Cost & Value

The image above summarizes some key cost and value considerations when covering the National DPP lifestyle change program. To learn more, see the following topics on this page:

1. Analyzing Costs of Covering the National DPP Lifestyle Change Program
2. Return on Investment vs. Value on Investment
3. Costs Associated with Type 2 Diabetes
4. Evidence Supporting the Cost Effectiveness of Prevention
5. National DPP Lifestyle Change Program Costs
6. Budget and Impact Tools
7. All Payer Model

Analyzing Costs of Covering the National DPP Lifestyle Change Program

When considering coverage of the National Diabetes Prevention Program (National DPP) lifestyle change program, many public and private payers weigh the economic impacts of covering the program for their employees, clients, or public assistance beneficiaries. The impact of the National DPP lifestyle change program on health care costs can vary across populations and program types and can be affected by differences in how medical and non-medical costs are interpreted and applied, and by how the benefits of preventing or delaying type 2 diabetes are assessed.

Frequent concepts applied to analyzing overall costs of covering the National DPP lifestyle change program include return on investment (ROI), value on investment (VOI), cost-benefit analysis, cost-effectiveness, cost savings, and cost avoidance.

• Return on investment (ROI) measures the cost of an investment against the direct economic benefits it produces (i.e., gain or loss relative to the amount of money invested).
• Value on investment (VOI) is a broader financial analysis of all the benefits and costs of an investment for all impacted stakeholders. VOI includes variables that are more difficult to quantify such as quality of life, productivity, satisfaction, engagement, etc.
• Cost-benefit analysis compares the costs of running a program with the overall benefits accrued from that program’s outcomes.
• Cost-effectiveness is similar to a cost-benefit analysis, yet is a more general term that refers to the overall extent to which something is effective or beneficial in relation to its cost.
• Cost savings identifies a quantifiable reduction in expenses related to a specific input; also referred to as “hard cost savings” that impact a company’s bottom line.
• Cost avoidance refers to actions taken to avoid potential future expenses.

These concepts may be applied in various ways to help payers analyze the costs of covering the National DPP lifestyle change program against a wide range of benefits, including lowered (or avoided) medical costs, increased quality and/or years of life, chronic disease prevention, reduced absenteeism, etc.

Return on Investment vs. Value on Investment

Entities considering coverage for the National DPP lifestyle change program often begin by considering their bottom line: what will this cost my organization? This can be a challenging question to answer, given numerous factors such as expectations for future cost reduction, the extended timeline of chronic disease prevention, and questions of how to identify and calculate indirect benefits. This section provides key information to help stakeholders consider the costs and value of the program from various angles and differentiates between the return on investment (ROI) mathematical equation vs. a more inclusive value on investment (VOI).

Return on Investment (ROI)

Calculating Return on Investment
The ROI measures the cost of an investment against the direct economic benefits it produces. The calculation can be simple or complex depending on how it is being used and how exact the user wishes to be, but its core purpose is to determine whether savings will result from or are a result of a specified change. The ROI can be forecasted prior to implementing a change or a policy, or it can be calculated after implementation. The ROI is one of many factors an organization may consider when choosing to initiate or continue coverage of the National DPP lifestyle change program.

ROI Formula
Using this formula outlined below, the returns generated from the National DPP lifestyle change program are greater than the program costs if the ROI is greater than 1. If the ROI is between 0 and 1, the returns generated are not enough to recoup the program costs.

One of the most important factors when calculating the ROI relates to determining which costs are tied directly to the intended audience. Only savings and costs to the intended audience (in this case the payer) should be included. For example, if the ROI is being calculated for a state Medicaid agency that is covering the National DPP lifestyle change program, it would not be necessary to include costs incurred by the CDC-recognized organizations to incentivize participation in the program.

Another consideration is how quickly the ROI is achieved. The time value of money means that currently available money is worth more than the identical sum in the future, because of its earning potential and inflation. For example, if two programs both generate the same ROI, but one achieves the ROI in three years while the other achieves the ROI in five years, the three-year ROI is worth more because the savings are realized sooner.

ROI Resources
Below are resources from multiple stakeholders and perspectives that are intended to guide the process of calculating an ROI. When calculating an ROI for information or decision-making purposes, individual companies should consult with a finance expert within their organization.

• ROI Toolkit: A Guide for Conducting a ROI Analysis of your Community Health Worker Program
• Conducting a Program Cost Analysis for Medicaid-Public Health 6|18 Prevention Programs
• Toolkit for Using the AHRQ Quality Indicators: Return on Investment Estimation (for hospitals)
• The Medicaid Return on Investment Template

Value on Investment (VOI)

The benefits received from the National DPP lifestyle change program extend beyond direct financial benefits. There are many other benefits, such as improved quality of life or higher employee engagement, that are more difficult to quantify. VOI is another type of financial analysis that attempts to capture the broader impact that the National DPP lifestyle change program can have, including benefits and costs to both the intended audience (such as the payer) and additional impacted stakeholders. For example, the graphic below shows some of the many benefits employers may receive or produce from covering the National DPP lifestyle change program that extend beyond the direct financial benefits.

VOI has gained traction in the employee wellness space, and the concept is applicable to other payers as well. For example, the National DPP lifestyle change program’s goals of 5-7% weight loss and maintenance of regular physical activity may likely help to prevent or improve symptoms of other chronic conditions or diseases, and improve overall quality of life (for more information on these secondary health outcomes, visit the Evidence page of the Coverage Toolkit).

Another potential benefit of covering the National DPP lifestyle change program is tied to the overall satisfaction of participants. Studies, such as the evaluation from the Medicaid Coverage for the National DPP Demonstration Project, indicate high levels of satisfaction with the program from those who have completed it. Another recent study published in the Journal of Clinical Medicine assessed the outcomes and perceptions of 89 adults who participated in a lifestyle modification program modeled after the National DPP lifestyle change program. The majority perceived high benefits and low barriers to program participation, including: helpful interaction with health coach or program leader (73%), improved lifestyle modification due to the program (65%), and satisfaction with the program (75%). Additionally, responses from an internal Omada Health (an online CDC-recognized organization) survey given to their National DPP lifestyle change program participants between December 2016 – December 2018 found that 42% of respondents indicated that participating in the program significantly increased their employer or health plan appreciation (another 24% indicated a moderate increase and 12% a slight increase). While it may be difficult to quantify the economic benefits associated with the high levels of satisfaction of individuals participating in the National DPP lifestyle change program, beneficiaries and employees may be more likely to stay with a health plan or an employer that offers quality and satisfactory programs.

VOI Resources

• ROI vs. VOI: Which Is Better For Evaluating Your Wellness Program?
• Move From ROI to VOI (Value on Investment) – Includes tips on how to communicate the VOI
• Beyond ROI: Building employee health & wellness value of investment – A research study that explored whether employers are offering health and wellness programs for reasons beyond health care cost savings

Costs Associated with Type 2 Diabetes

A brief background on the costs of treating and managing type 2 diabetes in adults is central to discussions on the economic value of prevention. Currently, it is estimated that over 38 million people in the U.S. have type 2 diabetes (diagnosed or undiagnosed). Another 97.6 million adults (or approximately 38% of the adult population) are estimated to have prediabetes, which puts them at high risk for developing type 2 diabetes in the absence of intervention.

The costs of treating and managing diabetes is high and continues to grow. In 2022, the total cost associated with people with diagnosed diabetes in the U.S. was $412.9 billion. Medical expenditures constituted $306.6 billion of that total, and reduced productivity was estimated at $106.3 billion. Approximately one in four health care dollars is spent on people with diagnosed diabetes in the U.S., 61% of which is attributable to diabetes. The costs associated with diabetes have also accelerated in recent years. Economic costs of diabetes increased 26% from 2012 to 2017 due to a higher prevalence of the disease and increased costs of treatment. In 2022, the overall estimated prevalence of diabetes remains relatively stable in comparison to 2017; however, the actual number of people with diabetes has grown and contributes to increased health care expenditures, especially on inpatient hospital stays and prescription medications.

On an individual level, the incremental rise in costs of diabetes are shown to begin at least 5 years before diagnosis of the disease and accelerate immediately after diagnosis. People with diagnosed diabetes incur an annual average of $19,736 in medical expenses ($12,022 of which are attributable to diabetes) – about 2.6 times more than a person without diabetes. One study of commercially insured adults found that health care costs for an individual with prediabetes that is subsequently diagnosed with diabetes is $8,015 more in the first 3 years after diagnosis than individuals with prediabetes who are not subsequently diagnosed with diabetes. People with diabetes are also at higher risk for other serious health problems, including heart attack, stroke, blindness, kidney failure, and amputation of toes, feet, or legs.

References for the information offered in this section:

• American Diabetes Association, The Cost of Diabetes
• American Diabetes Association, Economic Costs of Diabetes in the U.S. in 2022
• Centers for Disease Control and Prevention, National Diabetes Statistics Report, 2022
• Population Health Management, Medical Care Expenditures for Individuals with Prediabetes
• American Diabetes Association, Statistics by State

Evidence Supporting the Cost Effectiveness of Prevention

A number of studies apply the various constructs of cost-benefit analysis, ROI, cost savings, and cost avoidance in assessing the economic impact of the National DPP lifestyle change program. These and other reports are included on the Evidence page of the Coverage Toolkit.

Additional information about the studies in the graphic above can be found in the tabs below.

National DPP Lifestyle Change Program Costs

Program costs are an important part of the equation when calculating an ROI or VOI. It could be useful to benchmark program costs by using the most current CMS Calendar Year MDPP Payment Rates, which are updated annually for inflation. In addition to the per participant cost of delivering the program, it may cost as much as an additional $500 per participant for program costs related to removing barriers to participation, providing program supports, addressing health-related social needs, etc. Organizations interested in offering the program can use the American Medical Association’s National DPP Lifestyle Change Program Budget Considerations Tool to estimate the cost implications of offering the program.

Activities that drive program costs include facility fees and direct program delivery costs such as staffing costs. Some of these delivery costs may be higher in a Medicaid context than in other populations. For example, because the population can be more transient, it may be more time- and labor-intensive to reach potential participants and determine their eligibility. In addition, transportation is more likely to be a barrier to participation and program retention than for other populations, and Lifestyle Coaches may need to spend more time outside of actual classes to follow up with participants and to ensure that they continue to participate.

Program Costs in Practice

Budget and Impact Tools

A number of different tools are available to help payers assess costs while considering and planning for coverage of the National DPP lifestyle change program.

Budget Projection

The Coverage Toolkit contains resources to help Medicaid and commercial payers estimate costs and potential savings to include in an ROI or cost-benefit analysis. The Budget Projection Template Instructions (for Medicaid or for Commercial Payers) provide direction on how to develop a budget projection by estimating the cost to offer the program to eligible members. They identify the data that will be needed and walk through three steps to estimate the cost. The data can then be inputted into the Budget Projection Template. Once completed, the template will provide a customized total estimated cost of providing the program as well as an estimated average cost per participant.

• Medicaid Budget Projection Template Instructions
• Commercial Budget Projection Template Instructions
• Budget Projection Template

Impact Toolkit

The CDC Diabetes Prevention Impact Toolkit is a user-friendly, interactive website that allows states, commercial payers, and employers to assess the likely cost-effectiveness or cost-savings of covering the National DPP lifestyle change program. The default values in the Impact Toolkit are based on the best available data from relevant research, program implementations, state and industry averages, and expert judgment. Users of the Impact Toolkit can adjust those values based on the population served, expected adherence levels, program cost, and more.

• Additional information on the Impact Toolkit and the Cost Savings Calculator can be found here.

State Burden Toolkit

For state Medicaid and public health, the CDC’s Diabetes State Burden Toolkit provides information on the health, economic, and mortality burden of diabetes, which can be used in cost-analyses. The default values in the Diabetes State Burden Toolkit are based on the best available data from relevant research. Users of the Toolkit can view the different burden information by selecting from the subcategories in each module.

All Payer Model

Another consideration for determining the advantages of coverage is that the National DPP lifestyle change program is structured around an all payer model. Since the inception of the National DPP in 2012, the Centers for Disease Control and Prevention (CDC) and its partners have continued to focus on expanding the reach and coverage of the program so that all payers are involved – Medicare, Medicaid, state employee benefit plans, commercial health plans, and employers. Medicare started covering the program in 2018, a growing number of state Medicaid agencies offer coverage, and so do an increasing number of commercial and employer payers. In time, all covered lives at high risk for type 2 diabetes may have access to the National DPP lifestyle change program. To see which public and private payers are covering the program please visit the Participating Payers page.

The realization of an all payer model would also address the issue of turnover, or “churn,” in a covered population. This concern relates to scenarios in which a payer may cover the cost of the National DPP lifestyle change program only to have the program participants change plans, thus transferring the long-term savings or cost avoidance to another payer. In an all payer system, the risk of paying for a program without realizing the benefits would be minimized since the covered population at high risk for diabetes would have access to the program regardless of insurance plan.