Inflation-Adjusted Trends in Medicare Reimbursement for Common Dermatologic Procedures, 2007-2021

This cross-sectional study identifies trends in Medicare reimbursement for 46 common dermatologic procedures from 2007 to 2021.

Key Points

Question

What are 15-year trends in Medicare reimbursement for common dermatologic procedures?

Findings

In this cross-sectional study of 2007 to 2021 Medicare fee schedules for 46 common dermatological procedures, the mean inflation-adjusted reimbursement for dermatologic procedures decreased by 4.8%. Changes in reimbursement during this time varied significantly by procedure category.

Meaning

Changes in Medicare reimbursement are important to monitor and can have several possible downstream effects, including decreased patient access.

Abstract

Importance

Medicare enrollment, dermatologist utilization of Medicare, and dermatologic procedural volume have all increased over time. Despite this, there are limited studies evaluating changes in Medicare reimbursement within dermatology.

Objective

To identify trends in Medicare reimbursement for 46 common dermatologic procedures from 2007 to 2021.

Design, Setting, and Participants

In this cross-sectional study, reimbursement data were obtained from the Centers for Medicare & Medicaid Services Physician Fee Schedule for commonly used dermatologic Current Procedural Terminology (CPT) codes from 2007 to 2021. The CPT codes in several major dermatologic categories were analyzed, including skin biopsy, shave removal, benign/premalignant/malignant destruction, benign/malignant excision, Mohs micrographic surgery, simple/intermediate/complex repair, flap, graft, and laser/phototherapy. All procedure prices were adjusted for inflation to January 2021 dollar value.

Main Outcomes and Measures

The primary outcomes were percentage changes and cumulative annual growth rates of pricing for each dermatologic procedure.

Results

From 2007 to 2021, there was a mean decrease in dermatologic procedure reimbursement of −4.8% after adjusting for inflation. Mean inflation-adjusted changes in reimbursements during this time period significantly varied by procedure type, including skin biopsy (+30.3%), shave removal (+24.5%), benign/premalignant/malignant destruction (−7.5%), Mohs micrographic surgery (−14.4%), benign/malignant excision (−3.9%), simple/intermediate/complex repair (−9.9%), flap repair (−14.1%), graft repair (−12.0%), and laser/phototherapy (−6.6%; P < .001). Changes in reimbursement did not vary by anatomical risk categories.

Conclusions and Relevance

The findings of this cross-sectional analysis suggest that changes in Medicare reimbursement can have several downstream effects, including concomitant private insurance changes and decreased patient access. Future adjustments in reimbursement should balance high-value care with sustainable pricing to optimize patient access.

Introduction

Medicare enrollment grew from 43.3 million in 2007 to 61.2 million in 2020 and is projected to reach more than 80.0 million beneficiaries by 2030.^1,2 Similarly, dermatology practices have increasingly utilized and submitted charges to Medicare, and the volume of dermatologic procedures increases as patients age.³ One study found that the number of skin biopsies increased by 153% and skin cancer treatments increased by 39% from 1993 to 2016.⁴ Another study found that treatment of actinic keratosis in Medicare patients increased from 29.7 million procedures in 2007 to 35.6 million in 2015.⁵ As the prevalence of Medicare patients, Medicare utilization, and procedures required by Medicare patients rise over time, it is essential to better understand trends in Medicare reimbursement for dermatologic procedures.

To date, studies in several specialties have documented significant decreases in Medicare reimbursement over the past 2 decades.^6,7,8 Within dermatology, a recent study of 20 dermatologic service codes, including office visits, revealed a 10% mean decrease in Medicare reimbursement for nonfacility pricing between 2000 and 2020.⁹ The present study adds to this work by evaluating an increased number of dermatologic procedure codes, characterizing yearly trends rather than a 2-year comparison, and analyzing reimbursements by category and anatomical complexity. The objective of this study was to use historical Medicare fee schedules to evaluate 15-year trends in Medicare reimbursement for common dermatologic procedures.

Methods

Reimbursement data from 2007 to 2021 were obtained from the Centers for Medicare & Medicaid Services Physician Fee Schedule, which provides historical monetary pricing for health care services based on Relative Value Units.¹⁰ The National Payment Amount (a mean national estimate of procedure compensation adjusted for regional cost variations) was collected for each commonly used Current Procedural Terminology (CPT) code. If legislation was implemented to alter Medicare reimbursements mid-year (2008, 2010, 2012, and 2015), we took the unweighted mean pricing from the 2 files (eg, 2012A, 2012B) for the given year.

A total of 46 CPT codes for dermatologic procedures were analyzed, including skin biopsy, shave removal, benign/premalignant/malignant destruction, benign/malignant excision, Mohs micrographic surgery, simple/intermediate/complex repair, flap repair, graft repair, and laser/phototherapy (eTable in the Supplement). For procedures with several CPT codes separated by size (eg, benign/malignant excisions, simple/intermediate/complex repairs), mean pricing for the range of CPT size codes was calculated for each anatomical site category. Because biopsy CPT codes were changed in 2019 to specify type of biopsy (tangential, punch, or incisional), the mean pricing across all 3 types was obtained and compared with the prior undifferentiated biopsy and add-on CPT codes (11100 and 11101).

All procedure prices were adjusted for inflation to January 2021 dollar value using the US Bureau of Labor Statistics’ Consumer Price Index for All Urban Consumers, as established in similar analyses.¹¹ Percentage changes and cumulative annual growth rates (CAGRs) were calculated for each dermatologic procedure. Statistical analysis was performed in SAS, version 9.4 (SAS Institute), with P < .05 considered to be statistically significant; 2-tailed t test was used to compare mean percentage changes between the first and second half of the study period, and analysis of variance testing was used to compare percentage changes between procedure categories and anatomical complexity sites. This study was deemed exempt from review and approval by the Institutional Review Board of University Hospitals Cleveland Medical Center because it did not involve human participants.

Results

After inflation adjustment, the mean percentage change in reimbursement from 2007 to 2021 for the 46 dermatologic procedures analyzed in this study was −4.8%. Mean annual inflation-adjusted percentage changes in procedure reimbursement had the largest annual decrease in 2014 (−3.5%) and the largest annual increase in 2011 (+2.4%). There was no difference in mean percentage changes in adjusted reimbursement rates between the first and second half of our study time period (2008-2014 vs 2015-2021; P = .25).

Mean inflation-adjusted changes in reimbursements varied by procedure type: skin biopsy (+30.3%), shave removal (+24.5%), benign/premalignant/malignant destruction (−7.5%), Mohs micrographic surgery (−14.4%), benign/malignant excision (−3.9%), simple/intermediate/complex repair (−9.9%), flap repair (−14.1%), graft repair (−12.0%), and laser/phototherapy (−6.6%; P < .001; Figure).

Figure. Annual Pricing of Dermatologic Procedures in Relation to 2007 Reimbursements.

Procedure categories are the means of several Current Procedural Terminology codes as defined in eTable in the Supplement.

The procedures with the largest gain in inflation-adjusted reimbursement were add-on biopsies (CPT codes 11101, 11103, 11105, and 11107), which increased in reimbursement from 2007 to 2021 by 76.1% with a CAGR of 3.9%. Shave removals across all anatomical sites also had substantial increases in total reimbursement, with a mean gain of 24.6% with a CAGR of 1.5%. The largest decrease in reimbursements was noted for simple repairs, which had a mean adjusted percentage change of −38.7% and a CAGR of −3.2% (Table 1). When procedures were stratified by anatomical site complexity as delineated by CPT coding guidelines, there was no difference in reimbursement changes for low-risk (−6.2%), medium-risk (−2.2%), and high-risk sites (−8.2%; P = .69; Table 2).

Table 1. Inflation-Adjusted Procedure Reimbursement Changes, 2007 to 2021.

Procedure type	Mean reimbursement rate, $		Adjusted CAGR, %	Mean total change, 2007-2021, %
	2007 (in 2021 US dollars)	2021
Skin biopsy	96.58	109.37	0.8	30.3
Shave removal	110.94	138.19	1.5	24.6
Destruction
Premalignant	96.78	81.07	−1.2	−19.6
Benign	123.38	126.14	0.1	2.3
Malignant	215.49	210.81	−0.1	−1.9
Mohs micrographic surgery	519.56	447.54	−1.0	−14.4
Excision
Benign	231.12	220.89	−0.3	−4.2
Malignant	319.73	307.41	−0.3	−3.6
Repair
Simple	262.45	160.79	−3.2	−38.7
Intermediate	378.42	394.98	0.3	4.5
Complex	364.18	339.34	−0.5	−6.2
Flap repair	957.72	821.82	−1.0	−14.1
Graft repair
Split thickness	686.39	546.86	−1.5	−20.3
Full thickness	583.50	538.27	−0.5	−7.9
Laser/phototherapy	106.39	94.91	−0.8	−6.6

Abbreviation: CAGR, cumulative annual growth rate.

Table 2. Procedure Reimbursement by Anatomical Site, 2007 to 2021.

Procedure	Total reimbursement change by anatomical site risk, %
	Lowa	Mediumb	Highc
Shave removal	24.8	21.8	27.1
Destruction (malignant)	0.3	−1.7	−4.4
Mohs micrographic surgery	−12.3	NA	−14.8
Excision
Benign	−0.7	−5.4	−6.5
Malignant	0.1	−3.4	−7.5
Repair
Simple	−38.2	NA	−39.3
Intermediate	−0.5	4.6	9.5
Complex	−1.8	−11.2	−10.1
Flap repair	−13.1	−14.5	−15.6
Graft repair
Split thickness	−17.8	NA	−22.7
Full thickness	−8.7	−7.8	−6.3
Mean	−6.2	−2.2	−8.2

Abbreviation: NA, not applicable.

^a Low-risk anatomical sites include trunk, arms, and legs.

^b Medium-risk anatomical sites include scalp, neck, hands, feet, or genitals. Mohs micrographic surgery, simple repairs, and split-thickness grafts are only divided into 2 complexity categories and therefore do not have a medium-risk value.

^c High-risk anatomical sites include face, ears, eyelids, nose, lips, or mucous membranes.

Discussion

We found that mean inflation-adjusted procedure reimbursement decreased by 4.8% from 2007 to 2021. Several procedure categories, including Mohs micrographic surgery and surgical repairs, demonstrated the largest reductions in reimbursement, while reimbursement for biopsies (overall) and shave removals increased, similar to previous findings.¹² While the jump in reimbursement for shave removals in 2013 requires further investigation, we found that skin biopsy reimbursement increased substantially in 2019 following the split of the original CPT code into 3 categories (Figure). Prior to 2019, a less substantial increase was noted in inflation-adjusted biopsy reimbursement rates (7.3%; CPT code 11100), while reimbursement rates for add-on biopsy comparatively decreased (−2.4%; CPT 11101). We did not observe significant differences in reimbursement trends between anatomical risk categories.

Based on this analysis, dermatologic procedures have not faced as steep of reimbursement cuts as those in other medical subspecialties, including otology (−29.13% from 2000-2020), emergency medicine (−21.2% from 2000-2020), and general surgery (−24.4% from 2000-2018).^6,7,8 However, these comparisons are likely skewed by the disproportionate increase in reimbursement rates for biopsies and shave removals during this time period. Excluding these 2 procedure categories from analysis, the mean change in procedural reimbursement was −9.6%.

Given Medicare’s contribution to a large proportion of health care expenditures, changes in Medicare reimbursement rates may result in parallel changes in private insurance reimbursement. Physician groups with less bargaining power may have to accept contracts from private insurers based on a fixed fee schedule determined by Medicare reimbursement rates.¹³ Decreased compensation and rising health care expenditures raise concerns about the sustainability of the current health care model. Alternatively, larger practices may be able to negotiate higher reimbursement rates from private insurance companies to offset losses accrued from Medicare reimbursement cuts, possibly disadvantaging private insurance beneficiaries unable to afford higher premiums. Finally, clinicians may preferentially see patients with private insurance, thus reducing access for patients covered by Medicare. A recent study documented decreased dermatologist appointment acceptance rates and increased mean wait times for patients with government insurance.¹⁴

Limitations

Limitations of our study include inability to assess data from non-Medicare payers, absence of utilization metrics to supplement the reimbursement analysis, and inability to include all procedures performed by dermatologists. Further studies are necessary to identify geographic differences in Medicare reimbursement secondary to variation in state-to-state policy. Comparison of trends in Medicare reimbursement vs trends in private insurance and Medicaid reimbursement may further elucidate concerns related to patient access to dermatologic procedures.

Conclusions

This cross-sectional study of 2007 to 2021 Medicare fee schedules demonstrated a mean decrease in reimbursement for common dermatologic procedures, with variation by procedure category. Sustainable reimbursement policies are necessary to ensure equitable access to quality dermatologic care. Several legislative acts, such as the Medicare Access and Children’s Health Insurance Program Reauthorization Act of 2015, have attempted to restructure reimbursement around value-based care.¹⁵ As further proposals related to high-value care and outcome-driven reimbursements are discussed, an understanding of these recent trends and combined efforts from health care organizations, legislators, and national leaders in dermatology will be essential in guiding future decisions that will shape reimbursement.

Supplement.

eTable. List of Dermatologic Procedure Common Procedural Terminology (CPT) Codes