Use of Skin Cancer Procedures, Medicare Reimbursement, and Overall Expenditures, 2012-2017

“Skin cancers represent the most common malignant neoplasms in the United States and account for more than $8 billion of health expenditure annually. Because the US population is aging, the incidence of skin cancers is increasing. In addition to topical chemotherapy, procedural treatments for skin cancers include Mohs micrographic surgery (MMS), simple surgical excision, and shave excision as well as destructive modalities including laser surgery, electrosurgery, and cryosurgery.

From 2012 to 2017, MMS services had the highest mean payment ($378.71; range, $41.24-$466.93) and shave excisions had the lowest ($70.99; range, $15.58-$135.24). During this period, payment rates declined for each procedure class with the exception of shave excision. The use rates of simple excision, shave excision, and destruction of malignant lesions all declined from 2012 to 2017. However, during this period, the use rate of MMS increased 21% from 3554 per 100,000 Medicare beneficiaries to 4293 per 100,000 Medicare beneficiaries. From 2012 to 2017, total expenditures for simple excision and destruction of malignant lesions declined, whereas total expenditures for MMS and shave excision increased. Total Medicare spending on skin cancer procedures increased 9% from $743,222,614 in 2012 to $806,392,161 in 2017. This was primarily associated with an increase of $83,363,703 (18%) in expenditures for MMS. Expenditures for MMS represented 61% of overall spending on skin cancer procedures in 2012, and this proportion increased to 67% in 2017.

The results of this cohort study suggest that increased use of MMS has displaced use of other skin cancer procedures in the Medicare population. Medicare payment rates for MMS are more than double those for simple excisions. Thus, from an economic perspective, Medicare fee-for-service pricing incentivizes use of MMS compared with other modalities.

[..] Given the increasing incidence of skin cancer, further study is needed to evaluate whether the increasing use of MMS is improving value. Policy makers could potentially titrate incentives by linking payments for MMS to adherence with appropriate use criteria. Similarly, Medicare could provide a fixed, bundled payment for treatment of newly diagnosed skin cancers, thereby incentivizing more cost-effective procedures.”

Full article, Puri P, Baliga S, Pittelkow MR et al. JAMA Network Open 2020.11.10