By Jan Bowers, contributing writer, July 01, 2014
For most dermatologists, it probably comes as no surprise that treating actinic keratosis (AK) puts a hefty cost burden on the U.S. health care system. According to 2012 Medicare Part B National Summary Data for AK, the total number of procedures performed and billed under the three procedure codes for destruction of premalignant lesions — 17000, 17003, and 17004 — was 21,785,890; allowed charges totaled more than $572 million, and Medicare paid out more than $425 million. The aging of the U.S. population will push those costs even higher — and that comes on top of the cost of treating younger patients who, after years of sun exposure, develop AKs long before they’re covered by Medicare, as well as the costs associated with topical therapy.
These figures put AK treatment on a potential collision course with cost containment efforts that are moving providers away from traditional fee-for-service arrangements and toward alternative payment models (APMs) that emphasize savings, cost sharing, capitation, value-based payments, and the like. A recent New York Times article noted that “some of the most influential medical groups in the nation are recommending that doctors weigh the costs, not just the effectiveness of treatments, as they make decisions about patient care (“Cost of treatment may influence doctors,” April 17, 2014). DW asked several dermatologists, including some of the leading AK experts, how cost considerations currently affect their treatment of AK patients, and how the advent of managed care and APMs might change the way dermatologists manage AK. While acknowledging that cost does have an influence at some point, all maintained that with a range of therapies available, they can generally find an effective, affordable treatment that suits the patient. All but one, a dermatologist employed by Hawaii Permanente Medical Group, practice in a fee-for-service setting.[pagebreak]
“I do know what things cost, and I stay aware of that, which is why I think I’m not using ingenol mebutate very much,” said Mary E. Maloney, MD, chief of the division of dermatology at the University of Massachusetts Medical School. “But I will say that cost is my third consideration, and I hope we never get to a point where it’s my first consideration. The first assessment is who is the patient; the second is what kind of lesions do they have, and what’s the best way to treat them; the third is can they afford the treatment I’ve chosen.” At a cost of more than $1,000 per course of treatment, many patients can’t afford ingenol mebutate, Dr. Maloney said. “I’ve prescribed it for only one patient, who could not afford it,” she noted. “Even if it’s covered by insurance, there tends to be a very big co-pay. I think it has a place — I’m very excited by it — but I’m very worried about the cost.”
For patients with a few AKs, cryotherapy may well be the best choice and the most cost-effective, Dr. Maloney said. But “if you walk in and you have 15 AKs all over your face, and you have a moderate amount of wrinkling indicating sun damage, I might be more tempted to treat you with imiquimod or topical 5-fluorouracil because it’s going to catch all those things we can’t see, and it’s going to be much more cost-effective than repeated cryotherapy.” She doesn’t anticipate that her approach would change greatly in a managed care setting, she said. “If you have a big enough patient pool, you’ll still be able to provide what’s best for the individual patient. I think we all agree that health care has finite dollars; if I can do the same job with [topicals other than ingenol], I’m really pretty duty-bound to go in another direction for the good of the whole system.”
With an eye on containing costs for the current year, many insurance carriers are short-sighted when it comes to reimbursing for treatment that could prove cost-effective over the long term, said Stephen K. Tyring, MD, PhD, clinical professor of dermatology at University of Texas Health Sciences Center. “Sometimes they won’t pay for the more effective therapies, and we’re ironically stuck with just freezing the more hyperkeratotic lesions and hoping that they will at least pay for 5-FU,” he said. “There are many published studies that show a reduction in recurrence of AKs when imiquimod or ingenol mebutate is used as field therapy. Therefore, it would save the third-party payer a lot of money in the long run if they would reimburse for field therapy now — but they’re looking at budgets on a year-to-year basis.” The same type of short-term thinking is likely to prevail in a capitated setting, Dr. Tyring predicted. “If you only have x’ dollars to work with, you’ll probably just treat what you see and not use your dollars toward preventing future lesions.”
In the current environment, photodynamic therapy represents the highest cost to the institution among AK treatments, Dr. Tyring noted, because it requires special instrumentation and a photosensitizing drug. “That’s why we don’t use it much — it’s quite expensive, there’s questionable reimbursement, and of course it’s not necessarily associated with lower recurrence rates.” Staying abreast of what a third-party payer will and won’t reimburse is a moving target that requires a “team of insurance verification people at each clinic and each institution,” Dr. Tyring said. “It’s much too complicated for the physician or the patient.”[pagebreak]
While managed care can seem simpler, on its face, than traditional reimbursement models, it can pose a challenge to discerning the most cost-effective therapy for AKs, said Steven R. Feldman, MD, PhD, professor of dermatology, pathology, and public health science at Wake Forest University School of Medicine. One reason is that managed care organizations often use a pharmacy benefit management firm that might negotiate a lower price for drugs than the published wholesale prices, “so who knows what the insurance company is paying; I have no idea.” In addition, “one of the things that typically happens in managed care is that the insurance company budget is broken into a pharmacy benefit, a medical benefit, a durable medical equipment benefit, etc.,” he explained. “Within the world of actinic keratosis, the pharmacy is paying for creams, and the medical benefit is paying for us to freeze things, and I don’t know if trying to manage those two things separately is a cost-effective way of dealing with the AK problem. A more logical approach might be to make somebody the AK czar, who would say, let’s manage this in the most reasonable, cost-effective way we can overall. If that were to happen, I think we’d see changes that reduced incentives to treat AKs with procedures.”
As payers begin to take a harder look at frequently used treatments like cryotherapy, “they might think it’s time to have a wholesale re-evaluation of the management of AKs,” said Dr. Feldman. “Treat the field, and if you have residual lesions after you’ve treated the field, maybe you should go after those [with cryotherapy]. And if the patient’s at high risk of dying before it’s likely to become a skin cancer, then maybe not doing the procedure, maybe not even doing a cream, would be entirely reasonable.” Citing research data from Australia (Lancet. 1988 Apr 9;1(8589):795-7) indicating that the risk of a single AK (other than on the scalp or lip) progressing to squamous cell carcinoma within one year is 1 in 1,000, he said, “It’s arguable whether we’re overdoing AK treatment in general. You can imagine that if dermatologists were suddenly switched to a capitated system, the treatment of AKs would not look nearly like it does today.” As it stands now, in his own practice, Dr. Feldman said, “I have an ethical obligation to think about costs to society and to keep the overall cost down. But I have an even greater ethical obligation to the patient I’m in the room with. Often they’ll have a bunch of AKs, and I’ll suggest that rather than freezing them all today — for which I could charge for a procedure, but the treatment is painful — I can write you a prescription and you can treat them all. Patients often say No, I have to pay for the prescription, but the procedure you do is covered.’”
Another way of looking at cost-effectiveness in the current environment is through the lens of patient compliance. When considering the options for patients who need field therapy, “you start out with the observation that, maybe with the exception of diclofenac, the remaining field therapies have roughly the same, about 80 percent, individual clearance rate,” said George Martin, MD, a dermatologist in private practice in Kihei, Hawaii. “How do you pick one? When you start thinking about cost-effectiveness, you have to figure out what is the likelihood that my patient will complete the therapy? Because if they stop halfway through, you’re not going to get the same efficacy as they did in the clinical trial, and you have to treat the patient again.” Patients who are conscious of their appearance and/or can’t afford six weeks of downtime might opt for PDT or ingenol mebutate, which would require only 10 days of downtime, Dr. Martin said. “It’s downtime, discomfort, and for many, economics,” he remarked. “So much is dependent on the coverage of the individual’s insurance program for the field therapy we’re using. PDT is sort of your fallback for Medicare patients, but what’s covered for the other ones is pretty variable.”[pagebreak]
The Kaiser model
A New York Times headline last year dubbed Kaiser Permanente “the face of future health care” (March 20, 2013); the article states that, as an organization that combines a nonprofit insurance plan with its own hospitals and clinics, it’s “the kind of holistic health system that President Obama’s health care law encourages.” Which is not to say it’s flawless; the reporter says the organization’s chairman and chief executive “acknowledges Kaiser has yet to achieve the holy grail of delivering that care at a low enough cost.” Amy Reisenauer, MD, a dermatologist for Hawaii Permanente Medical Group, said one key advantage of the system is that the physicians are paid a salary, and this “frees me to choose the best treatment option for each patient on an individualized basis without worrying about whether it will be reimbursed.” Without the “confounding factor” of reimbursement for each procedure, “I can think about what the best treatment choices are based on things like how many lesions does the patient have; where are they distributed on the body; can the patient reach them with topical medication.” Patients pay the same office visit co-pay whether or not they receive cryotherapy or PDT, Dr. Reisenauer said, and “most patients have prescription coverage, so their topical prescriptions are going to be a co-pay.”
Patients have a choice of Kaiser pharmacy plans, or in some isolated cases may opt for no pharmacy plan, and different tiers of medications could require higher co-pays in some plans, Dr. Reisenauer said. “If patients choose not to have any prescription coverage, then the topical medications become prohibitively expensive. It’s very rare, but if it happens, it’s a problem. Then we would go to PDT because they would only owe the office visit co-pay.” As new drugs come on the market, the Hawaii dermatologists study the literature and “decide if this new cream shows better efficacy than what’s already available. We look at the pricing and tell the pharmacy if it’s something we want to have in our formulary.” When ingenol mebutate became available, the dermatology group decided that the efficacy was not significantly greater than 5-FU or imiquimod, and the treatment time was not significantly shorter than with PDT; the drug was not added to the formulary. “But the good thing is, if we have any patients we want to prescribe ingenol for, we still can,” Dr. Reisenauer explained. “We just explain to the pharmacy why we want them to get it, and they can get it.”
Physicians have no particular incentive to either perform or avoid particular procedures, Dr. Reisenauer said. “Because we’re a large entity, we can contract both on the pharmaceutical level and also with equipment suppliers. It’s pretty cost-effective to do PDT when you’re doing it as an organization. We get our PDT units and our aminolevulinic acid at a good price, and we use registered nurses for PDT.” The perception of Kaiser is that it places limitations on how its physicians can practice, Dr. Reisenauer said, “but I’ve found it to be the opposite. I think I have more freedom to do what’s best for the patient. That’s something I hope people would get to know and understand about our model. I don’t know about other managed care models.”[pagebreak]
Dermatologists’ role in APMs
While a plethora of alternative payment models are being developed and piloted, it’s difficult to predict how dermatologists might fit in because participation in the CMS-sponsored models has been limited to primary care physicians, said Marta J. Van Beek, MD, clinical associate professor of dermatology at the University of Iowa Carver College of Medicine and chair of the AAD’s Council on Government Affairs, Health Policy, and Practice. “Things have been changing at a rapid pace, and people are still trying to figure out the final effects of these alternative model pilot projects that the primary care physicians have been overseeing. Some pilots have saved money and some have not,” she said. “This is a huge paradigm shift; it’s very hard to conceptually think about medicine or the delivery of medicine as an entire global payment for a patient. It means that the various specialties and primary care will all be fighting over the same piece of pie.” APMs exist in the private sector as well as in government programs, and include accountable care organizations, medical home, the Medicare Shared Savings Program, and capitated arrangements. Some are blended models combining, for example, capitation with fee-for-service or pay-for-performance programs.
One effect of the shift to APMs is that dermatologists will need to start considering costs beyond the cost to the patient (which itself may well be going up), Dr. Van Beek pointed out. “The cost to society is the total cost of care, regardless of who’s paying for it. In AK treatment, some topical products may cost less than freezing or doing PDT. But depending on what your insurance plan is, or what they’ve negotiated with generics vs. name brands, there are times when it’s less expensive, from the patient’s perspective, to treat AKs with cryotherapy. For the past several decades, patients haven’t really paid attention to the costs of care because they’ve all been reimbursed by a third-party payer. But now those third-party payers are asking the patient to pay for a larger share of their care through co-pays and high deductibles.” And that will force dermatologists to take a fresh look at their treatment strategies, particularly for high-cost conditions like AKs.
Physicians who are happy with their fee-for-service arrangement may ultimately be forced to make the transition to some type of APM, Dr. Van Beek maintained. “There’s tremendous pressure from CMS, private insurance companies, and, actually, from many physician organizations to leave fee-for-service and go to APMs. If we, as dermatologists, want to preserve our patient relationships and our ability to take the best care of our patients, we need to be learning about APMs and remain fully engaged in the process. The physician-patient relationship can only be preserved if physicians stop reacting to change and, instead, start to influence and ultimately direct it.”