malignant melanoma: the implications of cost for stakeholder …€¦ · node biopsy (slnb).19 use...

ABSTRACT

Objectives: To evaluate the 2008 cost of care for melanoma in the United States, assess the cost impact of physician decision making, and prioritize areas needing innovation.

Study Design: Construction of an activity-based cost accounting model in Excel.

Methods: We built a survival-adjusted cost accounting model, leveraging the clinical practice guidelines published by the National Comprehensive Cancer Network. Additional assumptions were derived from the literature and clinical experience at Massa-chusetts General Hospital Melanoma Center. Cost estimates were based on 2008 national average Medicare reimbursements. Our model did not include indirect costs such as lost productivity and, therefore, does not examine the full societal cost of melanoma.

Results: The 2008 cost of care for malignant melanoma was estimated to be $1563 million and refl ects a 2.8-fold increase in cost since 1997. Stage I and II disease comprised 10% and 17% of total costs, respectively; stage III and IV disease consumed 15% and 57% of the total cost, respectively. Eighty percent of the total annual direct cost of treating melanoma is incurred by patients diagnosed within the fi rst year.

Conclusions: The growing cost of melanoma continues to high-light the medical need to fi nd cost-effective means of prevention and reduce the economic burden of malignant melanoma. We quantifi ed and prioritized 3 areas—recurrence, early stage disease, and palliative care—where efforts to innovate and refi ne practice could derive signifi cant clinical and cost benefi t.

(Am J Pharm Benefi ts. 2012;4(2):66-76)

Origi

nal R

esea

rch

The incidence of malignant melanoma (MM) in-

creased from 7.9 per 100,000 in 1975 to 21.5 in

2007.1 In 2008, the Surveillance, Epidemiology and

End Results (SEER) data showed that an estimated 62,480

cases of MM and 54,020 cases of melanoma in situ (MIS)

were diagnosed in the United States.2

Although most cases are caught early, melanoma is dev-

astating when diagnosed at a later stage. Five-year survival

rates are 98.7% for localized disease but only 15.5% for

distant disease.2 Moreover, the median age at diagnosis is

between 45 to 55 years, coinciding with peak professional

productivity and family responsibility. On average, melano-

ma decreases life span by 17.1 years.3

Because of this effect on society, investigators have quan-

tifi ed melanoma’s economic impact. Tsao et al4 estimated

the total 1997 direct cost of melanoma to be $563 million.

Seidler et al5 calculated the 1996 economic burden in the el-

derly to be $390 million, while Alexandrescu6 compared the

2009 costs of treating each stage of disease. Together, these

analyses emphasized calculating cost rather than practical

implications of their fi ndings.

We applied a managerial perspective to melanoma care

and chose a cost accounting analysis to identify the specifi c

levers that are most important in controlling costs, prioritize

key areas for innovation, and recommend ways forward for

entrepreneurs, investors, policy makers, and managers.

MATERIALS AND METHODSWe created a survival-adjusted activity-based cost ac-

counting model for MM and MIS, using the clinical prac-

tice guidelines published by the National Comprehensive

Cancer Network (NCCN) v2.2008.7 Adjusting these guide-

lines based on reported trends in the literature and our

clinical experience, we performed sensitivity analyses to

determine whether our assumptions substantially affected

the model.

At a GlancePractical Implications p 67

Author Information p 75

Full text and PDF www.ajpblive.com

Malignant Melanoma: The Implications of Cost for Stakeholder Innovation

Andrew Styperek, MD, MBA; and Alexa Boer Kimball, MD, MPH

66 The American Journal of Pharmacy Benefi ts • March/April 2012 www.ajpblive.com The American Journal of Pharmacy Benefi ts • March/April 2012 www.ajpblive.com

P R A C T I C A L I M P L I C A T I O N S

The cost of melanoma has increased despite little innovation. We used an activity-based cost accounting model of melanoma care to identify key cost drivers and highlight opportunities for stakeholder innovation.

� Investments should be made in technology that delays or prevents melanoma recurrence, risk-stratifi es early lesions, and predicts treatment response to expensive therapy.

� Consideration should be given to monitoring costs by diagnosis or disease, rather than by specialty or physician, to avoid costs incurred with inappropriate care.

� When applied iteratively to healthcare management, an economic model can drive cost and care improvement.

www.ajpblive.com Vol. 4, No. 2 • The American Journal of Pharmacy Benefi ts 67

Melanoma: Cost Implications for Stakeholder Innovation

Table 1 illustrates the clinical care activities included

in our analysis. Key assumptions are shown as a per-

centage of treated patients. Estimates of patient survival

by stage were taken from the American Joint Committee

on Cancer (AJCC) Melanoma Database.8 Recurrent mela-

noma survival data came from the literature.9

Our ground-up approach accounted for all costs

borne by payers (public or private) based on 2008 na-

tional average Medicare Current Procedural Terminology

(CPT) codes, negotiated drug therapy, and diagnosis-re-

lated group charges. For physician care, CPT codes were

reimbursed at 80% of Medicare, consistent with prac-

tice management data presented at the 2007 American

Academy of Dermatology meeting.10 Reimbursement for

procedure-based CPT codes were further adjusted by the

formula: 100%, 50%, and 25% for the fi rst, second, and

third CPT codes, respectively. Diagnosis-related group

charges were calculated for Massachusetts General Hos-

pital using the Centers for Medicare & Medicaid Services

PPS Inpatient PC Pricer program and allocated for each

admission using the average length of stay.11

Drug therapy costs were discounted 15% off 2008 av-

erage wholesale price,12-14 refl ecting a 2002 report by the

Offi ce of the Inspector General that showed pharmacy

acquisition prices ranging from 17.2% to 72.1% below

average wholesale price15 and Medicaid’s routine applica-

tion of 5% to 17% discounts off average wholesale price

for branded drugs.13 We did not explicitly address drug

assistance programs.

We estimated 2008 clinical trial enrollment to be 3%,

20%, and 64% of newly diagnosed stage II, III, and IV pa-

tients from the National Cancer Institute clinical trial data-

base (phase II and III, treatment trials only), respectively.16

Our research experience indicates that imaging and labo-

ratory testing are typically covered by payers. Because re-

current cases are usually eligible for trials that recruit stage

IV patients, we allocated enrollment evenly across both

groups, reducing the participation rate to 15%. Our analy-

sis does not include indirect costs (eg, lost productivity).

Clinical ActivitiesWe assumed that melanoma care began with a new

patient exam by a dermatologist (CPT 99204)17 and in-

cluded a biopsy if the lesion was suspicious for cancer

(CPT 11401) and pathology examination (CPT 88305).

We included cases that yielded only a positive diagno-

sis and adjusted 4% for inadequate biopsies that needed

reexcision.18

Stage 0 melanoma is excised at a follow-up appoint-

ment and evaluated by a pathologist. Charges vary based

on size of the excision; the NCCN recommended excision

margin is 0.5 cm; follow-up (CPT 99214)17 is every 12

months.

Stage IA care includes follow-up every 3 months for

2 years, every 6 months for 1 year, and every 12 months

thereafter; excision margins are 1.0 cm. NCCN guidelines

distinguish “stage IA with adverse features,” patients with

fatigue or a biopsy with adverse features (eg, mitosis,

dedifferentiation). We incorporated these patients’ care

as stage IB/IIA.

Patients with stage IB to IIC require greater surveil-

lance. Because lesions are larger, excision may require

a fl ap or graft. To stage care, 75% of stage IB/IIA and

90% of stage IIB/IIC patients undergo sentinel lymph

node biopsy (SLNB).19 Use of this procedure is suppor-

ted by reports indicating that 11% of melanomas with

vertical growth of less than 2 mm may be SLNB+.20,21

NCCN recommends imaging (eg, chest x-ray [CXR]) if

clinically indicated.7 While studies have shown the low

clinical utility of CXR,22,23 New York University’s experi-

ence between 2002 and 2005 with stage IB and II disease

showed that 80% of stage IB and II patients received

preoperative CXRs and at least 43% received computed

tomography (CT) scans prior to SLNB.24 We excluded

outpatient lactate dehydrogenase and complete blood

count testing because they are not justifi ed,25 except in

stage IV patients.

The decision to undergo interferon (IFN) alfa-2b thera-

py, costing $39,013 per patient, is important. We assumed

all patients received high-dose IFN (20 μg, 5 doses per

week for a month and 10 μg, 3 doses per week for 11

months) described in the Eastern Cooperative Oncology

Group and Intergroup Trials and were treated for side ef-

fects (eg, with metoclopramide, selective serotonin reup-

take inhibitor/mirtazapine, and megestrol acetate).26 We

68 The American Journal of Pharmacy Benefi ts • March/April 2012 www.ajpblive.com

� Styperek • Kimball

Table 1. Clinical Care Activities by Stage of Diagnosis

Diagnosis Excision SLNBa Imagingb IFN alphac Clinical TrialdFollow-

upe Chemo RxOther Rx Options

Stage 0 New patient, level 4BxPathology Report

Excision 0.5 cm marginPathology Report

— — — — 100% — —

Stage IA New patient, level 4BxPathology Report

Excision 1 cm marginPathology Report

— — — — 100% — —

Stage IB/IIA New patient, level 4BxPathology Report

Excision with margin, fl ap, or graftPathology Report

80% If SLNB onlyCXR: 75%CT: 35%

0% 2.8% (IIB only)

95% — —

Stage IIB/IIC New patient, level 4BxPathology Report

Excision with margin, fl ap, or graftPathology Report


20% 2.8% 70% — —

Stage III SLNB +

Assume all care in earlier stages has already been delivered (except IFN)

Lymphadenectomy if patient can toleratePerform as in-patient


80% 20% 50% — —

Stage III Clinically positive

FNAPathologist cytopathology and adequacy evaluationIf FNA fails, nodal BxIncludes false (-) SLNB

Primary excision with margin, fl ap, or graftPathology ReportLymphadenectomy if patient can tolerate

5% CXR: 100%CT: 100%MRI: 100% (brain)

80% 20% 50% — Radiation therapyf

(30%)

Stage III In-transit

New patient, level 4BxPathology ReportIncludes false (–) SLNB

Excise primary with margin, fl ap, or graftPathology Report

10%To confi rm LN involvement

CXR: 100%CT: 100%MRI: 100% (brain)

80% 20% 50% Dacarbazine regimen (75%)Add IL-2 in new patients (5%)

Hyperthermic infusion with melphalanIntralesion injection with IL-2 or BCGRadiation therapyf (30%)Topical imiqui- modLaser ablation

Stage IV & Recurrentg

New patient, level 4If local/in-transit —Biopsy with Pathology ReportIf nodal/distant —FNA or CT guided biopsy of site —Cytopathology and adequacy evaluationLDHIncludes false (–) SLNB

If local/in-transit —Excise with margin, fl ap, or graft —Pathology ReportNodal/distant —Surgical excision (35%) of metastasish

— CXR: 100%CT: 100%MRI: 100% (brain)Repeat imaging after initial treatment and plan

15% 15%i 10% Dacarbazine regimen (71%) of patientsPatients w/o brain meta - stasis try IL-2 (4%)If performance status 0-1 or Kamofsky >60, repeat chemo (11%)

Radiation therapyf (35%)Palliative care for 6 months (100%)

BCG indicates bacillus Calmette-Guérin; Bx, biopsy; Chemo Rx, chemotherapy; CT, computed tomography; CXR, chest x-ray; FNA, fi ne-needle aspiration; IFN, interferon; IL-2, interleukin 2; LDH, lactate dehydrogenase; LN, lymph node; MRI, magnetic resonance imaging; SLNB, sentinel lymph node biopsy. aSLNB cost includes pathologist injection and report (level 5), radiologist imaging, supervised certifi ed registered nurse anesthetist, surgeon, operating room time, tracer kit, and ambulatory surgery center. bWorkup imaging only. CXR is anterior-posterior only (Current Procedural Terminology [CPT] code 71020). CT is chest, abdomen, pelvis scan with and without contrast (CPT 71270 and 74170). Stage III clinically positive nodes, in transit, and stage IV also include cost of MRI brain, with and without contrast (CPT 70553). Imaging is linked to the rate of SLNB as part of the preoperative workup but also includes situations when imaging is used to diagnose and stage the patient at initial presentation. In stage III and later patients, imaging is more often used to set the baseline and evaluate new symptom onset.cInterferon alfa-2b therapy cost refl ects a high-dose regimen and includes drug costs (15% discount from 2008 average wholesale price); standard monitoring tests (baseline CXR, electrocardiogram at baseline and every 6 months, complete blood count with differential, thyroid function tests, liver function tests, triglycerides, complete metabolic profi le); use of metoclopramide, selective serotonin reuptake inhibitor/mirtazapine, and megestrol acetate to treat side effects; and medical oncologist visits (level 4 new patient, 19 therapy sessions, and 12 follow-up clinic visits). dIncludes cost of imaging and laboratory tests.eFollow-up protocols vary by stage and by clinician. We estimated that stage 0 patients would be offered follow-up once a year. Stage IA patients would receive follow-up every 3 months for 2 years, every 6 months for 1 year, and every 12 months thereafter. Stage IB/IA patients would be offered similar follow-up. However, we included 2 CT scans. Incidence of CT scans was linked to mortality.fRadiation therapy cost includes technician costs (plan, simulation, calculation, and delivery), radiation oncologist management (5 sessions) and follow-up, and inpatient treatment.gAlthough recurrence can occur at the scar, regionally, or distantly, we assumed that patients with recurrence would be treated under the care protocols for stage IV patients.hSurgical excision assumed abdominal procedures and includes surgeon, inpatient admission, anesthesiologist, pathology evaluation (level 6) and immunohistochemistry, hospital and postoperative follow-up, and emergency medical technician transportation. i T he 2008 estimated percentage of enrollees in trials was 60% of patients with newly diagnosed stage IV disease. Given the large number of patients with recurrent disease and their eligibility for clini-cal trials, we spread this fi gure across both patient populations.



included monitoring (eg, CXR, electrocardiogram, blood)

and oncologist follow-up schedules from these studies.

Stage 3 disease has many options for treatment.27 Pa-

tients with a positive SLNB are further evaluated by CT

and offered lymphadenectomy. Next, patients undergo

a clinical trial, follow-up with imaging, or IFN therapy.

We incorporated an 18% false-negative rate of SLNB for

patients with clinically positive, in transit, and distant me-

tastases.28 If nodes are clinically positive, fi ne-needle aspi-

ration (FNA) is performed. If inconclusive, nodal biopsy

is performed. Primary wide excision, fl ap, or graft with

lymphadenectomy is often the next step. Patients are then

offered either follow-up with CT imaging, clinical trial, or

IFN. Stage IIIC patients may also elect radiation.

Stage III in transit typically requires biopsy of a me-

tastasized lesion to confi rm the diagnosis, followed by

excision. After surgery, patients are offered hyperthermic

infusion, intralesional injection, laser ablation, topical im-

iquimod, and/or systemic chemotherapy. Chemotherapy

is often chosen, given the potential for remission. With

multiple options, we chose monotherapy with dacarba-

zine (250 mg/m2 daily over 5 days) with 6 cycles and

included metoclopramide for nausea because no other

regimen had demonstrated a survival benefit.29 We esti-

mated that 75% of patients were treated at outpatient facil-

ities.30 Five percent of patients undergoing chemotherapy

were expected to undergo combination therapy with

interleukin-2.31 We also included monitoring (eg, echo-

cardiogram, CXR, electrocardiogram, pulmonary function

tests, blood) and oncologist follow-up. After treatment,

patients entered clinical trials, pursued watchful waiting,

or started IFN.

For new stage IV lesions, FNA or image-guided biopsy

with lab work and imaging assesses organ involvement

and candidacy for surgery. If disease is limited (ie, resect-

able), then surgery is indicated followed by IFN, clinical

trial, or follow-up. If the patient refuses or cannot tolerate

surgery, chemotherapy or follow-up is indicated. Stage IV

patients undergo resection in only 35% of cases.32 If MM

is disseminated (ie, unresectable), the brain is evaluated

and if involved, clinical trial, chemotherapy, or palliative

care (surgery, radiation therapy, or supportive care) is

indicated. Otherwise, successive rounds of chemotherapy

are recommended if tolerated.

We assumed all patients receive palliative care, cost-

ing $29,872 in 2008. This estimate was derived from the

6-month 2001 average cost of palliative cancer care.33 To

update these costs, we adjusted by the consumer price

index.34

Recurrence may be local, regional, or distant. Patients

with local and in transit metastases receive surgical care

followed by stage IV therapy. Nodal and distant metas-

tases receive FNA or nodal biopsy followed by stage IV

treatment. Based on published experience, median dis-

ease-free interval (the period from the date of primary

diagnosis to diagnosed recurrence) was 2.7 years (range,

0.37-27.6 years) for melanoma.9 We treated recurrent

cases aggressively and applied stage IV costs, since even

stage I and II patients with local recurrence (defi ned as

within 3 cm from the primary lesion) have survival rates

Figure 1. Comparison of Local Recurrence and National Comprehensive Cancer Network Care Process Survival

100

90

80

70

60

50

40

30

20

10

08 16 24 32 40 48 56 64

Months

Surv

ival

, %

72 80 88 96 104 112 120

Stage IB/IIA

Stage IIIB/IIC

Stage III (SLNB+)

Stage III (clinically positive nodes)

Stage III (in transit)

Stage IV

Local recurrence

xxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

x

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

x

SLNB indicates sentinel lymph node biopsy.aAdapted from Francken et al9 and Balch et al.8 Data were reanalyzed with permission.



comparable to those of patients with stage III

disease (analysis of source data from Francken

et al9 with permission; Figure 1). Although sur-

vival varies by site of recurrence, we used mean

reported 1-, 2-, 5-, and 10-year survival rates of

56%, 40%, 20%, and 8.3%, respectively.9

To estimate total recurrent cases, we as-

sumed that deaths comprised new patients in

stages I through III whose disease had recurred

and progressed rapidly, new stage IV patients,

and new recurrent cases that were diagnosed in

previous years. Table 2A demonstrates how this

framework, when applied to the 2008 estimate

of 8420 deaths, resulted in 15,256 treated cases

of recurrent melanoma. To derive the number

of survivors with recurrent disease (Table 2A,

Table 2A. Estimating Recurrent Disease

Line Description Cases

A 2008 SEER estimated US deaths 8420

B Deaths from new stage IV disease (1779)

C Deaths from aggressive stage I-III disease (1690)

A - B - C Deaths from recurrent disease 4951

A + B Deaths from recurrent disease 6641

D + E Recurrent disease survivors 8615

D Primary diagnosis before 2008a 6423

E Primary diagnosis in 2008a 2192

A + B + D Total treated recurrent disease 15,256

SEER indicates Surveillance, Epidemiology and End Results.aEstimated from recurrent disease survival curves published by Francken et al.9

Table 2B. Estimating Incidence Mix by Clinical Stage From American Joint Committee on Cancer Dataa

Pathologic StageTNM Staging

SystemPatient Mix by

Pathology Diagnosis, %Care Process Stage (NCCN Guidelines) Clinical Stage

Clinical Stage Incidence Mix, %

IA T1a 25.60 IA I

IB T1b 7.80 IB/IIA I 52.10

T2a 18.70 IB/IIA I

IIA T2b 5.40 IB/IIA II

T3a 9.80 IB/IIA II

IIB T3b 8.70 IIB/IIC II 32.60

T4a 3.20 IIB/IIC II

IIC T4b 5.60 IIB/IIC II

IIIA N1a 1.40 III, SLNB+ III

N2a 0.70 III, SLNB+ III

IIIB N1a 1.20 III, SLNB+ III

N2a 0.60 III, SLNB+ III

N1b 0.70 III, clinically positive nodes

III


III 9.70

IIIC N1b 0.60 III, clinically positive nodes

III


III

N3 2.30 50% III, SLNB+; 50% III, clinically positive nodes

III

IV M1a 1.00 III, in transit III

M1b 1.10 IV IV5.60

M1c 4.50 IV IV

Total 100.00

NCCN indicates National Comprehensive Cancer Network; SLNB, sentinel lymph node biopsy.aAdapted from Balch et al.8



lines D and E), we used published recurrence survival

curves.9

To estimate the contribution from the previous 10

years, we used 2003-2007 SEER incidence data and ap-

plied the techniques described above for distributing

newly diagnosed patients into stages. SEER altered mela-

noma reporting in 2003. Costs of diagnoses prior to 2003

were estimated from our model (0.1% to 5.3% of total

expenses, depending on stage). While guidelines advise

lifelong follow-up, this follow-up may be deferred as

more time passes since a positive fi nding. We assumed all

patients attended the fi rst annual checkup and adjusted

attendance by 10% annually thereafter (Goldsberry G,

Kimball AE. Wait times in clinic practice: an operational

model of outpatient care. Unpublished manuscript. Mas-

sachusetts General Hospital, 2009).

Patient MixTable 2B summarizes how we estimated the mix of new

MM. We distributed the 2008 SEER incidence estimates2

across stages I through IV based on the AJCC experience.8

Because medical care is not always unique to a pathologic

stage (eg, T2a vs T2b), we combined pathologic stages

into “care process” groups that were determined by NCCN

guidelines. For example, pathology stage IA corresponded

to care process stage IA. The stage III SLNB+ care group

was derived from pathology stages IIIA and IIIB with mi-

crometastases only and included 50% of stage IIIC N3 le-

sions because of the potential for micrometastases. (This

pathology stage includes lesions of any thickness and

ulceration with 4 or more positive nodes with micro or

macro metastasis.) The stage III clinically positive nodes

group included pathology stage IIIB patients with mac-

rometastases only and remaining stage IIIC patients. Care

process stage III in transit refl ected pathology stage IV M1a

patients. Stage IV patients comprised the remainder.

Because data are commonly reported by clinical stage,

we further grouped care process stages into clinical sta-

ges I through IV. Thus, 2008 SEER incidence fi gures were

allocated: 32,571 in stage I, 20,373 in stage II, 6060 in

stage III, and 3475 in stage IV.

We adjusted for patients initially diagnosed with and

treated for stages II and III disease whose disease re-

curred within the same year, approximately 3882 cases in

2008. These patients were assumed to receive 6 months

of care under the primary diagnosis and the remaining 6

months under stage IV recurrent cost burden.

RESULTSThe estimated 2008 cost of MM was $1563 million (Ta-

ble 3). The majority of costs were incurred by recently

diagnosed patients, ranging from 74% to 91%. Although

stage IV patients incurred the majority of costs (57%), that

was primarily due to cases of recurrent disease (44%).

Patients with stages I and II disease were responsible for

10% and 17% of the costs, respectively.

Not surprisingly, costs were higher with later stages and

more recent diagnosis (Table 4). For example, the aver-

age patient diagnosed in 2004 with stage II disease could

expect to incur only $35 in costs in 2008, compared with

$12,556 if diagnosed in 2008. Stage IV melanoma costs are

40 times greater than those for MIS in the fi rst year.

Clinical decisions can drastically affect the cost of care,

especially in the later stages, as shown in Table 5. For

Table 3. 2008 Cost of Care by Stage for Patients Diagnosed With Melanoma in a Given Year and Overall 2008 Costs (in Millions)

Stage or Incidence

2008 Total Cost of Care

(Millions)

Years Since Diagnosis and Cost

1 2 3 4 5 6 7-10a

Stage 0 $53.2 $4.1 $3.7 $3.0 $2.2 $1.7 $3.8 $72

Stage I $138.7 $10.9 $4.8 $1.9 $1.4 $1.1 $2.3 $161

Stage II $245.4 $15.9 $5.6 $0.9 $0.6 $0.5 $0.9 $270

Stage III $197.2 $36.1 $2.8 $1.3 $0.9 $0.2 $0.3 $239

Stage IV $147.0 $30.7 $7.4 $5.3 $4.8 $1.0 $3.2 $199

Recurrent stage IV $523.0 $70.4 $29.1 $18.7 $12.8 $10.8 $29.4 $694

Cost of MIS and MM (all) $1304.6 $168.1 $53.4 $31.0 $22.8 $15.3 $39.9 $1635

Cost of new MM only $728.4 $93.6 $20.7 $9.3 $7.8 $2.8 $6.6 $869

Cost of new and recurrent MM

$1251.4 $164.0 $49.7 $28.0 $20.6 $13.6 $36.0 $1563

MIS indicates melanoma in situ; MM, malignant melanoma.aEstimated from American Joint Committee on Cancer survival curves and cost decay curves.



example, stage IV costs ranged from $3462 to $156,374

for an individual.

Table 6 highlights the estimated fi nancial impact of

adjustments to some of our key clinical assumptions. For

example, if palliative care costs were increased by $1000,

the overall 2008 cost of care would rise $6.7 million.

Conversely, decreasing IFN use by 10% in stage III and

IV patients would reduce annual costs by approximately

$17.7 million and $40.2 million, respectively.

DISCUSSIONTsao et al4 published the fi rst estimate of the annual di-

rect cost of MM. Since then, annual costs have increased

from $563 million in 1997 to $1563 million in 2008. This

analysis highlights the key drivers of this change.

With little innovation, cost increases have been

driven by incidence and the consumer price index. In-

cidence alone increased 55% between 1997 and 2008,

more than 22,000 cases annually, while the consumer

price index increased 34%.34 Together, the consumer

price index and the incidence have contributed $610

million to the annual costs, raising 1997 estimates to

$1.17 billion.

Imaging, traditionally linked to escalating healthcare

costs, contributed only $75 million, or 4.8% of 2008 mean

annual costs. In fact, use of CT and CXR in melanoma

refl ects a rift between the academic literature and prac-

tice that has been reported in other areas of medicine.35

For more than a decade, the literature has shown that

imaging early-stage disease is rarely useful.22,23,36-39 Yet, a

Table 4. 2008 Average Cost of Care by Stage per Patient Diagnosed With Melanoma Over Time

Years Since Diagnosis and Cost

Stage 1 2 3 4 5 6 7-10a

Stage 0 $984 $85 $75 $64 $54 $44 $74

Stage I $4259 $348 $149 $60 $50 $40 $70

Stage II $12,566 $813 $278 $45 $35 $28 $48

Stage III $39,761 $6215 $468 $233 $163 $29 $50

Stage IV $42,303 $9212 $2137 $1587 $1577 $345 $918

Recurrent stage IV $39,281 $6411 $2927 $1971 $1302 $1219 $2352

aEstimated from American Joint Committee on Cancer survival curves and cost decay curves.

Table 5. 2008 Average Cost of Care per Patient by Stage and Clinical Care Decision

Initial Workupa

Therapeutic Optionsb

Total Cost

Clinical Stage Imaging SLNB Follow-up ChemoOther Rx Modality

Clinical Trial

Interferon alfa-2b

Palliative CareDiagnosis Excision Lowc Average Highd

Skin checke $103 $103

Benign evaluationf $373 $373

Stage 0 $390 $413 $578 $1380

Stage I $390 $665 $140 $3087 $1347 $11 $0 $401 $5640 $7659

Stage II $390 $807 $482 $6914 $1981 $29 $4017 $418 $14,619 $35,206

Diagnosis Imaging Excision XRT Follow-up ChemoOther Rx Modality

Clinical Trial

Interferon alfa-2b

Palliative Care Lowc Average Highd

Stage III $5125 $855g $9075 $1760 $1420 $1368 $133 $627 $27,588 $0 $7093 $47,950 $79,113

Stage IV (new) $1611 $1300 $10,881 $4054 $147 $7428 $1050 $551 $483 $28,496 $3462 $60,301 $156,374

Stage IV (recurrent) $588 $1300 $10,676 $3974 $178 $7243 $999 $492 $4962 $27,217 $2380 $57,630 $167,905

Chemo indicates chemotherapy; Rx, prescription; SLNB, sentinel lymph node biopsy; XRT, radiotherapy. aActivities assumed to be common to all patients.bIncludes average costs incurred from initial patient evaluation plus any additional stage III–specifi c diagnostic care. cRefl ects the least expensive cost of treating patients. Defi ned as the cost of diagnosis, local excision, and clinical trial for stage I and II patients. Stage III and IV total also includes imaging. d“High” represents treatment with all modalities and methods recommended by the National Comprehensive Cancer Network at this stage of disease, including follow-up. This, in effect, represents the cost of the heroic patient care approach to melanoma. ePer visit. Level 4, established patient. No lesion noted or biopsied.fPer visit. Level 4, established patient. If abnormal lesions suspected, assumed only 1 lesion biopsied.gFrequency-weighted average costs of different therapy interventions. Assumed completed treatment.



2007 New York University report

demonstrated that imaging is still

routinely ordered.24

Drugs, while a signifi cant

proportion of total costs, have

not been responsible for cost

increases. For example, IFN alfa-

2b comprises 17% of melanoma

costs, yet contributed only $41

to $49 million, or 2.7% to 3.1%

(depending on discounts) of the

increase in costs after infl ation

between 199840 and 2008. In-

terestingly, IFN treatment costs,

including physician visits and

follow-up, have remained stable

and may refl ect the impact of

CPT codes not rising propor-

tionally over time. Despite this

legacy, drug costs should take

center stage as use of ipilim-

umab and vemurafenib, whose

treatment costs exceed $100,000

annually, grows after recent US

Food and Drug Administration

approval.41,42 This upcoming

shift allows our analysis to set

a baseline against which future

researchers can compare costs.

Our remaining differences in

cost between 1997 and 2008, ap-

proximately $380 million, refl ect

shifts in melanoma incidence

data, higher estimates of recur-

rent melanoma, and a broader

cost perspective. The number

of stage II and IV diagnoses

increased by 1.8-fold and 2.1-

fold, respectively.4 Similarly,

published AJCC data increased

recurrent melanoma estimates

by 6421 after adjustment for

incidence.9 Our comprehensive

approach to melanoma care in-

cluded surgery for metastases,

clinical trials, and ambulance

transport. Yet we did not include

patient bad debt and claim re-

jections, the latter varying from

7% to 14%.40

Table 6. Estimated Annual Financial Impact of Physician Management and Cost Assumptions

Clinical Decision Stage(s) Cost Impact (Millions)

Diagnosis

New vs establisheda level 4 visit I-IV $3.70

Patient visit level

3 vs 4 new patient I-IV $3.60

4 vs 5 new patient I-IV $6.20

SLNB false-negative rate 5% increase I-IV $1.40

Imaging

CXR 10% increase IB/IIA/IIB/IIC $0.10

CT 10% increase IB/IIA/IIB/IIC $2.50

MRI 10% increase III, SLNB + $0.20

Excision

SLNBb 10% increase IAIB/IIA

$15.20$41.40

Lymphadenectomy 10% increase IIB/IICIII

$11.60$6.40

Surgery 1% increase IV and recurrent $5.20

Follow-up

Rate of attritionc 10% reduction I-IV $3.50

XRT

As adjuvantd 10% increase III, clinically + lymph nodesin transit and IV

$22.10

Chemo

Choosing chemoe 10% increase III, in transit $0.40

Choosing chemo 10% increase IV and recurrent $6.90

Choosing IL-2 10% increase III, in transit $0.70

Choosing IL-2 10% increase IV and recurrent $15.80

Other Rx modality

Usage 10% increase I-IV $0.40

Clinical trial

Enrollmentf 10% increase II ($16.90)

10% increase III ($4.70)

10% increase IV and recurrent ($7.80)

Interferon alpha-2b

Low vs high dose 1-y savings Per patient $15,305

Total savings I-IV ($117.80)

Usageg 10% decrease II ($36.50)

10% decrease III ($17.70)

10% decrease IV and recurrent ($40.20)

Palliative care

Cost increase each $1000 IV and recurrent $6.73

Chemo indicates chemotherapy; CT, computed tomography; CXR, chest x-ray; IL-2, interleukin 2; MRI, magnetic resonance imaging; Rx, prescription; SLNB, sentinel lymph node biopsy; XRT, radiotherapy.aRefl ects total cost impact of assuming patient visits at the time of diagnosis were all new versus all established. bTotal cost impact of changes in physician use of SLNB in these patient groups.cTotal cost impact of improved patient follow-up.dCost increases from physicians promoting XRT across these patient populations.eCost increases from physicians promoting chemotherapy.fSavings from increased clinical trial enrollment.gSavings from physicians discouraging interferon treatment.



Other modeled costs actually decreased. We used aver-

age national reimbursement levels and reduced palliative

care costs to $29,872, lower in real terms than the Tsao et

al 1997 $27,000 estimate4 and higher than Alexandrescu’s

arbitrary $14,500 in 2009.6,43 Although home health use44

and care intensity33 can impact costs, our estimate refl ects

the most recent published Medicare data.

Our analysis also compares favorably with cost re-

lationships reported from Medicare claims data, which

permit comparison of melanoma costs with the costs of

other cancers (eg, lung, colorectal).45 For many cancers,

local disease is more expensive, perhaps refl ecting use

of operating rooms to excise lesions rather than clinic

rooms. In contrast, end-of-life costs in melanoma are

among the lowest, presumably refl ecting rapid progres-

sion of advanced disease.

Any economic analysis depends on the assumptions

used to build the model. Not everyone treats melano-

ma in the same way, and few data detail actual practice

patterns in the community. To incorporate divergent per-

spectives, we calculated the impact of adjusting key vari-

ables (Table 6) and believe that discordant views on care

intensity should fall within 10% to 15% of our estimate.

Our standard for this model is decision-making ability

rather than certainty.

RecommendationsUnderstanding these cost relationships, managers

have several tools to shape costs through adoption and

reinforcement of evidence-based practice. For example,

clinician updates can highlight disappointing results from

the Sunbelt Melanoma Trial46 to dampen use of IFN while

educating physicians about use of new therapies such as

ipilimumab and vemurafenib. Electronic medical systems

allow tracking the utilization of expensive tests and thera-

pies, and uncover new insights into the care dynamics

between specialties (eg, inappropriate imaging at New

York University).24 By uncovering how and by whom

Figure 2. 2008 Cost Contribution of Clinical Decisions in Melanoma Care

SLNB indicates sentinel lymph node biopsy; XRT, radiotherapy.

100

80

Cont

ribut

ion,

% 60

40

20

0

Stage of Diagnosis

Stage 0 Stage 1 Stage II Stage III Stage IV RecurrentStage IV

All Stages

Follow-up

Excision and SLNB

Diagnosis

Imaging

Interferon alfa

Clinical trials

Chemotherapy

XRT

Palliative care

Other therapy



clinical decisions are made, managers can target their ef-

forts to shift traditional physician practice.

Managers will have to address patient management

expenses arising from rapid increases in early-stage dis-

ease,47-50 with costs growing from 10% in 19974 to 27%

in 2008, by promoting technologies that risk-stratify le-

sions and predict treatment response. Haqq et al51 have

demonstrated that gene expression signatures can predict

melanoma progression and therapy response. By refi n-

ing this and similar approaches, managers may ultimately

help physicians prioritize treatments and minimize costs

from trial-and-error approaches to therapy.

Illustrating the impact clinical decisions have on costs,

Figure 2 demonstrates that human-intensive activities like

palliative care, diagnosis, follow-up, and excision repre-

sent 67% of annual costs. The signifi cant role played by

low-tech activities in melanoma represents an opportunity

for innovators and managers; they may be able to either

disrupt these activities with novel solutions or refi ne them

with evidence-based practice innovations. Palliative care, approximately 20% of annual mela-

noma costs, has become a signifi cant problem for stake-

holders. One approach has been to shift patient care to

the home and incorporate remote monitoring to enable

rapid response to potential problems. For example, Reid

et al52 demonstrated 29% fewer emergency department

visits and 6% fewer hospitalizations after implementation

of the medical home model over 2 years. While hurdles

regarding reimbursement and infrastructure remain, en-

trepreneurs with solutions in this space could have tre-

mendous societal impact and personal returns.

Patients with treated and undetectable disease that re-

curs represent the largest cost burden, totaling $694 mil-

lion or 44% of total costs in 2008. While dismal patient

prognoses already encourage clinicians to seek new ways

to prevent recurrence, we hope this analysis defi nes the

scope of the problem for entrepreneurs and investors to

focus their creativity and capital. Delaying the mean time

to recurrence by 1 year saves the healthcare system $45

million annually.

In a resource-constrained healthcare system that

spent $98 billion on cancer in 2008, economic analyses

help stakeholders focus their efforts on improving pa-

tient care.53 Unfortunately, innovation must contend with

capitated and rigid payment systems that often reduce

payouts with improved outcomes.54 Despite these market

distortions, the costs of managing early-stage melanoma,

palliative care, and recurrence will grow. We hope this

analysis will drive cost-effective management of mela-

noma and inspire innovations that improve care.

Acknowledgments

The authors would like to acknowledge John Thompson, MD, and Anne Brecht Francken, MD, for sharing their published recurrent mela-noma survival data with us. This analysis benefi ted greatly from their contribution.

Author Affi liations: From Department of Medicine (AS), Wake For-est University School of Medicine, Winston-Salem, NC; Department of Dermatology (ABK), Harvard Medical School, Boston, MA.

Funding Source: None.

Author Disclosures: The authors (AR, ABK) report no relationship or fi nancial interest with any entity that would pose a confl ict of interest with the subject matter of this article.

Authorship Information: Concept and design (AR, ABK); analysis and interpretation of data (AR); critical revision of the manuscript for important intellectual content (AR, ABK); and supervision (ABK).

Address correspondence to: Alexa Boer Kimball, MD, MPH, Mas-sachusetts General Hospital, 50 Staniford St, No. 246, Boston, MA 02114. E-mail: [email protected].

REFERENCES1. Ries LAG, Melbert D, Krapcho M, et al, eds. SEER Cancer Statistics Review, 1975-2005. Based on November 2007 SEER data submission. Bethesda, MD: National Cancer Institute; 2008. http://seer.cancer.gov/csr/1975_2005/. Ac-cessed July 7, 2008.

2. American Cancer Society. Cancer Facts & Figures—2008. Atlanta, GA: Ameri-can Cancer Society; 2008.

3. Albert VA, Koh HK, Geller AC, Miller DR, Prout MN, Lew RA. Years of potential life lost: another indicator of the impact of cutaneous malignant melanoma on society. J Am Acad Dermatol. 1990;23(2, pt 1):308-310.

4. Tsao H, Rogers GS, Sober AJ. An estimate of the annual direct cost of treating cutaneous melanoma. J Am Acad Dermatol. 1998;38(5, pt 1):669-680.

5. Seidler AM, Pennie ML, Veledar E, Culler SD, Chen SC. Economic burden of melanoma in the elderly population: population-based analysis of the Surveil-lance, Epidemiology, and End Results (SEER)—Medicare data. Arch Dermatol. 2010;146(3):249-256.

6. Alexandrescu DT. Melanoma costs: a dynamic model comparing estimated overall costs of various clinical stages. Dermatol Online J. 2009;15(11):1.

7. Houghton AN, Colt DG. National Comprehensive Cancer Network Clinical Prac-tice Guidelines in Oncology: Melanoma v.2.2008. Fort Washington, PA: National Comprehensive Cancer Network; 2008.

8. Balch CM, Buzaid AC, Soong SJ, et al. Final version of the American Joint Committee on Cancer staging system for cutaneous melanoma. J Clin Oncol. 2001;19(16):3635-3648.

9. Francken AB, Accortt NA, Shaw HM, et al. Prognosis and determinants of outcome following locoregional or distant recurrence in patients with cutaneous melanoma. Ann Surg Oncol. 2008;15(5):1476-1484.

10. Zalla JA. Coping with carriers from copays to collections and claims. AADA Course 104: Coding, Documentation, Practice Management. Presented at: 65th Annual Meeting of the American Academy of Dermatology; February 2, 2007; Washington, DC.

11. Centers for Medicare & Medicaid Services. Inpatient PPS PC Pricer 2008.5. https://www.cms.gov/PCPricer/03_inpatient.asp. Accessed July 7, 2008.

12. Thompson Healthcare. Red Book. Montvale, NJ: Thompson Healthcare; 2008.

13. Gencarelli DM. One Pill, Many Prices: Variation in Prescription Drug Prices in Selected Government Programs. NHPF Issue Brief. 2005;(807):1-20. http://www.nhpf.org/library/issue-briefs/IB807_DrugPricing_08-29-05.pdf. Published August 29, 2005. Accessed July 15, 2009.

14. Danzon PM, Wilensky GR, Means KE. Alternative strategies for Medicare payment of outpatient prescription drugs—Part B and beyond. Am J Manag Care. 2005;11(3):173-180.

15. Offi ce of the Inspector General (OIG), US Department of Health and Human Services. Medicaid Pharmacy—Additional Analyses of the Actual Acquisition Cost



of Prescription Drug Products (A-06-02-00041). http://www.oig.hhs.gov/oas/reports/ region6/60200041.pdf. Published September 16, 2002. Accessed July 20, 2009.

16. The National Cancer Institute. PDQ (Physician Data Query) [database]. http://www.cancer.gov/cancertopics/pdq. Accessed July 7, 2009.

17. Kanzler MH. An estimate of the annual direct cost of treating cutaneous melanoma. J Am Acad Dermatol. 1999;41(2, pt 1):281-283. Comment on: J Am Acad Dermatol. 1998;38(5, pt 1):669-680.

18. Witheiler DD, Cockerell CJ. Sensitivity of diagnosis of malignant melanoma: a clinicopathologic study with a critical assessment of biopsy techniques. Exp Dermatol. 1992;1(4):170-175.

19. Morton DL, Thompson JF, Cochran AJ, et al; MSLT Group. Sentinel-node biop-sy or nodal observation in melanoma. N Engl J Med. 2006;355(13):1307-1317. 20. Bedrosian I, Faries MB, Guerry D 4th, et al. Incidence of sentinel node metas-tasis in patients with thin primary melanoma (< or = 1 mm) with vertical growth phase. Ann Surg Oncol. 2000;7(4):262-267.

21. Kruper LL, Spitz FR, Czerniecki BJ, et al. Predicting sentinel node status in AJCC stage I/II primary cutaneous melanoma. Cancer. 2006;107(10):2436-2445.

22. Terhune MH, Swanson N, Johnson TM. Use of chest radiography in the initial evaluation of patients with localized melanoma. Arch Dermatol. 1998;134(5):569-572.

23. Weiss M, Loprinzi CL, Creagan ET, Dalton RJ, Novotny P, O’Fallon JR. Utility of follow-up tests for detecting recurrent disease in patients with malignant melanoma. JAMA. 1995;274(21):1703-1705.

24. Yancovitz M, Finelt N, Warycha MA, et al. Role of radiologic imaging at the time of initial diagnosis of stage T1b-T3b melanoma. Cancer. 2007;110(5):1107-1113.

25. Fader DJ, Wise CG, Normolle DP, Johnson TM. The multidisciplinary mela-noma clinic: a cost outcomes analysis of specialty care. J Am Acad Dermatol. 1998;38(5, pt 1):742-751.

26. Kirkwood JM, Ibrahim JG, Sondak VK, et al. High- and low-dose interferon alfa-2b in high-risk melanoma: fi rst analysis of intergroup trial E1690/S9111/C9190. J Clin Oncol. 2000;18(12):2444-2458.

27. Hamm C, Verma S, Petrella T, Bak K, Charette M; Melanoma Disease Site Group of Cancer Care Ontario’s Program in Evidence-based Care. Biochemo-therapy for the treatment of metastatic malignant melanoma: a systematic review. Cancer Treat Rev. 2008;34(2):145-156.

28. Caracò C, Marone U, Celentano E, Botti G, Mozzillo N. Impact of false-negative sentinel lymph node biopsy on survival in patients with cutaneous melanoma. Ann Surg Oncol. 2007;14(9):2662-2667.

29. Nashan D, Müller ML, Grabbe S, Wustlich S, Enk A. Systemic therapy of dis-seminated malignant melanoma: an evidence-based overview of the state-of-the-art in daily routine. J Eur Acad Dermatol Venereol. 2007;21(10):1305-1318.

30. Ransom JW, Rettig T. Specialty drug distribution: robust growth at attractive valuations. Raymond James and Associates, Inc. July 17, 2002. Internal Report.

31. Mekhail T, Wood L, Bukowski R. Interleukin-2 in cancer therapy: uses and optimum management of adverse effects. BioDrugs. 2000;14(5):299-318.

32. Essner R, Lee JH, Wanek LA, Itakura H, Morton DL. Contemporary surgical treatment of advanced-stage melanoma. Arch Surg. 2004;139(9):961-966.

33. Hanchate A, Kronman AC, Young-Xu Y, Ash AS, Emanuel E. Racial and ethnic differences in end-of-life costs: why do minorities cost more than whites? Arch Intern Med. 2009;169(5):493-501.

34. Bureau of Labor Statistics, US Department of Labor. Table containing history of CPI-U U.S. All items indexes and annual percent changes from 1913 to present. http://www.bls.gov/CPI/#tables. Accessed June 20, 2009.

35. Eagle KA, Garson AJ Jr, Beller GA, Sennett C. Closing the gap between science and practice: the need for professional leadership. Health Aff (Millwood). 2003;22(2):196-201.

36. Buzaid AC, Sandler AB, Mani S, et al. Role of computed tomography in the staging of primary melanoma. J Clin Oncol. 1993;11(4):638-643.

37. Vereecken P, Laporte M, Petein M, Steels E, Heenen M. Evaluation of extensive initial staging procedure in intermediate/high-risk melanoma patients. J Eur Acad Dermatol Venereol. 2005;19(1):66-73.

38. Clark PB, Soo V, Kraas J, Shen P, Levine EA. Futility of fl uorodeoxyglucose F 18 positron emission tomography in initial evaluation of patients with T2 to T4 melanoma. Arch Surg. 2006;141(3):284-288.

39. Wagner JD, Schauwecker D, Davidson D, et al. Ineffi cacy of F-18 fl uorodeoxy-D-glucose-positron emission tomography scans for initial evaluation in early-stage cutaneous melanoma. Cancer. 2005;104(3):570-579.

40. Moore P. How do your payers measure up? Physicians Practice website. http://www.physicianspractice.com/display/article/1462168/1586235. Published June 2006. Accessed July 20, 2009.

41. Adams B. Yervoy, Bristol Myers Squibb’s new treatment for advanced skin cancer has gained approval in the US. InPharm website. http://www.inpharm.com/news/152647/new-melanoma-drug-approved-fda. Published March 28, 2011. Accessed April 10, 2011.

42. Hellerman C. Skin cancer drug approved early. CNN Health website. http://thechart.blogs.cnn.com/2011/08/17/skin-cancer-drug-approved-early/?hpt=hp_t2. Published August 17, 2011. Accessed August 17, 2011.

43. Miller SC, Intrator O, Gozalo P, Roy J, Barber J, Mor V. Government expendi-tures at the end of life for short- and long-stay nursing home residents: differ-ences by hospice enrollment status. J Am Geriatr Soc. 2004;52(8):1284-1292.

44. Bee PE, Barnes P, Luker KA. A systematic review of informal caregivers’ needs in providing home-based end-of-life care to people with cancer. J Clin Nurs. 2009;18(10):1379-1393.

45. Yabroff KR, Lamont EB, Mariotto A, et al. Cost of care for elderly cancer patients in the United States. J Natl Cancer Inst. 2008;100(9):630-641.

46. McMasters KM, Ross MI, Reintgen DS, et al. Final results of the Sunbelt Melanoma Trial. J Clin Oncol. 2008;26(May 20 suppl):abstr 9003.

47. Barnett K. Cancer screening. Lecture given on July 15, 2009, at National Institutes in Health, Bethesda, MD. 2009. ResearchChannel archives. http://www.youtube.com/watch?v=O4XVEBn6BCU. Accessed May 2010.

48. Swerlick RA, Chen S. The melanoma epidemic: is increased surveillance the solution or the problem? Arch Dermatol. 1996;132(8):881-884.

49. Swerlick RA, Chen S. The melanoma epidemic: more apparent than real? Mayo Clinic Proc. 1997;72(6):559-564.

50. Downing A, Newton-Bishop JA, Forman D. Recent trends in cutaneous malig-nant melanoma in the Yorkshire region of England; incidence, mortality and sur-vival in relation to stage of disease, 1993-2003. Br J Cancer. 2006;95(1):91-95.

51. Haqq C, Nosrati M, Sudilovsky D, et al. The gene expression signatures of melanoma progression. Proc Natl Acad Sci U S A. 2005;102(17):6092-6097.

52. Reid RJ, Coleman K, Johnson EA, et al. The group health medical home at year two: cost savings, higher patient satisfaction, and less burnout for providers. Health Aff (Millwood). 2010;29(5):835-843.

53. American Cancer Society. Cancer Facts & Figures 2009. Atlanta, GA: Ameri-can Cancer Society; 2009.

54. Whellan DJ, Reed SD, Liao L, Gould SD, O’connor CM, Schulman KA. Financial implications of a model heart failure disease management program for providers, hospital, healthcare systems, and payer perspectives. Am J Cardiol. 2007;99(2):256-260.

malignant melanoma: the implications of cost for stakeholder …€¦ · node biopsy (slnb).19 use...

Documents