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The Practical Cancer Pharmacy
ACCC's Cost Calculator
The correct computation of cost is a critical part of any pharmacoeconomic study. The instructions below were developed to assist you in using ACCC's Cost Calculator, a set of formatted Excel worksheets for computing the cost to your institution for any Part B drug. Click here to download the Cost Calculator Excel Spreadsheet.
General Guidelines for Using the Cost Calculator
The worksheets within the cost calculator Excel spreadsheet are formatted to reduce the amount of information you need to enter. The general color-coding is designed to show you which cells require that you enter data, which cells compute relevant values, and which cells are linked to other locations.
- The cells that are not shaded are the ones that require you to enter data.
- Gray cells contain formulae. When you enter data, these formulae will compute the relevant values.
- Yellow cells are linked to other locations in the worksheets. Values will automatically appear in these cells when you enter the necessary information into the clear cells.
Worksheets can be modified as you see fit and saved on your local drives. We recommend that you do not make modifications to the file on this CD. That way you can always return to the original file if necessary.
Page 1 – Direct Drug Costs.
The first worksheet requests that you input some general identifying information for each drug, data that are needed to determine the amount of drug that is used over the course of a typical treatment episode, and the acquisition costs for the drug. There are four general sections.
- Section 1. Identifying Information. Please enter the J-Code, the 11-digit NDC code for the drug, its trade name, the type of “units” in which it is measured (for example, mg or mcg), and the number of those units contained in a “package”. For example, if 2 mg/ml of drug are located in 5 m vials, you would enter the following: Units (MG, MCG, IU, etc.) mg; Volume Per Package 10.
- Section 2. Dose Information. Tthe second section of the worksheet is intended to determine the amount of drug used over the course of a typical treatment episode (defined as the standard dose X the number of times that dose is given). There are many ways to determine this number. Our suggestion is to enumerate the total volume of the drug used within a given time period (a month) and then to divide that number by the number of times the drug is given. This will give you the units per administration. This number is then multiplied by the number of administrations that are required over the course of a typical episode of care. For example, if 5 mg of an antibiotic is given daily for 10 consecutive days, the dose per treatment episode would by 50 mg.
- Section 3. Acquisition Price. The third section is directed at computing the price your institution pays for the volume of drug used in a treatment episode. You are asked to input only the price for a standard package (i.e., vial, injection, container of tablets). The remaining cells in this section are all computed for you.
- Section 4. Ancillary Costs. We have included a section that allows you to compute the value of the ancillary resources that are typically necessary to give a drug in the hospital outpatient setting. Specifically, you can enter the amount of time spent in drug preparation and in drug delivery and the standard hourly rates for the personnel who are involved in those efforts.
Page 2 – Cost Adjustments. Many drug companies will offer financial incentives for you to buy their products. These typically come in two varieties: 1) direct discounts off the price and 2) rebates that are linked to the volume of drug that you buy. The second worksheet is structured to let you account for these reductions in purchase price. The formulae are structured to deal with discounts as a percentage of purchase price and with volume rebates as an absolute dollar amount. Should you wish to enter alternative values (e.g., a dollar amount for discounts), the computations will be thrown off. There are four possible “bottom lines” reflected in choices A-D on rows 13-16 on the spreadsheet. Each reflects a different possibility. We ask that you select the situation that reflects your reality with the drug and enter the number on Line 18. This value will then be linked to the Summary sheet.
Page 3 – Payer Mix. One clear objective of the educational program is to note that the revenue associated with a drug must also be incorporated into evaluating the financial implications of any drug. This worksheet asks for information on the various insurers that cover your patient population so that accurate revenue estimates can be derived. The worksheet has room for you to enter the names of the relevant insurers (in Column B below the cells that list Medicare and Medicaid). Then for each insurer we ask that you provide two pieces of information: 1) the percentage of your patient population covered by that insurer (in Column C) and 2) the percent of charge that insurer typically reimburses at (in Column D). For example, if Aetna pays 75 percent of charges, you would enter .75 for the value of Drug Reimbursement/Charge Ratio. All other values for the worksheet are computed.
Page 4 – Drug Revenue. This worksheet computes the amount of revenue you can expect for a typical treatment episode. The only data you need to enter are 1) the billing unit used by Medicare for the drug and 2) the reimbursement from Medicare for that amount of the drug. The 2004 reimbursement rates can be found on the companion file “Addendum B” that is on this CD. Simply open the file, highlight Column A (CPT/HCPCS), and conduct a search (using the Find function under Edit) for the relevant J-Code. All other values on the spreadsheet are computed for you.
Page 5 – Revenue Adjustments. Unfortunately, not all the revenue for services rendered is collected. This worksheet simply asks that you list the percentage of care you provide that is uncompensated and the amount of bad debt. Both should be entered as percentages of total revenue. The worksheet also has a space for other adjustments that you may wish to enter. These are summed for you and yield the percentage of expected revenue that typically goes uncollected.
Page 6 – Summary. As its name implies, this worksheet simply summarizes the values from other worksheets into a table that allows you to easily see the financial profile for drug.
Our Supporters
This educational program was made possible through an educational grant from Millennium: The Takeda Oncology Company.