The social care guidance manual

7.1.1 The economic plan

The NICE Collaborating Centre for Social Care's (NCCSC's) economist works closely with the Guidance Development Groups (GDG) to ensure that economic evidence reviews are underpinned by the most plausible assumptions and review questions. Defining the priorities for economic evaluation should start during the scoping of social care guidance, and should proceed alongside development of the review questions.

The economic plan is a document that is prepared by the NCCSC's economist in consultation with the rest of the NCCSC, the GDG and NICE. It identifies initial priorities for further economic analysis and outlines proposed methods for addressing these questions (see sections 7.1.3 and 7.1.4). The economic plan is likely to be modified during guidance development; for example, as evidence is reviewed it may become apparent that further economic evaluation is not necessary for some aspects that were initially prioritised. The economic plan is published on the NICE website before the guidance goes out for consultation. The rationale for the final choice of priorities for economic analysis should be explained in the guidance.

7.1.2 Advising the Guidance Development Group on economic issues

The GDG should be encouraged to consider the economic consequences of the guidance recommendations as well as the implications for practice. A formal presentation outlining the basic principles of social care economics is given at the first GDG meeting. Further presentations may be useful later in the guidance development process.

It is particularly important for GDG members to understand that economic analysis is not about estimating the resource consequences of a guidance recommendation, but is concerned with the evaluation of both costs and benefits. GDG members must understand that economic evaluation should compare the costs and consequences of alternative courses of action.

Within the context of the principles outlined in Social value judgements: principles for the development of NICE guidance (second edition, 2008) (note this is currently under review, see section 1.2), the GDG should be encouraged to consider recommendations that:

GDG members may find it useful for the economist to outline economic concepts such as incremental analysis, the public sector perspective (including NHS and personal social services^[3]), and measurement of social care-related outcome measures, including social care-related quality of life, capability and wellbeing.

7.1.3 Reviewing economic evaluations

Economic analysis should be underpinned by the best available evidence. The evidence should be based on, and be consistent with, that identified when defining the review questions. If expert opinion is used in the economic analysis, this should be clearly stated and justified in the guidance.

Identifying and examining published economic information that is relevant to the review questions is an important component of social care guidance development. Processes for searching, selecting, appraising and summarising economic evaluations are discussed in sections 5.3, 6.1.3, 6.3.3 and 6.3.5.

The general approach to reviewing economic evaluations should be systematic, focused and pragmatic. If a high-quality economic analysis that addresses a key social care issue and is relevant to current practice has already been published, then further modelling is probably not necessary.

Other published economic evaluations may not be relevant, for example, costs may differ from UK costs in non-UK studies. So time should not be spent critically appraising studies that are not likely to provide useful information for guidance decision-making. Search strategies and criteria for the inclusion and exclusion of economic evaluations should be designed to filter out such studies (see section 5.3). The strategies and criteria used should be stated explicitly in the guidance and applied consistently.

7.1.4 Prioritising questions for further economic analysis

It is anticipated that the social care economic literature is unlikely to be so comprehensive and conclusive that no further analysis is necessary. Additional economic analyses are usually needed, and should be developed selectively, unless an existing analysis can easily be adapted to answer the question.

Close collaboration between the economist and the GDG is essential early in the guidance development process to ensure that:

The number and complexity of new analyses depends on the priority areas and the information needed for robust decision-making.

Economic analysis is potentially useful for any question in which an intervention or service is compared with another. It may also be appropriate in comparing different combinations or sequences of interventions, as well as individual components of the social care service or intervention. However, the broad scope of much social care guidance means it may not be possible to conduct original analysis for every component.

Selecting questions for further economic analysis, including modelling, should be a joint decision between the economist, other GDG members and the NICE team. Selection should be based on systematic consideration of the potential value of economic analysis across all key social care issues.

An economic analysis will be more useful if it is likely to influence a guidance recommendation, and if the social care and financial consequences of the recommendation are large. The decision about whether to carry out an economic analysis therefore depends on:

For a particular question, new economic analysis may not be warranted if the evidence is so uncertain that even providing a rough estimate of cost effectiveness is not possible. Alternatively, the published evidence on cost effectiveness may be so reliable that further economic analysis would be unnecessary. In addition, economic analysis may not be needed if it is obvious that the resource implications are modest in relation to the expected gains.

7.2.1 Defining the decision problem

Economic evaluation should begin with a clear statement of the decision problem. This needs a definition and justification of the interventions or programmes being assessed and the relevant service users (including carers).

7.2.2 Comparators

The interventions or services included in the analysis should be described in sufficient detail to allow stakeholders to understand exactly what is being assessed. This is particularly important when assessing the cost effectiveness of services.

For social care guidance, comparators include interventions used or services delivered in the public and non-public sectors. The contribution of unpaid social care provided by families and carers may also be important. There should be agreement with the GDG on the most appropriate choice of comparator because of its important impact on the results of economic evaluation.

7.2.3 Perspective on costs

Social care-related outcomes are delivered by a range of providers, including various public sector agencies, commercial providers, the voluntary and community sector and unpaid (family) care. The costs are borne by various public sector agencies, service users and their families. The payer-provider matrix is complex and differs across the range of social care services and programmes; some social care is provided for carers, for example. Unlike healthcare, there is no universal model of who is liable to pay for social care services, and there may be local variation in eligibility criteria, including means testing.

There may be local variation in how decisions are made about which social care is provided, for example, in terms of the use of personal social care budgets. Social care economic evaluation must reflect this complex situation and so a multi-stakeholder perspective will be adopted, with exclusions justified.

A public sector perspective (including the NHS and personal social services, or local government) is used by NICE for public health economic analysis, if this is sufficient to capture all major costs and benefits. However, the perspective is flexible, and a societal perspective can be used where appropriate.

For social care, a flexible approach may be needed to take account of costs borne by the NHS, local authorities, education authorities, relevant publicly funded voluntary organisations or criminal justice services.

Scope for 'cost shifting' should be addressed in the economic evaluation, and the results of economic evaluation may need to be presented for different public sector agencies.

The cost of social care programmes and interventions may be borne by service users and their families, for example, when access to social care is means-tested. Some social care may also be provided on an unpaid basis, often by the carers of service users. There is the potential for costs to be shifted inappropriately from the public sector to families and unpaid carers.

NICE does not usually include the costs of unpaid or informal care in cost-effectiveness analysis for health and public health interventions. However, the importance of informal care in contributing to publicly funded social care interventions (for example, care for older people) means that economic evaluation in social care should take account of the value of unpaid care associated with the services or interventions under evaluation. The inclusion of unpaid care can have a significant impact on the potential cost effectiveness of social care interventions because unpaid care can be a substantial part of the care provided and therefore impacts on the outcomes of publicly funded services. It is recognised that there is no widely accepted method for valuing unpaid care, so any methods used should be justified and agreed with NICE before economic evaluation is undertaken, and consideration must be given to the sensitivity of results to the use of alternate methods. The issue is potentially complex, for example, some service users may pay privately to ensure additional 'quality' of care. In taking account of unpaid care, economic evaluation must be designed to ensure that the focus of the economic evaluation remains on assessing the cost effectiveness of publicly funded social care interventions and services.

Economic evaluation should also recognise that social care provided by the voluntary sector may be based on public-sector funding (grants to voluntary bodies, for example).

If appropriate, and with the agreement of NICE, results may also be presented from other perspectives. For example, an employer's perspective could be taken to show the business case for a social care intervention.

It is envisaged that the analytical difficulties involved in creating clear, transparent decision rules around what costs should or should not be considered, and for which interventions and outcomes, will be particularly problematic. These should be discussed with NICE before any economic evaluation is undertaken and an approach agreed.

7.2.4 Perspective on outcomes

The outcomes focus should be the effects on people for whom services are delivered. Effects on service users and carers (whether expressed in terms of health effects, social care quality of life, capability or wellbeing) are the intended outcomes of social care interventions and programmes.

Although holistic effects on service users, families and carers may represent the ideal perspective on outcomes, a pragmatic and flexible approach is needed to address different perspectives, recognising that improved outcomes for service users and carers may not always coincide.

The economic implications of alternative service outcomes could be the focus of some economic evaluations, and where appropriate, this should be agreed with NICE at the outset.

7.2.5 Type of economic evaluation

The approach to economic evaluation will be agreed with NICE at the outset. If possible, a cost-effectiveness analysis should be undertaken, with effects measured using a non-monetary outcome indicator. A cost–utility analysis, which allows effective comparisons across different decision problems, is the form of cost-effectiveness analysis usually preferred by NICE but the use of cost–utility analysis in social care economic evaluation will present methodological challenges because currently there is no accepted social care equivalent of the healthcare QALY.

If a cost-effectiveness analysis is not appropriate, or not possible, other validated methods such as cost–consequences or cost–benefit analysis may be used. The aim is to give the GDG an opportunity to consider the cost effectiveness of social care interventions and programmes across a complex arrangement of payers and providers. Cost–benefit analysis should only be used with NICE's agreement and should not conflict with NICE's social value judgements.

For social care topics, benefits may variously be identified in terms of health or social care-related quality of life, or in terms of capability. Evaluation related to quality of life may be undertaken in parallel with evaluation based on capability measures, where an intervention results in both types of outcome.

Box 11 Example of how a QALY is calculated in healthcare

For social care economic evaluation, there is currently no commonly accepted measure of outcome like the QALY in health economics. However, various outcome measures for social care are emerging, ranging from social care-related quality of life to broader measures of capability and wellbeing. As economic methodology develops, these measures may allow cost–utility analysis on the basis of a social care equivalent of the QALY.

A pragmatic approach to cost–utility analysis for social care should use a measure of social care-related quality of life, but parallel work using capability and wellbeing measures should also be undertaken if possible. Specific consideration may be given to identifying the nature of effects, because health effects may be relevant to some social care guidance topics and may necessitate the use of health economic approaches for elements of the economic evaluation.

7.2.6 Time horizon

The time horizon should reflect all important differences in costs and outcomes, and the reasons for the time horizon used should be documented.

7.2.7 Measuring and valuing effects

The QALY is the measure of health effects preferred by NICE, based on patient-reported changes in health-related quality of life. The EQ-5D is the preferred measure of health-related quality of life in adults, with utility of changes being based on public preferences.

For social care economic evaluation, a flexible approach is needed, reflecting the nature of effects delivered by different social care interventions or programmes. If health effects are relevant, the EQ-5D-based QALY may be used. However, it is likely that broader, preference-weighted measures of social care outcomes, based on specific instruments, will be more appropriate.

Social care quality-of-life measures are being developed and NICE will consider using 'social care QALYs' if validated.

For example, the ASCOT (Adult Social Care Outcome Toolkit) set of instruments is used by the Department of Health in the Adult Social Care Outcomes Framework indicator on social care-related quality of life.

If a social care intervention is associated with both health and social care-related outcomes, it may be helpful for these elements to be presented separately, especially considering the emerging nature of social care economic evaluation.

Similarly, depending on the topic, and on the intended effects of social care interventions and programmes, the economic evaluation should also consider a parallel study of effects in terms of capability and wellbeing. For capability effects, use of the ICECAP (Investigating Choice Experiments for the Preferences of Older People – CAPability) instruments may be considered as part of the longer-term development of methodology.

In a field of emerging methodologies, and in the context of the variety of social care services, it is recognised that there is no single correct approach to measuring effects. The reference case, although referring to ASCOT-based social care quality of life in parallel with capability-based analysis based on ICECAP measures, should be approached with some flexibility, as long as decisions about the measurement of effects are clearly explained as part of economic evaluation reports.

Measurement of effects is as reported by service users or carers as relevant.

The source of preference data for valuing changes in quality of life and capability should be a representative sample of the UK public. However, if effects are expressed in terms of wellbeing, this must be valued by individual service users and carers.

7.2.8 Equity considerations

NICE healthcare and public health economic evaluation does not include equity weighting – a QALY normally has the same weight for all population groups.

It is important to recognise that social care provision may be means-tested, and that this affects the economic perspective in terms of who bears costs – the public sector or the service user or family. Economic evaluation should reflect the intentions of the social care system. Equity considerations relevant to specific topics, and how these were addressed in economic evaluation, must be reported.

Social care economic evaluation is unlikely to involve formal equity weighting at the outset. Economic analysis for presentation to the GDG may, however, be accompanied by a briefing on equity issues specific to social care (for example, using subgroup analysis). This approach would need to be agreed with NICE at the outset of economic evaluation.

7.2.9 Evidence on resource use and costs

Costs should relate to public sector resources (such as the NHS and personal social services) and be valued using relevant prices. Costs borne by service users and the value of unpaid care must also be included.

7.2.10 Discounting

The need to discount to a present value is widely accepted in economic evaluation, although the specific rate is variable across jurisdictions and over time. NICE considers that it is usually appropriate to discount costs and health effects at the same rate. The annual rate of 3.5%, based on the recommendations of the UK Treasury for the discounting of costs, should be applied to both costs and effects.

Sensitivity analyses using rates of 1.5% for both costs and effects may be presented alongside the reference-case analysis.

7.2.11 Identifying and selecting model inputs

If existing models are being used, or are informing new analysis, the way these studies are adapted or used should be outlined clearly.

Additional searches may be needed, for example, if effectiveness searches do not provide the information needed for economic modelling, including:

It is not necessary to conduct formal, systematic literature searches for all the types of information required for economic modelling (although effectiveness data used in the modelling should be taken from the effectiveness reviews). For example, information on unit costs can be obtained from the Personal Social Services Research Unit report unit costs of health and social care or the Department of Health tariff. Information on costing can be found in the NICE Assessing cost impact: methods guide (2011) or from a costing analyst in the NICE implementation team. Some information about public services may be better obtained from national statistics or databases, rather than from literature studies.

7.2.12 Exploring uncertainty

Considerations of potential bias and limitations should be discussed by the GDG. Appropriate sensitivity analysis should be used (depending on the type of uncertainty) to explore the impact of potential sources of bias and uncertainty on the results of the economic analysis.