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It also presents the results from the two-part model, in which first the incurrence of expenditure was modeled with logistic regression followed by a linear mixed model to estimate the components of variance of the level of cost conditional upon incurring any expense.
It is noteworthly that while heterogeneity among physicians explains little of adult expenditure, this factor is very relevant for pediatric expenditure, and the proportion of explained variance is larger for the incurrence of expenditure than for the cost. Table 4 Cost modeling approaches for prediction of pharmaceutical expenditure.
It is apparent that the adjustment for ACGs reduces the variability in mean expenditure.