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Assessment of the Current Medicare Reimbursement System for Breast Cancer Operations

From the Michael E. DeBakey Department of Surgery (AL, AS, AA) and the Breast Care Center at Baylor College of Medicine and The Methodist Hospital; and Hematology-Oncology Associates of Houston (MOS), Houston, Texas.

Correspondence: Address correspondence and reprint requests to: Anthony Lucci, MD, Department of Surgical Oncology, MD Anderson Cancer Center, 1515 Holcombe Boulevard, Unit 444, Houston, Texas 77030; Fax: 713-798-8783; e-mail: alucci{at}mdanderson.org

	ABSTRACT

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Background: Medicare determines procedural reimbursement by means of formulas considering physician work, practice, and liability expenses. Since no mechanism exists to consider outcomes in calculating reimbursements, we hypothesized that Medicare reimbursements do not correlate with outcomes for different breast cancer operations.

Methods: We prospectively studied 240 patients with T1, 2N0M0 breast cancer in three surgical treatment arms: segmental mastectomy with axillary node dissection (SM& ALND; n = 42); SM with sentinel node dissection (SM& SLND; n = 96); and mastectomy without reconstruction (MRM; n = 102). Outcome parameters of complications, hospital stay, analgesic usage, and days to return to work were correlated with procedure reimbursements.

Results: Median follow-up was 26 months. SM&SLND patients rarely required hospital stays (14%) in comparison with either SM&ALND (96%) or MRM patients (99%) (P < 0.001). SM&ALND and MRM patients required 9 and 10 median days of narcotics, respectively, versus 1 day in the SLND group (P < 0.001). SM&SLND patients returned to work at a median of 3 days, in comparison with 19 for SM&ALND and 26 for MRM patients (P < 0.001). Complications were more common in the MRM group (67% numbness/10% pain) and the SM&ALND group (56%/9%) than in the SM&SLND group (0%/1%). Reimbursements were inversely correlated with outcomes. MRM was reimbursed the highest, at an average of $1,075.03, with SM&ALND at $882.72. SM&SLND was reimbursed at $642.00.

Conclusions: Medicare reimbursements for breast cancer operations do not correlate with outcomes. Less-invasive procedures are paid for at lower rates despite better outcomes and fewer complications. The data from this study raise the question of the impact of reimbursement on breast procedure selection.

Key Words: Breast cancer • Breast operations • Medicare • Outcomes • Reimbursement

	INTRODUCTION

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The Medicare system was established in July 1965 as a means for caring for individuals over 65 years of age, those with various disabilities, and patients with end-stage renal disease. Medicare Part A covers hospital services and Medicare Part B covers physician/provider services. In the early years of the Medicare system, physicians were paid on the basis of "reasonable charges" that they billed for a procedure or visit. Due to perceived concern over geographic practice and resource cost variations, as well as variations in payments to specialists within different disciplines for the same procedure, the Physician Payment Review Committee recommended a change in the system. Since January 1, 1992, physician reimbursements have been paid on the basis of a "resource-based relative value scale," or RBRVS. Under this system a physician is reimbursed after performing and then coding the procedure with a unique identifier known as a CPT (Current Procedural Terminology) code. CPT codes are established and modified by the CPT Advisory Committee of the American Medical Association.

Physician reimbursement for each CPT -coded procedure is determined by the Centers for Medicare and Medicaid Services (CMS), based on a formula comprising three main components. These components include factors that account for geographic variations in practice and resource costs (Geographic Practice Cost Index, or GPCI values), a national conversion factor, and the relative value unit (RVU) for each procedure. The 2004 national conversion factor is 37.3374, and the conversion factor is reviewed annually. Relative value for a procedure (the RVU) is determined by a formula that considers (1) a physician work component that accounts for the time taken to perform the service, the technical skill and physical effort, and the required mental effort, judgment, and stress due to potential risk to the patient; (2) practice expenses related to performance of the procedure; and (3) a malpractice expense component.

Physician work accounts for 55% of the total relative value for each service, while the practice expense component accounts for 42% of the total value. The malpractice component is responsible for 3.2% of the relative value. The GPCI values are designed to account for variations in the cost of practicing medicine in different geographic regions of the country. The relative value for each procedure is calculated with the following formula:

(1)

The total RVU multiplied by the national conversion factor (37.3374) determines the total pay for the provider.

An important aspect of the Medicare reimbursement system is that second procedures (or multiple procedures) performed on the same day as the primary procedure are reimbursed at one-half the fee schedule or Medicare allowable for that procedure. Therefore, a sentinel node procedure performed in the operating room in concert with a partial mastectomy is reimbursed at one-half its assigned allowable that would have otherwise been paid if the procedure were done alone. While many managed care organizations and private insurers have individual policies for situations such as multiple procedural discounts, the great majority of commercial insurers in the United States base their payments for surgical procedures on the RVUs assigned by the CMS.

Factors not considered in the Medicare payment determination system include patient benefit and procedural outcomes. Surgical treatment for breast cancer includes options with similar survival outcomes^1–7 but with strikingly different complication rates, morbidity, and potential personal and societal consequences. The current Medicare reimbursement system has no formal mechanism for consistently recognizing and adjusting payment considerations in a way that addresses the growing knowledge base seen in well-documented and studied surgical breast care changes and advances over the past decade.

Based upon our assessment of the current Medicare system for determining physician reimbursements, we hypothesized the following.

1) The current Medicare reimbursement system would fiscally disadvantage surgeons who perform predominantly breast-conserving procedures, despite the fact that breast conservation therapy has been shown to be equivalent to mastectomy in terms of overall outcome, including long-term survival and local recurrence rates.^1–7 Conversely, surgeons who perform more radical operations would be financially advantaged by use of the current Medicare reimbursement scale.

2) Outcomes for common breast cancer operations are not correlated with physician reimbursement.

The purpose of this study was to compare outcomes for minimally invasive and breast-conserving procedures versus more radical procedures such as mastectomy and then to correlate these with Medicare payments for the procedures.

	METHODS

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We prospectively studied 240 patients under an institutional review board–approved protocol with T1, 2 N0 M0 clinical stage breast cancer treated in three different surgical treatment arms:

1) Segmental mastectomy with axillary lymph node dissection (SM& ALND; n = 42)

2) Segmental mastectomy with sentinel lymph node dissection only (no completion axillary dissection) (SM& SLND; n = 96);

3) Modified radical mastectomy without reconstruction (MRM; n = 102).

Only patients who underwent mastectomy without reconstruction were included in the MRM group in order to exclude reconstructive surgery effects on postoperative complication and hospital stay data. All surgical procedures were performed from December 1999 through June 2003. All patients who had ALND or MRM had a level I and II axillary node dissection, and all had at least one closed-suction drain in place until drainage was <30 cc/day or for a maximum of 10 days. For each operation, outcome parameters of chronic complications (those persisting greater than 4 weeks), days of hospital stay required postoperatively, days of use of pain medications postoperatively, and days until return to work or normal activity were calculated. These figures were then correlated with Medicare reimbursement numbers for each procedure. In order to make this study pertinent to different areas of the country, and since Medicare utilizes factors that consider geographic variations as well as other variables in determining payments, we elected to use the average Medicare reimbursement for several large metropolitan areas that are part of different Medicare regions within the United States.

Geographic regions included in the study were as follows: Manhattan, New York City (CMS region 0080301); metropolitan Los Angeles, California (CMS region 3114618); metropolitan Chicago, Illinois (CMS region 0095215); Houston, Texas (CMS region 0090018); metropolitan Philadelphia, Pennsylvania (CMS region 0006501); and metropolitan Boston, Massachusetts (CMS region 3114301). We limited the procedures reviewed to partial mastectomy (CPT 19,160), partial mastectomy with complete axillary lymph node dissection (CPT 19,162), sentinel lymph node dissection (CPT 38,525), injection to identify sentinel lymph nodes (CPT 38,792), and modified radical mastectomy (CPT 19,240). Data for Medicare payments for the different regions were obtained from the Centers for Medicare and Medicaid Services Web site, at http://www.cms.hhs.gov/physicians/mpfsapp/step0.asp. These payments represent the Medicare physician reimbursement figures for the year 2004.

Patients were followed prospectively, and for each postoperative visit a questionnaire was completed that determined whether the patient had any of the following complications: arm swelling, persistent pain (lasting longer than 4 weeks), persistent numbness (lasting longer than 4 weeks), number of days the patient stayed in the hospital postoperatively, number of days that narcotic pain medications were required postoperatively, and number of days before the patient was able to return to work (or to normal activity, for those who were not working). Normal activity was defined as the ability to perform the routine activities they were able to perform preoperatively, with the exception of those activities requiring lifting greater than 15 lb or strenuous physical activity in the first 6 weeks postoperatively. Arm swelling was also assessed objectively and recorded for all patients with use of arm measurements 10 cm above and below the antecubital fossa at each 6-month follow-up visit. Other complications such as hematoma, infection, or reoperation for bleeding were recorded.

Statistical analysis was performed with SAS software (SAS Institute, Cary, NC). Differences between all three groups were assessed with ANOVA. Pair-wise comparison was used to detect differences between individual groups.

	RESULTS

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Median follow-up of all patients was 26 months, with a range of 8 to 48 months. Patients who were seen on at least two postoperative visits within the first 6 months following operation to assess for potential complications or problems were included in the study. Patients who underwent SM and SLND were significantly less likely to require a postoperative hospital stay (14%) than were either the SM&ALND patients (96%) or MRM patients (99%) (P < 0.001) (Fig. 1). SM&ALND patients and MRM patients required 9 and 10 median days of postoperative narcotics for pain control, respectively, as compared with a median of 1 day in the SM&SLND group (P < 0.001) (Fig. 2). SM&SLND patients returned to work quickly, at a median of 3 days postoperatively, as compared with 19 days for SM&ALND patients and 26 days for MRM patients (P < 0.001) (Fig. 3). Postoperative complications such as arm numbness and pain were much more common in the MRM group and the SM&ALND group than in the SM&SLND group.

View larger version (23K): [in this window] [in a new window]   FIG. 1. Comparison of postoperative hospitalization: percentage of patients in each treatment arm who stayed at least one night in the hospital postoperatively.

View larger version (30K): [in this window] [in a new window]   FIG. 2. Comparison of postoperative pain: postoperative pain as measured by number of days of pain medication postoperatively.

View larger version (24K): [in this window] [in a new window]   FIG. 3. Comparison of postoperative recovery time: postoperative recovery time as measured by number of days required before returning to work and/or normal daily activity.

No patient in this study required reoperation for bleeding or hematoma. The incidence of infection requiring drainage and/or wound packing was 2% (5 of 240) among all groups. There were two superficial wound infections in the breast incisions in patients in the SM&ALND group and two in the SM&SLND group. One patient in the MRM group had a superficial wound infection isolated to the lateral portion of her mastectomy incision that was treated with simple packing, and it resolved in approximately 2 weeks. There was an 8% (19 of 240) incidence of skin cellulitis in all groups, and all cases required only antibiotic treatment for resolution. One patient in the MRM group had documented arm swelling at 14 months postoperatively. There were no other documented instances of lymphedema in any group.

	DISCUSSION

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The initial conclusion one draws from this study might be that equivalent-outcome surgical procedures for breast cancer treatment are reimbursed quite differently, with the more physically destructive and higher-morbidity procedure being "financially rewarded" as compared with the less invasive options. Although this may indeed be the case, the implications and conclusions are much more far-reaching.

The specifics of how Medicare sets its allowables and fee schedules have been described already in this report. There is no response mechanism within the payment system that routinely allows fee schedule adjustments that make sense financially for Medicare, breast cancer patients, and society at large. The adoption of a reimbursement system that rewards favorable outcomes is especially important as breast cancer treatment advances scientifically, clinically, technologically, and academically. The fact that Medicare fiscally advantages a decades-old procedure requiring weeks of lost wages over less-invasive procedures shows there is a real problem to be addressed, or certainly an opportunity for a better solution.

The problem as it currently exists is that surgeons performing minimally invasive procedures, such as sentinel lymph node mapping, are reimbursed at rates significantly lower than the more radical alternatives. This is especially alarming in light of mature data from multiple prospective randomized trials showing that breast-conserving therapy, in terms of survival and local recurrence, is equivalent to mastectomy.^1–7 An extended radical mastectomy, a somewhat irrelevant procedure in the current treatment of breast cancer, requires more physician labor than an MRM procedure, yet the MRM is reimbursed at a higher rate.⁸ This would suggest that response to change is possible.

In order to proceed with the minimally invasive sentinel node biopsy and partial mastectomy procedure, coordination with nuclear medicine physicians and technicians as well as pathologists must occur. In addition, equipment such as hand-held gamma counters (costing upward of $20,000) must be purchased or requested of administrative personnel. Given that facilities and administrators look closely at numbers, Medicare reimbursement creates a hurdle to a physician trying to move forward with establishment of minimally invasive procedural protocols and arrangements within the institutional or hospital setting.

Closer examination of the sentinel node procedure versus its Medicare reimbursement is revealing: the portion of the procedure wherein the blue dye is injected to identify lymph nodes is a physician-specific, experience-driven skill. Improper injection of the blue dye can result in a failure to identify the sentinel node. The dye must be injected at the proper location as well as at a certain three-dimensional depth. The Medicare reimbursement for this is $46.40 (allowable) minus 50% (reduction for second procedure, same day) minus 20% (patient responsibility). The actual Medicare payment for this portion of the procedure is $18.56. As for the sentinel node dissection itself, additional training and skill are required to properly identify the sentinel node accurately. Multiple published studies document a lower false-negative rate for surgeons with greater experience with the sentinel node procedure.^9–11 Accurate identification of the sentinel node(s) is essential to avoid an axillary recurrence and to allow for preservation of cancer-free lymph nodes. Yet the sentinel node portion of the procedure is reimbursed at 80% of $409.32 minus the 50% discount for the same-day partial mastectomy, resulting in a payment of $163.72 for this "cutting edge" procedure.

To be fair, the minimally invasive surgeon would receive a total payment of about $643.44 for all performed procedures, assuming the patient or a secondary insurer pays the remaining 20% of the Medicare allowable (but this does not always occur). However, the surgeon who performs a mastectomy for early stage breast cancer would receive $1,075.03. The addition of a "prophylactic" contralateral mastectomy brings the mastectomy surgeon about $1,525.00 in this instance.

Approximately 20% to 30% of all patients with early stage breast cancer will require a completion axillary node dissection when a positive sentinel node is identified, and often a metastatic node can be documented intraoperatively by imprint cytology ("touch prep").^12,13 There remains no additional reimbursement for the sentinel node procedure or for the time or resources invested by the surgeon when a positive node identified intraoperatively requires an immediate completion axillary dissection. This is due to the policy that a sentinel node procedure performed prior to a complete axillary node dissection is "bundled" into CPT code 19,162 (partial mastectomy and axillary dissection) and is reimbursed the same as if a segmental mastectomy and axillary node dissection were done initially.

Surgeons unfamiliar with the sentinel node procedure must utilize their time and practice resources, as well as institutional resources, if they wish to adhere to the recommended guidelines for gaining experience in node mapping. The American Society of Breast Surgeons currently recommends at least 20 cases of sentinel node dissection be done with a completion dissection prior to performing sentinel node exclusively, and several published studies support this concept on the basis of higher false-negative rates for surgeons during their initial experience with the procedure.^9,11,14 Clearly, a system that places a financial disadvantage on physicians desiring to learn new procedures will not hasten adoption of these newer techniques that move the practice of medicine forward.

To state that the care of breast cancer patients is directly influenced by Medicare’s reimbursement system may not be entirely true. However, there are previous studies that would suggest otherwise.¹⁵ There are important indirect considerations as well; given equivalent efficacy, society would optimally have surgeons trained in the three main approaches to breast cancer researched in this article. Since sentinel node biopsy and its attendant procedures have been widely available only for the past decade or so, physicians should be supported to train in the performance of these procedures. With additional personnel, equipment, supplies, and organizational expenses and efforts, reimbursements amounting to half of something that someone already does is problematic in encouraging the continual provision of updated standard of care options.

Patients are often treated with mastectomies in instances where less invasive procedures could suffice. Similarly, wire-localized excisional biopsies are performed for mammographic or ultrasonographic abnormalities where image-guided core biopsies, not requiring general anesthesia, could avoid an operation altogether if the core biopsy was negative for tumor. Even if the image-guided core biopsy result was positive, a single operation for both tumor removal and lymph node staging could proceed cohesively and simultaneously within the same operating room visit. Patients diagnosed with an image-guided biopsy also have a significantly greater chance that negative margins will be obtained at the time of their partial mastectomy.¹⁶ Finally, an image-guided biopsy is much more cost-effective than an open wire-localized excisional biopsy. In one study, ultrasound-guided and stereotactic core needle biopsies represented a cost savings to Medicare of $1,960.00 and $1,750.00, respectively, in comparison with wire-localized open biopsy.¹⁶ There is little doubt that image-guided biopsy is the best and most cost effective means of diagnosis in the great majority of patients presenting with a mammographic abnormality. A report of insurance data from New York State in the mid-1990s demonstrated a nearly two-to-one ratio of needle-localized excisional biopsy to stereotactic biopsy.¹⁷ More important, biopsy positivity rates among surgeons in that study varied between 9% and 48%, indicating that a mean of 70% of the patients underwent an operative procedure that most likely could have been avoided if an image-guided biopsy had been used.

The data from our study show striking disparities in lost work time between the mastectomy and sentinel node groups. Over 210,000 new breast cancers will be diagnosed in 2004. The National Cancer Database’s 1994 report documented that 75% of new breast cancers were diagnosed at either stage I or stage II.¹⁸ Therefore, we can assume that at least 75% of the over 210,000 new cases per year will be amenable to breast-conserving therapy, with clinically node-negative patients being candidates for sentinel lymph node mapping. Our finding of a 23-day difference in lost work time between the MRM and SM&SLND groups results in the following observations.

If we assume for the sake of this discussion that all the early stage breast cancer (75% of 210,000 = 158,000 cases) was treated with SM&SLND, total time off of work would be 11.4 million hours. Assuming 20% would have a positive sentinel node and require a completion dissection, the median time off would increase to around 14.3 million hours. If all procedures for early stage breast cancer patients consisted of modified radical mastectomies, the time off work would be 98.6 million hours.

Assuming an average wage of $15 an hour, the lost wages related to sentinel node and partial mastectomy (including 20% requiring ALND for a positive sentinel node) would be $215 million. Conversely, total lost wages for the modified radical mastectomy patients would be $1.5 billion. Even if we assume that half of all new early stage cancers are treated with SM&SLND (+ 20% requiring ALND) versus MRM, the economic cost for lost work time would be $129 million versus $750 million. This analysis does not consider the impact on corporate/business productivity, or costs related to rehabilitation for arm complications relating to MRM. A further full analysis of all economic and coincident societal ramifications exceeds the scope of this study and discussion, but this brief economic overview is worthy of mention because of the lost days of work data supported in the results section.

In the United States the overall breast conservation rate was 42.6% in a recent study by Morrow et al.¹⁹ that utilized a review of data from over 16,000 patients with stage I and II breast cancer. This low rate of breast conservation persists despite a wealth of data that confirm the equivalency of breast-conserving therapy to mastectomy, even after 20 years of follow-up.⁶ A recent evaluation of data from the ATAC (Anastrozole and Tamoxifen Alone or in Combination) Trial showed that residence within the United States was an independent predictive factor for use of mastectomy as the operative treatment.²⁰ There are data implicating a number of factors that potentially influence surgical treatment choice for breast cancer, including tumor size and grade,¹⁹ patient age²¹ and socioeconomic status,²² geographic location,¹⁹ hospital type,²³ and type of insurance held by the patient.²⁴ Several studies identify private insurance as a predictor of use of breast conservation.^19,24 Could it be that private insurance, paying 120% to 160% of Medicare rates, would make breast conservation a more attractive choice?

Before we dismiss this notion as far-fetched, consider the recent study of Hadley et al. at The Urban Institute, a nonpartisan economic and social policy research organization based in Washington, DC.¹⁵ Their study of 1787 Medicare beneficiaries with localized breast cancer led them to conclude that financial incentives influenced the use of mastectomy versus breast-conserving therapy. When all other factors were controlled, a 10% increase in breast-conserving therapy fees significantly increased the odds of use of breast-conserving therapy, while a 10% decrease in MRM fees also significantly increased the odds of the patient having breast conservation. They concluded that physicians might feel greater latitude in responding to financial incentives because MRM and BCT have equal outcomes.

While it is difficult to prove the link between higher reimbursements and preferential selection of more radical procedures, it is intuitive that paying significantly lower rates will not encourage surgeons to obtain the additional equipment and training required to perform less-invasive procedures. Equivalent procedures should be reimbursed equivalently. This may not hold true for all of the procedures covered under the Medicare system, and consideration of factors that account for outcomes would involve a major reworking of the RVU calculation system. Yet in breast cancer treatment, where there is proven equivalence of breast conservation to mastectomy, there should exist incentives, or at least fiscal equivalence, for surgeons to perform breast-conserving procedures where clinically indicated.

	FOOTNOTES

 
The purpose of this study was to compare outcomes for different breast cancer operations with their respective Medicare reimbursement. We found that the least-invasive procedures are reimbursed at the lowest rates despite better outcomes and fewer complications.

Received for publication March 18, 2004. Accepted for publication August 9, 2004.

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This Article Abstract Full Text (PDF) Alert me when this article is cited Alert me if a correction is posted Services Similar articles in this journal Similar articles in PubMed Alert me to new issues of the journal Download to citation manager Citing Articles Citing Articles via HighWire Citing Articles via Google Scholar Google Scholar Articles by Lucci, A. Articles by Azzizadeh, A. Search for Related Content PubMed PubMed Citation Articles by Lucci, A. Articles by Azzizadeh, A.