Assume that the United States government has created an Office of Health Economic Evaluation and the President has appointed you as the Undersecretary of Health Economics. Congratulations! You have been well trained for this new position. Working with your hand-picked team of experts you find the following evaluation lying on your desk after you arrive from your Senate confirmation hearing
- A proposal for a new private health care start up company to provide stem cell treatments to regenerate knee cartilage and eliminate half of all Medicare-paid knee replacements. Assume that Medicare paid for 350,000 knee replacements last year at a cost of $15,000 each. This new treatment is expected to help about 1 in 5 patients on the first try at $5,000 per treatment. Other patients may take up to three treatments (two beyond that first one) to see relief.
Describe in detail how you would analyze that proposal, including a description of what type of analysis discussed in your readings would be used for that proposal. What variables would you need to evaluate and what data would you need? How would you affirm or deny a request for Medicare to pay for this service?
State any assumptions you feel necessary to answer the question. You do not have to research any past work on evaluating these treatments. Design your team’s analysis and determine your decision rule for your treatment of choice. Also be sure to tell me, based on your design of an economic evaluation what your decision rule would be on approving or rejecting the intervention. You should present a recommendation on your treatment. Answers without a recommendation are not answers.
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