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.¹ Because the US population is aging, the incidence of skin cancers is increasing.² 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. Medicare payments vary widely across these types of procedures.³ However, little is known about how variations in payment correspond to the use of different skin cancer procedures. This study describes recent trends in payment rates, use rates, and overall expenditure for skin cancer procedures in the Medicare Part B population.

For this cohort study, we grouped procedures into the following categories using Healthcare Common Procedure Coding System codes: simple excision, MMS, shave excision, and destruction of malignant lesions. Using the Medicare Physician Supplier and Other Provider Public Use File,³ we aggregated the volume of services, number of clinicians (physicians, physician assistants, and nurse practitioners), and mean Medicare Part B payments from January 1, 2012, to December 31, 2017. We adjusted for inflation by converting payments to 2017 dollars. We calculated the mean number of providers for each Healthcare Common Procedure Coding System code within the procedure category. We defined use rates as the total number of services in the procedure category divided by the year’s Medicare Part B population. This study was exempt from Mayo Clinic institutional review board approval because the data were publicly available and deidentified. This study followed the Strengthening the Reporting of Observational Studies in Epidemiology (STROBE) reporting guideline for cohort studies. We used JMP, version 14 (SAS Institute Inc) for data analysis.

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) (Table). 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 (Figure). 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.

In 2012, the American College of Mohs Surgery developed appropriate use criteria at least in part to reduce overuse.⁴ However, despite the adoption of appropriate use criteria, our study shows that MMS use rates have steadily increased in the Medicare population. This has resulted in inflation-adjusted growth in spending on skin cancer procedures.

This study has several limitations. First, because this study lacks patient-level clinical data, we cannot determine the appropriateness or outcomes of procedures. Second, the trends we describe may not be generalizable outside the Medicare Part B population. Third, this study did not account for ancillary costs such as charges for repair, skin flap creation, and pathological examination.

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.

Accepted for Publication: September 14, 2020.

Published: November 10, 2020. doi:10.1001/jamanetworkopen.2020.25139

Open Access: This is an open access article distributed under the terms of the CC-BY License. © 2020 Puri P et al. JAMA Network Open.

Corresponding Author: Aaron R. Mangold, MD, Department of Dermatology, Mayo Clinic, 13400 E Shea Blvd, Scottsdale, AZ 85259 (mangold.aaron@mayo.edu).

Author Contributions: Mr Puri had full access to all of the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis.

Concept and design: Puri, Baliga, Pittelkow, Mangold.

Acquisition, analysis, or interpretation of data: Puri, Bhullar, Mangold.

Drafting of the manuscript: Puri, Baliga, Pittelkow, Mangold.

Critical revision of the manuscript for important intellectual content: Puri, Baliga, Bhullar, Mangold.

Statistical analysis: Puri, Bhullar.

Administrative, technical, or material support: Pittelkow, Mangold.

Supervision: Baliga, Pittelkow, Mangold.

Conflict of Interest Disclosures: None reported.