, in accordance with the economic principle that current consumption is valued over future consumption and with the accepted methodologies used to determine the cost of illness (Gold et al., 1996). The remainder of this chapter provides greater detail on the methodology used to make national estimates of the cost of preterm birth as well as a more detailed breakdown of the summary costs provided above by cost category. Part of the literature on cost-effectiveness with respect to preterm birth is also addressed. COST-OF-ILLNESS METHODOLOGY APPLIED TO PRETERM BIRTH The societal costs associated with illness are conventionally broken down into direct and indirect costs. Direct costs include the value of the resources used to treat the condition, such as medical care, special education, and developmental services. Indirect costs include the value of resources lost to society, such as the reduced labor market productivity or the reduced level of household productivity due to heightened morbidity or premature mortality. Costs are incremental relative to referent or counterfactual assumptions. Except where otherwise stated, the estimates of the societal costs of preterm birth provided here use term birth (37 weeks of gestation or greater) as the referent. The relevant costs included are not conceptually restricted to those associated with the affected individual. Maternal, caregiver, and family costs are also relevant. Maternal costs include the incremental costs of prenatal care and delivery services, the costs of any extended care associated with maternal morbidity arising from the pregnancy, and the costs of added precautionary care in subsequent pregnancies, even if the subsequent birth goes to term. Caregiver costs appropriately include travel expenses for extended care of the preterm infant, in addition to the incremental value of time devoted to caring for the infant or child born preterm. Insufficient information was available to estimate reliably the national burden for all of the cost categories listed above. However, estimates were made for a portion of the lifetime costs for medical care, special education services, and household and work productivity losses for the affected individual. A national estimate of early intervention services was also made, based on the extent and cost of such services provided in Massachusetts. Among the family costs, only an estimate of maternal delivery costs was included. New estimates of the inpatient and outpatient medical care costs associated with preterm birth through 7 years of age are provided on the basis of the medical care services provided to a cohort of 23,631 individuals born

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Preterm Birth: Causes, Consequences, and Prevention in Utah from 1998 to 2000 and covered under a major integrated health care system. These data also served as the basis for making maternal delivery cost estimates. Additional estimates on the incremental lifetime medical care costs beyond age 5 years are provided for four disabling conditions associated with preterm birth: CP, MR, VI, and HL. Estimates of incremental special education costs and lost household and labor market productivity were also tabulated for these conditions. All estimates of preterm birth associated with these conditions drew upon published analyses and unpublished tabulations from the Metropolitan Atlanta Developmental Disability Surveillance Program (MADDSP). The cost estimates presented capture the annual discounted present value of the resources projected to be used or lost by the cohort born preterm in a single year rather than the costs incurred annually by the prevalent population in the nation that was born preterm. This cohort, or “incidence,” approach essentially involves the construction of a synthetic cohort on the basis of current patterns of resource utilization by age or age category. The cost estimates obtained by this approach lend themselves particularly well to the evaluation of programs aimed at prevention. MEDICAL CARE COSTS DUE TO PRETERM BIRTH Birth to Early Childhood To date, research on the medical care costs of preterm birth has focused nearly exclusively on inpatient care, primarily on the initial hospitalization of the infant (Zupancic, 2006). Certain studies have provided estimates of inpatient hospitalization costs exclusively for infants born with extremely low birth weights (The Victorian Infant Collaborative Study Group, 1997) or very low birth weights (VLBWs) (Rogowski, 2003), others have provided estimates exclusively by gestational age (Phibbs and Schmitt, 2006), and still others have provided estimates by both gestational age and birth weight (BW) (Gilbert et al., 2003; Schmitt et al., 2006). This literature has drawn specific attention to the high costs associated with neonatal intensive care for preterm infants. More than two-thirds of infants born extremely premature (at less than 28 weeks of gestation) and more than one-third of infants born very premature (at 28 to 31 weeks of gestation) in California who survived infancy in 1996 had respiratory distress syndrome and received mechanical ventilation in their initial hospitalization. In comparison, less than 1 percent of infants born at term received mechanical ventilation in their initial hospitalization (Gilbert et al., 2003). Ancillary costs, including respiratory care, laboratory, radiology, and pharmacy costs, contribute heavily to the costs of intensive care for low birth weight (LBW) infants. They represented over 25 percent of the median $53,316 in initial hospital-

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Preterm Birth: Causes, Consequences, and Prevention ization costs for those born with VLBWs (<1,500 grams) in a group of hospitals belonging to the Vermont Oxford Network in 1997 and 1998 (Rogowski, 2003). Less research has been conducted on the medical care expenses of preterm birth beyond early hospitalization. Comprehensive data on medical care delivery and cost for the cohort of infants born between 1998 and 2000 who were covered by Intermountain Healthcare (IHC) Health Plans and who were monitored from birth through 2004 afforded the opportunity to analyze inpatient and outpatient medical care costs associated with preterm birth from birth to age 7 years, well beyond the term covered by any previous study in the United States. In making national estimates, it would have been preferable to have data from several rather than from a single health plan. Resource constraints faced by the committee precluded the incorporation of data from additional plans. As noted below, however, substantial effort was undertaken to stratify the sample and adjust estimates so as to make valid approximation of costs for the nation as a whole. IHC is a large, nonprofit, fully integrated health care organization headquartered in Utah. In addition to providing a comprehensive set of medical care services under its Health Plans, it also provides services to patients under contract with Medicaid and Medicare, patients covered under non-IHC commercial insurance, and privately paying patients, as well as those receiving charitable care. Of the 139,517 estimated live births in Utah between 1998 and 2000 (NCHS, 2004b), 81,931, or 59 percent of the total, were born within the IHC network of facilities. One-third of those births were covered under IHC Health Plans, 38 percent were covered by other commercial insurance, 22 percent were covered by Medicaid, and 7 percent were covered through other sources of private payment or by charity. Finding 12-1: The medical costs of preterm birth during infancy, particularly during the neonatal period, are high and the medical needs are relatively well understood. The long-term medical, educational, productivity, and productivity costs borne by the individual, as well as by the family and society, are not well understood. The detailed estimates of costs presented here were based strictly on the cohort covered under IHC Health Plans, as records of service utilization and cost were comprehensive for that cohort. The application of exclusion criteria based on clear coding errors for gestational age (less than 22 weeks or more than 43 weeks of gestation) or BW (<450 or >5,000 grams) or the presence of missing fields in certain instances resulted in 23,631 Health Plan infants in the cohort as of birth; 1,902 of these infants were born

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Preterm Birth: Causes, Consequences, and Prevention preterm. By the end of the 48th month of follow-up, the last possible month for all surviving infants in the cohort to be monitored, given the 2004 cutoff, 11,357 subjects (48 percent of the total) remained. The corresponding numbers (percentages) remaining at 48 months by gestational age were 36 (40 percent) among those born at less than 28 weeks of gestation, 73 (42 percent) among those born at 28 to 31 weeks of gestation, 754 (46 percent) among those born at 32 to 36 weeks of gestation, and 10,494 (48 percent) among those born at 37 weeks of gestation or later. To maintain robustness, resource utilization and cost estimates were pooled for the cohort over years 3 and 4 and for years 5 through 7.1 Extrapolation of health care utilization and costs across organizations and across geographic areas is potentially confounded by differences in demographics, including the underlying health status of populations, as well as by differences in the health care delivery conventions by provider. For that reason, adjustments of charges to costs and adjustments of costs for differences across geographic areas may not be sufficient to project cost estimates from one region to the nation as a whole. Risk adjustment based on differences in population characteristics and further adjustment for organizational differences in the delivery of care may also be required (Rogowski, 1999). A comparison of demographic and vital statistics, as well as of health care utilization and costs, between the IHC Health Plans cohort and those served outside of the plan but within the IHC network of facilities, was therefore made. A further comparison of the results with published results from other studies on initial hospitalization costs and costs outside of Utah was also performed. The comparison of demographic characteristics and vital statistics of the Health Plans cohort of births with other births in IHC facilities between 1998 and 2000 revealed—as one might expect, given the well-established inverse socioeconomic gradients in the rates of preterm birth and LBW—that those covered by IHC Health Plans were less likely to be born preterm (8.5 percent) and of LBW (6 percent) than those born in IHC facilities and covered by Medicaid (11.2 and 8.7 percent, respectively). 1 These estimates of those remaining in the cohort include all those still enrolled in Health Plans, even if they did not receive medical care services during a specific period. With an additional mortality adjustment, these essentially served as denominators for calculating average cost. Attrition occurred either because of mortality or because of loss of eligibility for coverage. Estimates were adjusted for mortality based on national figures, as discussed below. As long as resource utilization for those otherwise dropping coverage were similar to those remaining in the health plan, such attrition would not affect the estimates. Some attrition, however, particularly among those born extremely premature, was likely due to infants reaching a $1 million lifetime limit. While not common, the selection out of such infants introduced a downward bias into the estimates.

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Preterm Birth: Causes, Consequences, and Prevention The rates of preterm birth and LBW among births covered by other commercial insurance were nearly identical to those in the IHC Health Plan cohort. The overall rate of preterm birth in the United States in 1999–2000 was 11.6 percent (MacDorman et al., 2005). The rate of infant mortality for those born extremely prematurely and for those born with VLBWs was lower in the IHC Health Plans cohort than in the cohort cared for in IHC facilities not covered by Health Plans; but summary statistics (mean, median, interquartile ranges, and box plots) revealed that the rate of neonatal intensive care unit utilization, the average length of stay, and the average cost of treatment for the initial hospitalization by gestational age were not significantly different between those who were covered by IHC Health Plans and those who were covered by Medicaid or other commercial insurance in IHC facilities. With the incorporation of adjustments for mortality, in other words, the IHC Health Plan cohort yielded reliable estimates of average service utilization across plans by gestational age and BW. The levels of health care provision under the umbrella of a single organization and for a population with demographics different from those for the nation as a whole (in Utah, the population is younger and has lower proportions of ethnic and racial minorities than the population of the nation as a whole) could still deviate from those for the general population. Because studies of resource utilization associated with preterm birth have been specific to particular organizations or geographic regions, there is no “gold standard” against which a definitive assessment can be made. Table 12-2 provides a summary of the results of several recent studies, including the results for the IHC Health Plans cohort, on the length of stay for initial or early hospitalizations by gestational age and BW. Data from those studies were reconfigured to make more direct comparisons with the IHC Health Plans cohort by gestational age and BW. The first three columns of Table 12-2 summarize the length-of-stay data for recent population-based studies in the state of California. The samples in each of those studies essentially drew from the same statewide database on hospital discharges linked to vital records. Because of the absence of reporting of charges by the Kaiser Permanente Medical Care System, the lengths of stay for hospitalizations under that system were largely excluded from the statistics in the CA1 and CA2 columns of Table 12-2. The major difference between the hospital stay figures from the study of Gilbert et al. (2003) reported in column CA1 and those from the study of Phibbs and Schmitt (2006) reported in column CA2 is that the former included only survivors of infancy, whereas the latter included all infants. Given that the length of stay for survivors is longer than that for nonsurvivors, it is counterintuitive for the average length of stay reported in the study of Phibbs and Schmitt (2006) to be uniformly longer by gestational age than that reported in the study by Gilbert et al. (2003). Nevertheless, the gradients in the lengths of stay by gestational age are quite similar

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Preterm Birth: Causes, Consequences, and Prevention TABLE 12-2 Mean Length of Stay for Initial or Early Hospitalizations, by Gestational Age and Birth Weight and by Study Birth Parameter Mean Length of Stay (days) CA1 CA2 CA3 NIC/Q STAT UK IHC (SD) Gestational age (wk) <28 76.0 79.4 NA NA NA 24.1 67.4 (41.6) 28–31 31.6 49.8 NA NA NA 23.9 44.4 (24.2) 32–36 4.7 5.9 NA NA NA 7.2 6.7 (9.3) All <37 8.0 10.5 NA NA 16.8a 9.3 13.0 16.6a ≥37 (term) 1.9b 2.6c NA NA 2.73a 3.4 1.5 (1.7) Birth weight (g) <1,500 57.5 NA 47.9 47d NA NA 53.5 (34.5), 51d 1,500–2,500 8.1 NA 9.4 NA NA NA 8.4 (11.3) All <2,500 14.4 NA 16.4 NA NA NA 15.9   ≥2,500 1.8 NA 2.3 NA NA NA 1.6 (2.1) NOTE: NA = not available. SD = standard deviation. CA1 = derived from Gilbert et al. (2003) for the cohort of singleton live births in California in 1996 that survived infancy. The length of stay for the initial hospitalization includes interhospital transfers. The estimates largely exclude those for Kaiser Permanente Medical Care Program hospitalizations. CA2 = 1998 to 2000 California birth cohort (Phibbs and Schmitt, 2006). The length of stay is for the initial hospitalization, including interhospital transfers. The estimates largely exclude those for Kaiser Permanente Medical Care Program hospitalizations. CA3 = 2000 California birth cohort (Schmitt et al., 2006). The length of stay is for the initial hospitalization, including interhospital transfers, as well as most Kaiser Permanente Medical Care Program hospitalizations. NIC/Q = Median length of stay for 6,797 VLBW infants born in 1997 and 1998 in 29 of 34 hospitals throughout the United States belonging to the Vermont Oxford Network that participated in the Neonatal Intensive Care Quality Improvement Collaborative in 2000 (Horbar et al., 2003; Rogowski, 2003). The data are strictly the portion of initial hospitalizations within a participating center and therefore exclude that portion of the initial length of stay for 1,364 infants before transfer to a participating center, as well as that portion of the initial stay after transfer out of a participating center (n = 1,264). All data are for before the initiation of the quality improvement initiative. STAT = Medstat (2004). The length of stay is for all hospitalizations in the first year of life, based on 2001 and 2002 claims records for 3,214 premature infants who survived infancy and who were covered as dependents under commercial plans for select large employers in the United States; the selection of premature infants was based on select International Classification of Diseases (Ninth Revision) and diagnosis-related group codes. UK = based on the data of Petrou et al. (2003), covering 239,649 births in southern United Kingdom (Oxfordshire and West Berkshire) from 1970 to 1993. The reported data on initial hospitalizations were based on unpublished tabulations provided to the committee by the authors. IHC = 1998 to 2000 birth cohort (n = 23,631) covered by IHC Health Plans. The data summarize the length of stay for any admissions in the first month, including any readmissions after initial discharge. They exclude transfers associated with the initial hospitalization that took place after the first month of life. aData are for the entire first year of life. bData are only for those born at 37 to 38 weeks of gestation. cData are only for those born at 37 weeks of gestation. dMedian length of stay.

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Preterm Birth: Causes, Consequences, and Prevention between the two studies, and the difference was not statistically significant. The average length of stay and the gradients exhibited by gestational age and BW from the IHC Health Plan cohort reported in the final column are very similar, in this context, to those reported for the California population-based data in columns CA1 to CA3 of Table 12-2. It should be noted that the IHC data provided in the table summarize the inpatient lengths of stay for all admissions in the first month after birth and therefore exclude transfers from initial hospitalizations that transpire after the first month. The California studies included only the lengths of stay for initial hospitalizations but included all transfers connected to that hospitalization, even if they occurred after the first month. Therefore, among the extremely premature and very premature infants, who have the longest initial hospitalizations and who have the highest rates of transfer after the first month, the California data would be expected to exhibit longer average lengths of stay than the IHC data. Among those born moderately preterm (32 to 36 weeks of gestation), who are more likely to be discharged from their initial hospitalization but then readmitted for other problems within the first month after birth, the IHC data would be expected to reveal relatively longer average lengths of stay. These are the precise patterns exhibited in Table 12-2. Table 12-2 also reports the median lengths of stay for 6,797 VLBW infants who were born in 1997 and 1998 and who received intensive care in 29 of 34 hospitals located in several states across the United States belonging to the Vermont Oxford Network (Horbar et al., 2003; Rogowski, 2003). Estimates were made before the participation by these hospitals in a neonatal intensive care quality improvement initiative (NIC/Q) beginning in 2000. The 47-day estimate reflects only the portion of initial hospitalizations that transpired within a participating hospital and therefore excludes that portion of the initial length of stay for 1,364 infants before transfer into a study hospital as well as that portion of the initial stay after 1,264 infants transferred out of participating hospitals. Given these exclusion criteria, which generated slightly shorter stays relative to those for the IHC cohort, the median length of stay of 51 days for the IHC cohort is very similar to that of the NIC/Q hospitals. The STAT column of Table 12-2 is taken from a study of infants who survived their first year of life and provides the average length of stay over that entire year (Medstat, 2004). The sample included infants born between 2000 and 2002 covered under the health plans of certain large employers in the United States. The selection of infants was made on the basis of specific International Classification of Diseases (Ninth Revision) and diagnosis-related group codes and not on the basis of a reported gestational age or BW. Despite such differences, the average length of stay for the IHC cohort, when the length of stay was recalculated for survivors in the entire first

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Preterm Birth: Causes, Consequences, and Prevention developmental disabilities was significantly higher among preterm infants than among term infants. The prevalence exhibited a distinct inverse gradient by gestational age (Table 12-8). Although births at less than 28 weeks of gestation constituted 0.8 percent of all births, for example, extreme prematurity accounted for 19, 6, 7.5, and 17.4 percent of all cases of CP, MR, HL, and VI, respectively (Table 12-8). In addition, although extremely preterm births represented just 6.9 percent of all preterm births in the MADDSP sample of survivors to age 3 years, children born extremely preterm accounted for more than 40, 23, 23, and 47 percent of all individuals born preterm with CP, MR, HL, and VI, respectively. The ratios of the rates of CP, MR, VI, and HL among preterm infants to those among term infants surviving to age 3 years were 6.5, 2.1, 2.1, and 4.3, respectively. Prevalence differences, given in the final column of Table 12-8, were used to estimate the excess number of cases of each developmental disability among survivors born preterm. Prevalence by birth weight category demonstrated similarly sharp gradients (Table 12-10). Several of the infants displaying one of the four index developmental disabling conditions had multiple index disabling conditions, and aggregation of the costs for all these disabling conditions therefore required that such cooccurrences be taken into account to avoid double counting. The cooccurrence rates generated from MADDSP permitted such aggregation (Yeargin-Allsopp et al., 1992). Because per-case costs were not estimated separately for each permutation of multiple conditions, an algorithm was established to assign cases to conditions. The algorithm was adopted by assigning cases hierarchically to the condition with the highest cost among each case with multiple conditions. The implicit assumption was that a case with multiple disabling conditions costs, on average, at least as much as the mean cost of its highest-cost disabling condition. The resulting hierarchical order of conditions, from highest to lowest cost, was MR, CP, VI, and HL. An individual born with both MR and HL, for example, was assigned the average cost of all individuals with MR. On the basis of the data reported by MADDSP, 64 percent of survivors to age 3 years with CP had MR, 73 percent of those with VI had either MR or CP, and 23 percent of those with HL had MR, CP, or VI. Medical care costs were adjusted for inflation to 2005 dollars by using a price index weighted by Medicare medical price and employment cost indices, based on the percentage contributions of inpatient services; outpatient services; and therapy, rehabilitation, and longterm care to the overall treatment of these developmental disabilities. Because medical care costs for all premature infants were reported above for those through age 7 years, medical care cost estimates for these four developmental disabilities through age 5 years were subtracted from the total medical care costs in the disability cost study to avoid double counting. The net effect was to reduce the total lifetime medical costs asso-

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Preterm Birth: Causes, Consequences, and Prevention TABLE 12-10 Cases and Prevalence of Developmental Disabilities by Birth Weight Among Survivors to Age 3 Years, MADDSP Developmental Disability and Statistic Birth Weight <1,000 g 1,000–1,499 g 1,500–2,499 g 2,500–2,999 g No. of 3-year survivors: 1981–1991 birthsa   1,147 2,648 23,117 62,451 Cerebral palsy No. of cases 101 130 166 107 Prevalenceb 88.1 49.1 7.2 1.7 (95% CIc) (72.3–106.0) (41.2–58.0) (6.1–8.4) (1.4–2.1) Mental retardation No. of cases 151 156 464 667 Prevalenceb 131.6 58.9 20.1 10.7 (95% CI) (112.6–152.6)   (50.2–68.6) (18.3–22.0) Hearing loss No. of cases 16 13 41 72 Prevalenceb 13.9 4.9 1.8 1.2 (95% CI) (8.0–22.6) (2.6–8.4) (1.3–2.4) (0.9–1.5) Vision impairment No. of cases 44 20 35 50 Prevalenceb 38.4 7.6 1.5 0.8 (95% CI) (28.0–51.2) (4.6–11.6) (1.1–2.1) (0.6–1.1) No. of 3-year survivors: 1986–1993 birthsd   1,179 2,231 19,112 50,960 NOTE: The data represent the birth weight-specific prevalence of select developmental disabilities among 3- to 10-year-old children who were born in Atlanta, Georgia, from 1981 to 1993 and who survived to 3 years of age. ciated with these conditions by less than 5 percent. Because the age categories used in the developmental disability cost study made it difficult to accurately carve out medical care costs for 6- and 7-year-olds separately, cost estimates for those 6- and 7-year-olds were subtracted from the overall medical care costs for preterm birth provided above to avoid double counting. Estimates of the costs at each age were discounted at a rate of 3 percent to the year of birth. Adjustment for the prevalence differences between term and preterm birth by condition and application of the algorithm for mul-

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Preterm Birth: Causes, Consequences, and Prevention   Low Birth Weight Normal Birth Weight Risk Ratio Risk Difference 3,000–3,999 g ≥4,000 g Total 231,613 35,780 356,756 26,912 329,844     254 37 795 397 398     1.1 1 2.2 14.8 1.2 12.2 13.5 (1.0–1.2) (0.1–1.4) (2.1–2.4)         1,402 189 3029 771 2,258     6.1 5.3 8.5 28.6 6.8 4.2 21.8 (9.9–11.5) (5.7–6.4) (4.6–6.1) (8.2–8.8)       131 23 296 70 226     0.6 0.6 0.8 2.6 0.7 3.8 1.9 (0.5–0.7) (0.4–1.0) (0.7–0.9)         106 19 274 99 175     0.5 0.5 0.8 3.7 0.5 6.9 3.2 (0.4–0.6) (0.3–0.8) (0.7–0.9)         189,441 29,656 292,579         aBirth cohort of 3-year-old survivors for children with cerebral palsy, mental retardation, hearing loss, or vision impairment. bPer 1,000 children. cCI = confidence interval. dBirth cohort of 3-year-old survivors for children with autism. tiple disabilities discussed above yielded a total of $976 million in lifetime incremental medical care costs associated with preterm birth after age 5 years, or nearly $2,000 per preterm birth. The addition of these costs to the national costs of preterm birth from birth to age 5 years yielded a total national cost of medical care for preterm birth of $16.86 billion in 2005. The estimate of national medical care cost associated with preterm birth is conservative, in the sense that it includes the costs associated with all premature infants only through the first 5 years of life. The costs beyond

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Preterm Birth: Causes, Consequences, and Prevention age 5 years, as demonstrated by these cost estimates for the four developmental disabilities associated with preterm birth, are quite substantial. Although these conditions associated with preterm birth are among the most disabling, there are several others, including autism and certain birth defects (Rasmussen et al., 2001). Furthermore, the medical care cost estimates for even these four developmental disabilities are conservative, because longterm care provided for the small subset of the population who required institutionalized settings and therapy and rehabilitation services provided for adults were not included. In summary, extremely preterm birth contributes disproportionately to the medical care costs of prematurity, not only because early medical care for such infants is so expensive but also because survivors have disproportionately high rates of disabling conditions that generate high lifetime medical care costs. Very preterm and moderately preterm infants, however, also have significantly elevated rates of developmental disabilities relative to those for term infants. Although the prevalence of disabilities is lower among this group than among extremely preterm infants, the disproportionate number of births in this category yields a significant contribution to the national cost. Moderately preterm infants, for example, represent over 50 percent of preterm cases with MR. Treatment for reactive airway disease, for which all premature infants are at risk, and treatment of infection may contribute to higher average outpatient costs among those born preterm. The relatively high outpatient medical care costs in the upper tail of the medical care cost distribution for those born at 32 to 36 weeks of gestation noted earlier is likely explained, in part, by the costs incurred by individuals with developmental disabilities. LBW is clearly a risk factor for developmental disabilities and their associated costs and one that is correlated with gestational age. The extent to which these risk factors contribute independently to these developmental disability costs is not fully understood. Future studies should investigate costs for other disabling conditions, which were not available for these analyses but are prevalent among preterm infants such as asthma and attention deficit hyperactivity disorder. EARLY INTERVENTION SERVICES Evidence from Massachusetts on early intervention (EI) services delivered between the first through third years of life suggests that the rate of provision of such services for preterm infants is significantly higher on a per-case basis than that for term infants. Mean expenditures for such services per case displayed an inverse gradient by gestational age: less than 28 weeks, $7,182; 28 to 30 weeks, $5,254; 31 to 33 weeks, $2,654; 34 to 36 weeks, $1,321; and 37 to 39 weeks, $697 (Clements et al., 2007).

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Preterm Birth: Causes, Consequences, and Prevention The services that Massachusetts mandates for EI services are more generous, on average, than those mandated by the nation as a whole (personal communication, W. Barfield, 2006). It is unclear, however, whether the level of incremental EI services delivered to children born preterm relative to those delivered to those born term in that state are above the national average. If incremental EI services were delivered in the rest of the country at the same level that they are delivered in Massachusetts, the incremental cost of such services would be an estimated $1,200 per preterm child, or a total of $611 million in 2005 dollars.2 SPECIAL EDUCATION COSTS Much of the literature on the rates of receipt of special education by newborn status has focused on LBW infants, particularly VLBW and extremely low birth weight infants, and has not been estimated from population-based samples (Pinto-Martin et al., 2004). In a 9-year follow-up of a cohort of 1,105 infants born between September 1984 and June 1987 in central New Jersey, both VLBW and birth at a gestational age of less than 28 weeks were found to be significantly associated with the receipt of special educational services, with the odds ratio for those born extremely preterm relative to those born term being higher than the odds ratio for those born VLBW relative to those born with normal BWs (Pinto-Martin et al., 2004). Although a review of the literature revealed a few studies that have made estimates of the costs of special education associated with LBW (Zupancic, 2006), little research on the special education costs specifically associated with preterm birth has been conducted to date. One multivariate study found that LBW added $1,240 (1989–1990 dollars) per child to the annual cost of schooling for children ages 6 through 15 years born with birth weights of less than 2,500 grams (Chaikand and Corman, 1991). This translates into $2,009 in 2005 per LBW child when the employee compensation index for primary and secondary school employees is applied to adjust for inflation between 1989–1990 and 2005. As with the cost of medical care beyond age 5 years, an estimate of the special education costs due to premature birth was made on the basis of the incremental special education costs specific to four developmental disabili- 2 This calculation assumed the same percentage distribution of services across the first 3 years of life for children born preterm as the distribution of mean costs of EI services for all children. All costs beyond the first year of life were discounted at a 3 percent rate back to the year of birth. Costs were adjusted for the difference in the cost of living between Massachusetts and the nation as a whole and for inflation, gauged by the Employment Cost Index, between 2003 and 2005. Only preterm children surviving infancy were assumed to receive EI services.

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Preterm Birth: Causes, Consequences, and Prevention ties that have a higher prevalence among those born preterm: MR, CP, VI, and HL. It is noted that the increased use of infertility treatment may lead to special education costs due to its effect on preterm birth via multiple gestations. To the extent that preterm birth associated with multiple gestations leads to the four disabilities that are included in these estimates, such costs are included. The estimates reflect the receipt of services from ages 3 to 18 years, discounted back to the year of birth at a 3 percent rate. The estimates were based on data from CDC (2004c) and unpublished tabulations from MADDSP, as described above. The rate of receipt of special education services by developmental disability was based on the distribution from MADDSP. Allocation among federal special education handicap categories was based on the primary disability for those with MR, VI, and HL and was based on estimates from Waitzman et al. (1996) for CP. Costs for special education were taken from the Special Education Expenditure Project (Chambers et al., 2003). Estimates were incremental; that is, costs above and beyond what would have been spent on regular education. For each case associated with preterm birth, estimated lifetime special education costs were $102,410, $81,655, $125,811, and $92,020 for those with MR, CP, VI, and HL, respectively. In terms of cohort results, updated to 2005 costs, special education for individuals with these four developmental disabilities added an estimated $2,237 per preterm survivor to the overall lifetime cost associated with preterm birth. This translates into a societal cost of $1.1 billion for special education in association with preterm birth. There is only about a 10 percent difference between the inflation-adjusted estimate per LBW infant from an earlier study (Chaikand and Corman, 1991) and the $2,237 per infant estimate for preterm birth provided here. Although the similarity is intriguing, there were distinct differences in the methodologies and populations underlying the methods used to obtain these estimates. The estimate was for services provided to children who had been born with LBWs from ages 6 to 15 years, whereas the current estimate was for special education services provided to children who had been born with LBWs from ages 3 to 18 years. The estimate provided here, more importantly, is based only on a subset of disabling conditions among children born preterm for whom special education is provided. In that respect, these special education cost estimates are conservative proxies of the full cost of special education services provided to those born preterm. As discussed in Chapter 11, the receipt of special education services is quite prevalent among children born preterm, beyond those with the specific disabilities. However, these costs could not be tabulated.

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Preterm Birth: Causes, Consequences, and Prevention INDIRECT COSTS: HOUSEHOLD AND LABOR MARKET PRODUCTIVITY Lost labor market and household productivity for individuals born preterm may result from disabling conditions, from the more subtle effects of cognitive or behavioral deficits, or from lower intelligence quotients. Lost productivity can result from either premature mortality or heightened morbidity, in which the ability to work or the amount of work, or both, could be affected. One complication for the calculation of indirect mortality and morbidity costs that is generally ignored when infant mortality is considered is the rate of “replacement”; that is, the extent to which a subsequent pregnancy is tied to the first by virtue of the loss. Treatment of this issue is complicated by philosophical as well as economic issues, as each birth is typically treated as an independent event. The effect of replacement on cost, from a societal perspective, might translate into a net reduction in indirect mortality costs associated with the preterm infant, for example, but the amount of reduction would depend on the rate and timing of the replacement as well as on the overall health status of the replacement child. Another potential complication arises with the treatment of multiple gestations associated with preterm birth and the extent to which productivity associated with the multiple gestations should be considered jointly in the analysis of the costs of preterm birth. Although these are legitimate and potentially mitigating factors, they pose significant hurdles for estimation of the costs associated with preterm birth. They are ignored in the estimates provided below, although infant mortality was excluded in the estimates of indirect costs, which could be interpreted as an implicit assumption of 100 percent replacement of such infants with infants that are born at term. As with the estimates of medical care costs beyond 5 years of age and special education costs, the CDC analysis (CDC, 2004c), together with unpublished tabulations from MADDSP, permitted estimates of the lifetime incremental indirect costs associated with excess cases of MR, CP, VI, and HL associated with preterm birth. Work limitations for each disabling condition were estimated from the NHIS-D, earnings reduction was drawn from the Survey of Income and Program Participation, and age-sex earnings and household productivity values were taken from the work of Grosse (2003). After multiple index conditions were accounted for and after adjustment of the costs to 2005 dollars by use of the employment compensation index, the results indicate that excess cases of these conditions associated with preterm birth contributed $11,214 in indirect productivity costs per case, or $5.7 billion to the overall national cost of preterm birth in 2005.

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Preterm Birth: Causes, Consequences, and Prevention FAMILY COSTS Maternal Costs Several studies have estimated the excess maternal costs associated with the birth of an LBW infant and with preterm birth (Zupancic, 2006). Most such studies focused strictly on elevated delivery costs, although two recent U.S. studies incorporated prenatal hospital admissions as well (Gilbert et al., 2003, Schmitt et al., 2006). One study included any subsequent transfers until the mother was ultimately discharged (Gilbert et al., 2003). Use of the estimates from the IHC cohort data used above to estimate medical costs for infants and children reveal, in line with much of the findings in the literature, that maternal delivery costs are significantly higher for preterm deliveries than for term deliveries and that there is a distinct inverse gradient by gestational age and BW. On the basis of those data, with adjustments for geographic differences in cost and for inflation, the incremental delivery costs by gestational age were $11,737, $9,153, and $2,613 for infants born at less than 28, 28 to 31, and 32 to 36 weeks of gestation, respectively. These excess maternal delivery costs associated with preterm birth translated into $1.9 billion in total costs in 2005. This cost does not include the excess costs associated with prenatal care, including prenatal inpatient admissions, nor does it include postnatal costs associated with the provision of services for maternal morbidity or for services undertaken to reduce the risk in subsequent pregnancies, in the event that such pregnancies go to term. Caregiver Costs Outside of the initial hospitalization, there has been a paucity of research on the out-of-pocket travel costs for caregivers associated with the incremental medical services provided to preterm infants. Productivity losses have also received scant attention (Zupancic, 2006), although such caregiver costs for disabling conditions can exceed the costs of care for the affected individuals themselves (Tilford et al., 2001). One recent study among large employers, in which mothers were both employed and the primary beneficiary on the company’s health plan, found that mothers lost an estimated $1,513 in annual wages and benefits more in short-term disability following a preterm birth than after a term birth. The estimate was $2,766 when the synergies that are lost with coworkers when a worker needs to be replaced on short notice are modeled (Medstat, 2004). Although these estimates are suggestive of the loss of significant numbers of hours at work by the mother because of a preterm birth, the sample was too restricted and the identification of premature birth too broad to be able to make generali-

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Preterm Birth: Causes, Consequences, and Prevention zations to the national population. More research on the family costs associated with preterm birth needs to be conducted to more fully understand its societal burden. ECONOMIC EVALUATION OF INTERVENTIONS TO REDUCE PRETERM BIRTH AND ITS CONSEQUENCES Economic evaluation of interventions that can be used to reduce the rates of preterm birth and its adverse consequences can aid in decision making regarding the development and integration of new technologies and programs. The techniques for such an evaluation take on several different forms. Cost identification assesses the burden of illness and the features of its distribution in economic terms, as with the estimates provided above. Such estimates can form part of the foundation for the comparison of the cost with the outcome. Identified costs that are averted from primary or secondary prevention of preterm birth, for example, can be treated as benefits in benefit-cost or cost-reduction analysis. Cost-effectiveness analysis is distinct from benefit-cost analysis, in that outcomes are expressed in some unit of health improvement, such as a reduction in the numbers of cases of a health-limiting condition or the numbers of lives or years of life saved rather than in strict monetary terms. The cost per unit of gain, or effectiveness, among interventions can be compared, as long as the health improvements are expressed in a single metric. The fact that most interventions have diverse health consequences means that such comparisons are often limited. Cost-utility analysis is a form of cost-effectiveness analysis in which health outcomes are expressed in a single metric, such as quality-adjusted life years (QALYs), to afford the assessment of the relative effectiveness of programs with diverse health consequences (Drummond et al., 2003; Gold et al., 1996). The conversion of QALYs into monetary units permits the translation of cost-effectiveness into a cost-benefit, but such a conversion is controversial largely because the tradeoffs that are used to elicit preferences over health states in developing QALYs, as opposed to so-called willingness-to-pay preference measures, are too constrained to comport with the theoretical foundations of valuation in welfare economics. A recent expert panel therefore recommended against the use of this practice (IOM, 2006). It should be emphasized, as well, that although the average performance of an intervention or program may prove to be of net benefit, the incremental expansion of such efforts may not prove to be of net benefit. Appropriate economic evaluation in decision making often requires the assessment of a marginal net benefit rather than an average net benefit. To date, there have been limited analyses of the cost-benefit or the cost-effectiveness associated with interventions for preterm birth. One global

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Preterm Birth: Causes, Consequences, and Prevention cost-benefit analysis of the reduction in mortality and morbidity associated with LBW due to advances in neonatal intensive care technology between 1950 and 1990 found that the net societal return was not only high but also outweighed that of several other widely used technologies in health care (Cutler and Meara, 2000). Although the historical advances in neonatal intensive care technology have been vast, as have the increases in the associated costs, the analysis was based on limited available data on the extent of and the quality of life associated with the developmental disabilities associated with LBW. It also ignored the effects of LBW on the quality of life of the family and caregivers and implicitly assumed a zero replacement rate; that is, that no subsequent births were tied to infant deaths associated with LBW. It also converted QALYs to dollars, which, as noted above, runs contrary to the recommendations of a recent expert panel on health valuation (IOM, 2006). Notwithstanding these limitations, the analysis provides a provocative case for the fact that cost-increasing neonatal technologies generate a net societal value. Because the results are tabulated as an average return over a historical period, however, they could not serve as the basis for the incremental evaluation of new technologies or programs for the prevention or treatment of LBW, as the authors noted (Cutler and Meara, 2000). One recent study of the initial hospitalization cost by week of gestational age for the cohort born in California between 1998 and 2000 demonstrated that substantial reductions in such costs, on average, could be garnered by extending gestation by an additional week, particularly among those infants born at less than 32 weeks of gestation (Phibbs and Schmitt, 2006). The large interquartile variance in cost among those born at each week of gestational age, however, even after accounting for infant mortality, reinforced the high degree of uncertainty over the extent of the savings that would actually be reaped through selective extensions of gestation rather than through general extensions of gestation. In a similar approach applied to LBW, another study found that even small increases in BW could generate significant savings in medical care costs in the first year of life, although such an incremental weight gain among those infants born with a birth weight below a threshold of 750 grams might generate increases in medical costs (Rogowski, 1998). These analyses represent a solid methodological foundation for a more refined economic evaluation of the interventions and programs aimed at the prevention of preterm birth that include longer-term and broader categories of outcomes and associated costs. CONCLUSIONS The cost of preterm birth to the nation exceeds $26.2 billion annually and $51,500 per infant born preterm. Although a disproportionate share of

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Preterm Birth: Causes, Consequences, and Prevention these costs is incurred in the form of neonatal intensive medical care services and among those born extremely preterm, the estimates provided in this chapter demonstrate that substantial incremental costs associated with preterm birth extend after the initial hospitalization and among the majority of infants born even just a few weeks preterm. Furthermore, the costs are not limited to medical care services. Substantial costs associated with preterm birth are due to early intervention and special education services associated with elevated rates of disabling conditions, and to lost household and labor market productivity over the life span. Although relatively little research has been devoted to the maternal and caregiver costs associated with preterm birth, such costs are likely quite substantial. More research on the long-term and nonmedical care costs associated with preterm birth, including maternal and caregiver costs, needs to be conducted to have a more comprehensive understanding of its societal burden. Such research should also address the distribution of cost by gestational age and across public and private payers. Other areas that will be important to investigate include the ways in which reimbursement for obstetrical services may affect the costs of preterm birth. For example, do low reimbursement and high malpractice costs in certain regions of the country affect care? Given that preterm births generate revenue for hospitals through NICU charges, how might this affect health systems’ incentive to reduce preterm births? How this transpires may vary depending on the degree of integration of the health care system, and the specific mechanisms for reimbursement. Examining potential incentives to encourage health care providers and systems to reduce preterm births should be considered. This, of course, will require advances in the field to better understand causes of preterm birth and effective interventions to prevent its occurrence. The reader is referred to Chapter 14 for further discussion of the financing of health care and the organization and quality of perinatal and neonatal care. The results of these additional investigations will form the basis for more refined economic evaluations of interventions that may reduce the associated societal burden of preterm birth.