# Definitions

Please click on term to review definition.

Cost-effectiveness Acceptability Curve:

The cost-effectiveness acceptability curve (CEAC) is a graph presenting the uncertainty within results of a study.   This graph plots the probability that the incremental cost-effectiveness ratios is favorably cost-effective (i.e. has a cost-effectiveness ratio below the societal willingness to pay threshold.)

Comparator:

The alternative to which the intervention is compared.

Cost-Effectiveness Threshold:

A subjective threshold used by the authors of the study to determine if the intervention studied is cost-effective and/or should be adopted. Typical cost-effectiveness thresholds are \$50,000/QALY, \$100,000/QALY in the USA and £20,000-30,000/QALY in the UK.

Cost-Saving:

The intervention costs less than the comparator. This term can be used to describe both those intervention that are just as effective as the comparator and those interventions that are less effective than the comparator.

Country of Study:

The country (or countries) for which the study and results are applicable.

Currency and Year

The currency (and year of that currency) used in the study.

Discount Rate:

The interest rate used to compute present value of costs and benefits incurred. The present value (PV) of an incremental gain in quality adjusted life years (ΔQALY) occurring n years in the future is calculated as:

where i is the annual discount rate. For interventions that affect QALY gains over more than a single year, the present value can be calculated by summing over all affected years. Mathematically, this can be written as:

where t indicates the number of years in the future. The present value of a change in costs (ΔCOST) occurring over n future years can be calculated in a similar manner. That is:

Disease Classification:

The primary disease addressed by the intervention and the comparator.

Dominant:

The intervention costs less and is at least as effective as the comparator.

Dominated:

The intervention costs more and is no more effective than the comparator.

Health State Utility Weight:

A degree of preference individuals or society have for a particular health state or condition.  This weight vary between zero and one and represents the ratio of one year perfect health to some years in the studied health state (e.g. if you are indifferent between living one year in perfect health and two years in some health condition, then the weight of that health condition would equal 1/2 = 0.5).  By definition, a value of one represents perfect health and a value of zero represents being dead.

Incremental Cost-Effectiveness Ratio:

The formula for the incremental cost-effectiveness ratio (ICER) is:

Intervention:

The technology, procedure, or health service evaluated in the study.

Intervention impact:

The quadrant describes where the ratio is located in the cost-effectiveness plane (see figure).

The Northwestern quadrant: Comparisons in which the intervention increased costs but was no more effective than the comparator. Ratios in this quadrant are sometimes referred to as "Dominated".

The Northeastern quadrant: Comparisons in which the intervention both increased costs and was more effective than the comparator.

The Southwestern quadrant: Comparisons in which the intervention saved money but was no more effective than the comparator.

The Southeastern quadrant: Comparisons in which the intervention both saved money and was more effective than the comparator.  Ratios in this quadrant are sometimes referred to as "Dominant" or "Cost-saving".

Perspective:

The viewpoint from which intervention costs and benefits are calculated.  Most studies calculate costs from either a societal perspective or a health care payer perspective.   Studies conducted from a societal perspective include costs directly incurred by patients (e.g. copayments), health care payer(s), and indirect costs to society (e.g. productivity losses resulting from poor health.)   Studies conducted from a health care payer perspective do not include indirect costs but include costs incurred by private insurance companies (like those that typically cover Americans prior to retirement), and/or public programs (e.g. Medicare or the UK's National Healthcare Service).

Prevention Stage:

Prevention stage is match to the following medical definitions (Ref: Concise Medical Dictionary. Oxford University Press, 2007. Oxford Reference Online. Oxford University Pres).

Primary: Avoidance of the onset of disease by behavior modification or treatment, such as immunization, promotion of safety equipment use (e.g. seat belts), health education (e.g. anti-smoking campaigns), promotion of improved nutrition and prenatal care.

Secondary: The avoidance or alleviation of disease by early detection and appropriate management. Secondary prevention includes population screening to identify disease in asymptomatic people to enable timely treatment.

Tertiary: Treatment to reduce complications and progression of established disease, e.g. remedial exercises for contractures, care of pressure points and bladder function in paraplegia, cardiac rehabilitation following myocardial infarction, stroke rehabilitation, and screening of people with diabetes for diabetic retinopathy.

Quality Score:

A subjective rating score by reviewers from 1 (lowest quality) to 7 (highest quality). Scores should reflect the following considerations (in order of importance): 1) whether or not the authors correctly computed the incremental cost-effectiveness ratios, 2) whether or not the authors comprehensively characterized the uncertainty of the results (see sensitivity analysis), 3) whether or not the authors correctly used and explicitly specified the health economic assumptions used in the study (e.g. discount rate, currency, time horizon), 4) whether or not the authors appropriately and explicitly estimated the utility weights.

Ratio Description:

Ratios are presented on this website as “Intervention VERSUS Comparator IN Target population”.

Sensitivity Analysis:

An analysis of the impact of uncertain parameters on the cost-effectiveness ratio.

• Univariate (One-Way) Sensitivity Analysis:  One parameter of the model is changed at a time and impact upon the results is measured.
• Multivariate Sensitivity Analysis:  A general term that encompasses any type of sensitivity analysis in which multiple parameters are changed simultaneously and impact on the results measured.
• Bounded Sensitivity Analysis:  Upper and lower bounds of the results are estimated (e.g. a confidence interval.)
• Probabilistic Sensitivity Analysis: Parameters used in the study are are varied over a probability distribution. Monte Carlo simulation and bootstrapping can then be used to estimate how varying these parameters impacts the results (e.g. a cost-effectiveness acceptability curve.)

Study Theme:

The primary study topic. We classify study themes into six categories: public health, men, women, children, elderly, and none of these.

Target Population:

The population(s) upon which the results of the analysis can be reasonably applied.

Time Horizon:

The length of time in which resource use and health effects are measured (Gold MR. et al. Cost-Effectiveness in Health and Medicine).

Utility Weight:

The value for a utility or preference for a particular health outcome or health state and can range from zero to one. Utility weights may be measured using direct methods such as time-trade off or standard gamble, or indirect methods such as SF-36, Euro QoL, Health Utility Index, etc.