Glossary of Value Assessment Terms

03/19/2020

Click here for an infographic on value terminology.

Updated July 26, 2024 

Below is a list of plain language definitions of terms used in value assessment. 

Base case analysis: An analysis using assumptions and inputs that the researcher/research team believes are most likely. It produces what are called the base-case results. After running this base-case model, additional testing, such as a sensitivity analysis (see below), may be performed to compare how the results from the base case analysis change using different assumptions and input values.1  

Budget impact analysis: When a new product becomes available, an organization, like a health plan or hospital, will want to estimate the impact that new product will have on its budget. The estimate of that impact will need to consider the costs for specific treatments with usual care today versus an estimate of the cost of treatments with the new treatment added. Estimates consider how many people will use each of the treatments available and the net costs for those treatments.2,3  See the National Health Council’s module: Budget Impact Analysis. 

Burden of illness: The combined costs, in dollars and other impacts, as the result of a disease. This could include direct medical costs, lost wages, caretaker costs, health effects, and more.4 Studies that measure the “burden” of illness aim to examine things like the cost to the patient, the health system, the payer or insurance company, or even the cost to society.5 (Also known as “burden of disease”) 

Clinical benefit: The effect of a treatment or an intervention on an outcome. For example, improvement in symptoms, mobility, or other aspects of a patient’s quality of life, can be considered a clinical benefit.6,7 

Comparative effectiveness research (CER): CER compares the effectiveness of two or more treatment approaches or health care services, examining their risks and benefits.8 See the National Health Council’s module Getting to Know the Lingo.

Cost effectiveness: Cost effectiveness compares the relative costs and outcomes of different interventions, usually in units (for example, life-years gained, deaths avoided, heart attacks avoided, or cases detected). Alternative interventions are compared in terms of incremental cost per unit of effectiveness. The unit of effectiveness in health economics is typically measured as a health outcome (e.g., life years gained, heart attaches avoided, quality-adjusted life year, etc.). This form of economic evaluation can inform decision-makers on the allocation of limited health care resources and discussions around pricing.9 Some value assessment frameworks incorporate cost-effectiveness analysis with other criteria in their recommendations. See the National Health Council’s module Unlocking the Mysteries of the Quality-Adjusted Life Year (QALY)  and Getting to Know the Lingo.

Confidence interval: A confidence interval (CI) is a statistical estimate. It helps to convey how certain a researcher is in the estimates they found in their results. The confidence interval can be calculated to give a range for the treatment effect that will be seen in the population. When the range is narrow there is more confidence that the number is a good estimate. When the range is wide there is less confidence that the number is a good estimate. For example, if the estimate is an average of 15 years (CI 14-16) as compared to an average of 15 years (CI 7-27), there is more confidence in the first estimate because the range is narrow at 14-16.9 

Direct cost: A cost that can be directly associated to something, such as a test, treatment, procedure, or service. The costs can be either “direct medical costs” (e.g., cost of medication) or “direct non-medical costs” (e.g., transportation costs).10  See the National Health Council’s module Getting to Know the Lingo. 

Effectiveness: A measure of how well a treatment works in the real world (e.g., Does it work outside a controlled trial?).11 See the National Health Council’s module Getting to Know the Lingo.

Efficacy: A measure of how well a treatment works under controlled circumstances (e.g., Does it work in a controlled setting, such as a randomized controlled trial?). For example, if a procedure is very successful at treating a disease, but only if administered by a top surgeon in a patient with no complications or co-morbidities, it would be efficacious but not necessarily effective in the real world.12 See the National Health Council’s module Getting to Know the Lingo.

Health economics: A field of economics that focuses on understanding and analyzing the efficiency, effectiveness, values, and behaviors involved in the delivery and use of health and health care. Most health economic work involves assessing costs, how dollars are spent, and the outputs/accomplishments from that spending related to the benefits patients receive from the treatment.1 

Health economics and outcomes research (HEOR): A field of scientific research to inform health care decision makers. Health care decision makers are often faced with the need to make choices between treatment options, including drugs, devices, and other health care services. However, the benefits and costs of these options can vary dramatically and can be economic, clinical, and/or include things that are hard to measure directly. HEOR can help healthcare decision makers—including clinicians, governments, payers, health ministries, patients, and more—to adequately compare and choose among the available options.13  

Health-related quality of life (HRQoL) measure: A type of patient-reported outcome measure that has many dimensions representing a patient’s view of the effect of illness and treatment on their physical, psychological, and social aspects of life. A HRQoL measure typically evaluates whether a patient experiences difficulty completing normal activities (e.g., work, caring for children, etc.) and how these difficulties affect their relationships with family, friends, and social groups. It is important to note that the measures (questionnaires) used to collect HRQoL can either be specific to a certain disease, like breast cancer, or can be about health in general.9,14 See the National Health Council’s webinar: What is the difference between health-related quality of life (HRQoL) and patient-reported outcomes?  

Health technology assessment (HTA) (Also known as value assessment): An interdisciplinary process to evaluate the social, economic, organizational, and ethical issues for a health intervention or health technology (such as a drug) and can involve a review of: 

  • clinical evidence compared to existing care, 
  • cost effectiveness, and 
  • social and ethical impacts on the health care system and the lives of patients.9,15 

Assessments vary, but most look at the health benefits and risks of using the technology. They can also look at costs and any other wider impacts that the technology may have on a population or on a society. They can also look at the relationship between costs, benefits, and risks, and make recommendations about value and pricing. 

Heterogeneity of treatment effect (HTE): Individuals differ in how they respond to the same medicine. This can be a result of complicated interactions between how the medicine works and a patient’s individual characteristics. These characteristics can include their genes, their diet, the environment that they live in, other diseases or conditions that they might have, other medications, behaviors, and adherence to treatment. Clinical trials typically report results only on a narrow, relatively similar patient population, making it difficult to know if individuals who are different from those in the trial will respond to the treatment in the same way.16,17  

Indirect cost: Costs incurred by society as a result of the impact of disease, illness, and treatments, excluding direct costs. They include things like the loss of ability to engage in normal daily activities, work, domestic responsibilities, volunteering, and social and recreational/ leisure engagements.10,18 See the National Health Council’s module Getting to Know the Lingo. 

Patient preference: When faced with different choices, patients have personal views of how desirable or undesirable those choices are. In health care, patient preference is a measure of that level of desirability of the alternatives or choice among health outcomes or treatments (e.g., different drugs). There are various techniques used in research to measure patient preferences.19,20 

Perspective: The perspective or point-of-view in an economic analysis determines which types of costs and health benefits are included in the evaluation. Traditional perspectives evaluated include the health care system and societal. 21 

An analysis based on a health care system perspective might only include costs incurred by the health system (e.g., costs for medicine, administration, and monitoring) and patient health outcomes. The societal perspective is broader and also includes things like a patients’ loss of productivity due to the inability to work.  

PICOTS framework: A tool designed to assist researchers and others in clearly stating a research question. “PICOTS” is an acronym that stands for the key parts of the research question— 1. Patient population (P), 2. Intervention or issue of interest (I), 3. Comparator(s) or comparison intervention(s) (C), 4. Outcomes of interest (O), 5. Time (T), and 6. Setting (S). It helps to ensure that a research question is clearly defined, specific, and patient centered.22,23 

Outcomes-based contract (or value-based contract): A type of contract between a pharmaceutical manufacturer and a payer where a payment or rebate is linked to a specific outcome. For example, payment by the payer to the company for a drug is based, at least in part, on whether or not patients achieve agreed-upon outcomes when on the drug.24, 28  

Patient-centered outcomes research: A type of outcomes research that focuses specifically on the outcomes of interest to patients and stakeholders, and includes their perspectives throughout the entire research process.8 

Quality-adjusted-life year (QALY): The quality-adjusted life year (QALY) is a measure used in health economics to summarize the quantity and quality of life a patient experiences.9 See the National Health Council’s module: Unlocking the Mysteries of the Quality-Adjusted Life Year (QALY).

Reference case: A formal statement developed by a value assessment or health technology assessment body outlining what they consider appropriate methods and assumptions for developing economic models. For example, a summary of a reference case will include considerations for selecting appropriate comparators, the costs to include, a time horizon, etc.1 

Sensitivity analysis: A process researchers use to check if and how much results of an economic analysis might change if the inputs or assumptions are modified.10 Sensitivity analyses provide insight on how sound or uncertain the study findings are – for example – if the findings stay close to the original findings even when data inputs are modified, then the analysis is viewed as more robust.  

Scenario analysis: A type of sensitivity analysis that explores what happens when we change the model structure or the underlying assumptions. For example, changing a model’s time horizon from one year to five years. Like sensitivity analyses that deal with model input uncertainty, scenario analyses assess the robustness of the findings.  

Time horizon: The time horizon of an economic evaluation describes the duration over which health outcomes and costs are measured. For example, if the condition being evaluated is a chronic disease with continuous medical management, like type 2 diabetes, then selecting a longer time horizon for the economic model would be appropriate. It’s important to note that the same time horizon should be used for both health outcomes and costs.1 

Utility: Utility values are intended to represent how patients value different states of health (e.g., perfect health, having fatigue, being in pain, being unable to walk). States of health can be assigned a number – usually between 0 and 1, where perfect health is equal to 1 and death is equal to 0. To assign where the other health states (e.g., fatigue or pain) lie between 0 and 1, researchers ask patients and members of the general public to rate the desirability of these health states using methods that typically involve a questionnaire. Utility values are also known as “health state preference values” and are used when assessing quality of life. See the National Health Council’s module: Unlocking the Mysteries of the Quality-Adjusted Life Year (QALY). 

Value: The value of a treatment is commonly viewed by health care payers (i.e., both public and private insurers) in terms of its effectiveness and cost.25 Generally, this considers the treatment’s effects, both positive and negative, and the costs and cost savings associated with the treatment and its impact. For patients, value is individualized and disease dependent, and can evolve with the disease trajectory or stage of a patient’s life.26,27 

Value assessment (Also known as health technology assessment): An interdisciplinary process to evaluate the social, economic, organizational, and ethical issues for a health intervention or health technology (such as a drug) and can involve a review of: 

  • clinical evidence compared to existing care, 
  • cost effectiveness, and 
  • social and ethical impacts on the health care system and the lives of patients.9,15 

Assessments vary, but most look at the health benefits and risks of using the technology. They can also look at costs and any other wider impacts that the technology may have on a population or on a society. They can also look at the relationship between costs, benefits, and risks, and make recommendations about value and pricing. 

Value assessment framework: The guiding principles of organizations that conduct value assessments. Value assessments often include a comparison of clinical effectiveness, a cost-effectiveness analysis, a budget impact analysis, and other components. The value assessment frameworks detail the guiding principles behind each of these components that will drive each value assessment. Some value assessment frameworks are focused on shared decision making between a patient and a provider, while others are focused on population-level decision making such as coverage and reimbursement decision making.27 See the National Health Council’s module: Value Frameworks.  

Value-based insurance design (V-BID): A type of insurance where patients’ out-of-pocket costs, such as copays and deductibles, are aligned with the impact that treatment or service has. For example, “high-value” treatments such as diabetes medications should have low or no copays. Other treatments considered “low-value” such as something with questionable efficacy should have a high copay.29 

References

  1. YHEC – York Health Economics Consortium. Glossary of Health Economic Terms. https://yhec.co.uk/resources/glossary/. Accessed December 19, 2019.

  2. Sullivan SD, Mauskopf JA, Augustovski F, et al. Budget impact analysis-principles of good practice: report of the ISPOR 2012 Budget Impact Analysis Good Practice II Task Force. Value Health J Int Soc Pharmacoeconomics Outcomes Res. 2014;17(1):5-14. doi:10.1016/j.jval.2013.08.2291

  3. Wright D. Budget Impact Analysis. York Health Econ Consort. https://www.yhec.co.uk/glossary/budget-impact-analysis/. Accessed July 25, 2019.

  4. Hessel F. Burden of Disease. In: Encyclopedia of Public Health. ; 2008:94-96. https://link.springer.com/referenceworkentry/10.1007/978-1-4020-5614-7_297. Accessed July 25, 2019.

  5. Onukwugha E, McRae J, Kravetz A, Varga S, Khairnar R, Mullins CD. Cost-of-Illness Studies: An Updated Review of Current Methods. PharmacoEconomics. 2016;34(1):43-58. doi:10.1007/s40273-015-0325-4

  6. Lee JJ. Defining Clinical Benefit in Clinical Trials: FDA Perspective. https://celiac.org/wp-content/uploads/2015/04/great3-07.pdf. Published March 24, 2015. Accessed July 25, 2019. 

  7. Richard Pazdur MD. PROs: Defining Clinical Benefit From the Patient’s Perspective. Cancer Network. https://www.cancernetwork.com/view/pros-defining-clinical-benefit-patients-perspective. Published May 1, 2006. Accessed December 19, 2019.

  8. Research We Support. https://www.pcori.org/research-results/about-our-research/research-we-support. Published August 12, 2014. Accessed July 22, 2019.

  9. Glossary. EUPATI. https://toolbox.eupati.eu/resources/findoutmore/glossary/. Accessed June 28, 2019.
  10. Single A, Ahern E, Culyer T, et al. HTAi consumer and patient glossary: A beginner’s guide to words used in health technology assessment. HTAi. https://aaz.hr/resources/pages/59/1.%20HTAiPatientAndConsumerGlossaryOctober2009_01[1].pdf. Published October 2009.

  11. Neumann PJ, Thorat T, Shi J, Saret CJ, Cohen JT. The changing face of the cost-utility literature, 1990-2012. Value Health J Int Soc Pharmacoeconomics Outcomes Res. 2015;18(2):271-277. https://doi.org/10.1016/j.jval.2014.12.002. 

  12. Cost-Effectiveness in Health and Medicine. Second Edition, New to this Edition: Oxford, New York: Oxford University Press; 2016.

  13. ISPOR – About HEOR. https://www.ispor.org/heor-resources/about-heor. Accessed December 19, 2019.

  14. What is the difference between health-related quality of life (HRQoL) and patient-reported outcomes? National Health Council. https://nationalhealthcouncil.org/blog/what-difference-between-health-related-quality-life-hrqol-and-patient-reported-outcomes. Published June 27, 2019. Accessed December 19, 2019.

  15. WHO | Health technology assessment. World Health Organization. https://www.who.int/teams/health-product-policy-and-standards/assistive-and-medical-technology/medical-devices/assessment. Accessed July 23, 2024.

  16. Segal J, Weiss C, Varadhan R. Understanding Heterogeneity of Treatment Effects in Pragmatic Trials With an Example of a Large, Simple Trial of a Drug Treatment for Osteoporosis. Center for Medical Technology and Policy. Published January 2012. https://cmtpnet.org/docs/resources/Segal-Heterogeneity-in-Pragmatic-Trials.pdf

  17. The Myth of Average for Patients Infographic | National Pharmaceutical Council. https://www.npcnow.org/publication/myth-average-patients-infographic. Accessed July 25, 2019.

  18. Health Economics: Types of Cost. communitymedicine4asses. June 2014. https://communitymedicine4asses.wordpress.com/2014/06/07/health-economics-types-of-cost/.Accessed July 22, 2019.

  19. Food and Drug Administration. Patient-Focused Drug Development Glossary. https://www.fda.gov/Drugs/DevelopmentApprovalProcess/ucm610317.htm. Accessed April 25, 2019.

  20. ISPOR – Health Preference Research. https://www.ispor.org/member-groups/special-interest-groups/health-preference-research. Accessed December 19, 2019.

  21. Wright D. Perspective. York Health Econ Consort. https://www.yhec.co.uk/glossary/perspective/. Accessed July 2, 2019.
     
  22. The PICOTS Framework: How to Write a Research Question. https://www.pcori.org/engagement/engagement-resources/Engagement-Tool-Resource-Repository/picots-framework-how-write. Published July 31, 2019. Accessed December 19, 2019.

  23. Stillwell SB, Fineout-Overholt E, Melnyk BM, Williamson KM. Evidence-Based Practice, Step by Step: Asking the Clinical Question: A Key Step in Evidence-Based Practice. AJN Am J Nurs. 2010;110(3):58. doi:10.1097/01.NAJ.0000368959.11129.79

  24. Outcomes-Based Pharmaceutical Contracts: An Answer to High U.S. Drug Spending? | Commonwealth Fund. https://www.commonwealthfund.org/publications/issue-briefs/2017/sep/outcomes-based-pharmaceutical-contracts-answer-high-us-drug. Accessed May 7, 2019.

  25. Porter ME. What Is Value in Health Care? N Engl J Med. 2010;363(26):2477-2481. doi:10.1056/NEJMp1011024.

  26. Perfetto EM, Oehrlein EM, Boutin M, Reid S, Gascho E. Value to Whom? The Patient Voice in the Value Discussion. Value Health J Int Soc Pharmacoeconomics Outcomes Res. 2017;20(2):286-291. doi:10.1016/j.jval.2016.11.014

  27. The Patient Voice in Value: The National Health Council Patient-Centered Value Model Rubric. National Health Council https://nationalhealthcouncil.org/sites/default/files/Value-Rubric.pdf.

  28. Value-Based Contracts | National Pharmaceutical Council. https://www.npcnow.org/topics/alternative-payment-models/value-based-contracts#:~:text=Value%2Dbased%20contracts%20allow%20payers,making%20a%20sub%2Doptimal%20purchase. Accessed July 25, 2019.

  29. University of Michigan V-BID Center. About V-BID. University of Michigan V-BID Center. http://vbidcenter.org/about-v-bid/. Accessed July 25, 2019.