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Original Investigation |

Bundled Payment Models for Actinic Keratosis Management

Joslyn S. Kirby, MD, MS, MEd1; Amber Delikat, BS2; Douglas Leslie, PhD3; Jeffrey J. Miller, MD, MBA1
[+] Author Affiliations
1Department of Dermatology, Penn State Milton S. Hershey Medical Center, Hershey, Pennsylvania
2medical student at Penn State College of Medicine, Hershey, Pennsylvania
3Department of Public Health Sciences, Penn State University, Hershey, Pennsylvania
JAMA Dermatol. 2016;152(7):789-797. doi:10.1001/jamadermatol.2016.0502.
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Importance  Recent legislation encourages alternative payment models, such as bundled payments. There are no clear recommendations on bundled payment design, and research on bundled payments for dermatologic care is limited.

Objective  To investigate several methods to develop bundled payment models for actinic keratosis (AK) management and the likely effect on the cost of AK management.

Design, Setting, and Participants  Cohort cost identification study using claims from Highmark Insurance and the MarketScan Commercial Claims and Encounters databases. Patients with claims for AK during the study period, January 2010 to December 2012, were included (N = 118 129). Utilization measures, such as visits and procedures, and direct costs were calculated and 8 bundled payment models were developed. Indirect costs were not included.

Main Outcomes and Measures  The actual health care costs and theoretical cost differences for the bundled payments. Costs are reported in 2012 US dollars and were adjusted for inflation. The proportion of patients and clinicians with annual AK claim costs less than or equal to the bundled payments were calculated.

Results  Eight bundled payment models were developed and 2, based on the 75th percentile payment, did not result in theoretical savings for any of the patient samples (increased annual spending of $1.04 million to $6.88 million). The median-based payment without adjustments resulted in the largest theoretical savings (decreased spending of $2.22 million to $6.43 million). In contrast, the mean-based payment with adjustments resulted in the smallest theoretical savings. The median-based with indirect payment (65.2% for patients and 62.0% for clinicians) and mean-based adjusted payments, with (68.9% and 66.2%) and without (68.1% and 65.6%) discount, were equal to or greater than the actual health care costs for similar proportions of patients and clinicians, respectively. In addition, both resulted in a decrease in overall health care costs for the patient cohort.

Conclusions and Relevance  It is important to consider alternative payment models, such as bundled payments, in preparation for payment reform. The dermatology profession needs to understand disease management in dollar terms to advocate on behalf of clinicians and patients for fair and reasonable reimbursement, regardless of payment type.

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Figure 1.
Cost Differences for Bundled Payment Models vs Actual Cost

Costs are adjusted to 2012 US dollars. HM indicates Highmark (regional) sample.

aAdjusted for nonmelanoma skin cancer and sex.

bDiscount of 2%.

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Figure 2.
Proportions of Patient-years and Clinicians in National Sample With Actual Costs Less Than or Equal to the Bundled Payment for Actinic Keratosis Care

Costs are adjusted to 2012 US dollars.

aAdjusted for nonmelanoma skin cancer (NMSC) and sex.

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