JOURNAL BRIEFS Urology Practice: Commercial Prices for Prostatectomy and Treatment among Younger, Privately Insured Men with Prostate Cancer
By: Lillian Y. Lai, MD, MS; Vahakn B. Shahinian, MD, MS; Brent K. Hollenbeck, MD, MS | Posted on: 01 Nov 2021
Lai LY, Kaufman SR, Oerline MK et al: Commercial prices for prostatectomy and treatment among younger, privately insured men with prostate cancer. Urol Pract 2021; 8: 611.
Given the multiple management options available and the different potential tradeoffs associated with each, management selection for patients with localized prostate cancer can be challenging. Patients often rely on the recommendation of their counseling urologists,1 who, in turn, weigh patient values with cancer severity, functional status, life expectancy and other factors to recommend a management option that best fits patient preferences. While guidelines and decision aids are available to support management selection,2 the best available evidence does not provide definitive answers as to when and how to treat prostate cancer. In such circumstances of uncertainty, nonclinical factors such as financial incentives may also influence practice patterns, as demonstrated in a variety of clinical contexts.3-5
Under a fee-for-service system, reimbursement can be optimized by increasing volume of services and/or by increasing price per service. Within the Medicare context where prices are set by regulators and fixed, compensation is primarily modulated as a function of the volume of services provided. In contrast, in the commercial context where prices are market-dependent and highly variable, urologists may additionally modulate their compensation by negotiating a higher amount paid per service. In this context, the wide-ranging degrees of financial incentives embedded in commercial prices offer a unique opportunity to understand the relationships between financial incentives and practice patterns.
To understand how urologists respond to financial incentives afforded through commercial prices, we performed a retrospective cohort study of the management of 38,863 privately insured men aged 64 years old or younger who were diagnosed with prostate cancer between 2010 and 2016.6 We examined the association between commercial prices for prostatectomy and the use of treatment of any kind within 12 months of diagnosis in this younger population. We also assessed the association between commercial prices for prostatectomy and, specifically, the use of prostatectomy among those who underwent treatment.
We found that the adjusted use of treatment of any kind decreased significantly from 87.1% to 71.1% over the study period (fig. 1), while prostatectomy remained the most common treatment modality among those who underwent treatment (fig. 2). We also observed that increasing commercial prices for prostatectomy were associated with decreasing use of treatment of any kind. For every $1,000 increase in market-level commercial prices for prostatectomy, the odds of undergoing treatment of any kind decreased by 7% (OR 0.93, 95% CI 0.89–0.97, p <0.01) after adjusting for patient sociodemographic, comorbidity and market characteristics. Among those who underwent treatment, the adjusted use of prostatectomy did not vary significantly with commercial prices (OR 0.99 for every $1,000 increase, 95% CI 0.89–1.10, p=0.85). In other words, urologists in higher paying markets did not increase their volume to realize higher profits.
This observation, when considered with prior literature demonstrating higher odds of utilization in the face of favorable reimbursements,5,7–9 suggests that financial incentives do not monolithically spur utilization. While somewhat counterintuitive, the decrease in volume associated with the increase in price we observed is consistent with the “target income hypothesis,”10 which posits that physicians alter their behavior to reach a desired income. Under this framework, the target income can be reached with a fewer number of services provided when prices are higher, such that utilization is reduced.
Our reassuring observations likely represent one facet of the complex interplay between financial incentives and utilization. It is possible that urologists are maximizing their income by increasing utilization of other services aside from prostatectomy. In addition, in this analysis of national commercial claims data, we were unable to account for nuanced patient-side factors such as cost-sharing. With increased awareness of financial toxicity associated with treatment of localized prostate cancer among urologists and patients, higher prices, which could translate into higher out-of-pocket costs, might have deterred patients from choosing treatment and, therefore, altered urologists’ response to price. Further, we recognize that there are different practice models and compensation structures within each market. However, despite the possibility of this heterogeneity obscuring the relationship between commercial prices and utilization, we found decreasing use of treatment with increasing prices. This lends credence to our findings suggesting that urologists, on average, were not motivated by higher prices to select treatment in the commercial context.
- Scherr KA, Fagerlin A, Hofer T et al: Physician recommendations trump patient preferences in prostate cancer treatment decisions. Med Decis Mak 2017; 37: 56.
- Lin GA, Aaronson DS, Knight SJ et al: Patient decision aids for prostate cancer treatment a systematic review of the literature. CA Cancer J Clin 2009; 59: 379.
- Gruber J and Owings M: Physician financial incentives and cesarean section delivery. RAND J Econ 1996; 27: 99.
- Clemens J and Gottlieb JD: Do physicians’ financial incentives affect medical treatment and patient health? Am Econ Rev 2014; 104: 1320.
- Hollenbeck BK, Kaufman SR, Yan P et al: Urologist practice affiliation and intensity-modulated radiation therapy for prostate cancer in the elderly. Eur Urol 2018; 73: 491.
- Lai LY, Kaufman SR, Oerline MK et al: Commercial prices for prostatectomy and treatment among younger, privately insured men with prostate cancer. Urol Pract 2021; 8: 611.
- Mitchell JM: Urologists’ use of intensity-modulated radiation therapy for prostate cancer. N Engl J Med 2013; 369: 1629.
- Mitchell JM: Urologists’ self-referral for pathology of biopsy specimens linked to increased use and lower prostate cancer detection. Health Aff 2012; 31: 741.
- Shahinian VB, Kuo Y-F and Gilbert SM: Reimbursement policy and androgen-deprivation therapy for prostate cancer. N Engl J Med 2011; 364: 579.
- Rizzo J and Blumenthal J: Is the target income hypothesis an economic heresy? Med Care Res Rev 1996; 53: 243.