Physician financial incentives stemming from a fee-for-service payment system may induce overtreatment. Such overtreatment negatively affects health-care quality and may be an important factor in the rising costs of health care (1–3). In 1963, Arrow (4) first detailed the conflict of interest and effect on health-care utilization that could arise when the physician acts as both the agent (patient adviser) and seller of health care.

Large variations in care utilization exist, but demarcating overtreatment or undertreatment is difficult because in many disease models the appropriate level of treatment is unclear or too complex to be presented in a simple model (5). However, in examples in which evidence-based guidelines exist for a therapy with high reimbursement, one may explore the hypothesis that financial incentives affect treatment utilization. In particular, overtreatment may occur when financial incentives induce physicians to expand the use of a therapy beyond the group in which it has proven benefit. In an effort to explore this hypothesis, we examined whether utilization rates of androgen suppression therapy (AST) for prostate cancer in both indicated and non-indicated cases changed coincident with a large rapid reduction in the reimbursement for this treatment.

AST, delivered as a depot injection of luteinizing hormone–releasing hormone, is indicated for management of prostate cancer in two clinical situations, as palliative therapy in metastatic prostate cancer (6) or in combination with external beam radiotherapy in the treatment of locally advanced prostate cancer (7), for which it has been shown to improve survival. Seventy percent of men with metastatic prostate cancer in the United States receive AST within 4 months of diagnosis (8). AST use is associated with multiple adverse effects (9–13), is costly, and has not been shown to improve survival or other patient-centered outcomes in men with low-risk cancer; thus, current guidelines recommend watchful waiting or local therapy such as radiotherapy or radical prostatectomy and not AST use in men with low-risk prostate cancer (14,15). AST given as the sole treatment in low-risk prostate cancer (commonly known as “primary AST”) is the most extreme example of non-indicated use.

AST use increased more than threefold between 1991 and 1999 across patient age, disease stage, and grade, irrespective of whether the treatment was considered clinically indicated or not (16). By 2001, Medicare expenditures for AST had increased to more than one billion dollars. Faced with rising costs of AST, the federal government reduced AST reimbursement by 64% between 2004 and 2005 as part of the 2003 Medicare Modernization Act (17). Rates of AST use dropped by 14% in 2005 (18). Because both indicated and non-indicated AST use had been high and reimbursement was reduced dramatically, this policy change served as an ideal natural experiment to test the effect of financial incentives on the provision of indicated vs non-indicated care. Because payment for other chemotherapeutic agents was also reduced under the Medicare Modernization Act, this investigation is highly relevant to the current health-care reform debate as it pertains to cancer care.

We investigated the effect of a large reduction in Medicare physician reimbursement in 2004–2005 on indicated vs non-indicated AST use as a model of the effects of financial incentives on overtreatment. We hypothesized that the payment change would not affect indicated AST use in metastatic disease, whereas non-indicated use (primary AST in low-risk disease) would decline following the reduction in physician reimbursement. To evaluate this hypothesis, we measured rates of AST utilization in men diagnosed with prostate cancer between 1992 and 2005, stratified by treatment indication.

Weight et al. (18) measured the total number of annual Medicare prescriptions for AST from 2001 to 2005 and found a 14% decline in 2005. Their study suggested several alternative explanations beyond financial incentives for an observed decline in Medicare prescriptions for AST. First, there may have been a shift in the presentation of prostate cancer toward lower risk disease. We controlled for such a shift through stratification by tumor characteristics and indications for AST use. Second, there may have been a trend toward using longer acting agents, leading to a reduction in the number of prescriptions per year. We controlled for the possibility of such a trend by operationalizing longer acting agents as several doses of a 1-month agent. Third, there may have been a shift toward intermittent AST, which is a strategy of delivering AST for a limited period, beginning only when the PSA starts to rise and typically ending several months later, after PSA levels fall (22). By limiting our investigation to the receipt of at least 3 months of AST in the first year, we minimized the possibility of this confounding. Specifically, among non-indicated AST prescriptions, receipt of 1–2 months of AST without receiving a third month was rare (<5% in 2000 and 2005). Last, Weight et al. (18) hypothesized that the decline in prescription rates might represent a decrease in the use of neoadjuvant AST. We controlled for such a decrease by limiting our non-indicated cases to primary AST monotherapy.

The growing body of evidence of harms attributable to AST may be argued to have resulted in the observed decline in AST use. However, post hoc analyses and administrative database studies documenting high-risk complications of AST such as osteoporotic fractures, metabolic syndrome, and cardiovascular morbidity were mostly published after 2005 (9,10,12). If physicians were increasingly aware of the unintended consequences of AST before the publication of these results, this could have accounted for the decline in AST utilization in 2004–2005. Similar analyses of trends in communities less prone to financial incentives such as the US Veterans Affairs or Canadian health system may shed light on this matter. However, trends in other disease models (ie, perioperative beta blockers) demonstrate that even evidence from randomized trials is slow to affect clinical practice (23). Thus, the observed pattern of declining AST use in 2004–2005 likely represents a real effect of reimbursement change and not physician awareness of clinical evidence.

We chose to explore AST utilization trends in the extremes of indication—definitely indicated and non-indicated—so as to more clearly explore the effect of payment change on these two groups. Thus, we did not investigate AST utilization trends in intermediate groups such as locally advanced prostate cancer, for which indications for AST utilization in combination with radiotherapy or surgery have changed over our period of investigation (24–27). Furthermore, we emphasize that this investigation does not suggest that financial incentives led to the increase in AST seen in the 1990s. Our analysis only allows us to conclude that the reduction in reimbursement is associated with a decline in use in 2004–2005.

The national SEER registry with Medicare follow-up represents a relevant and robust method for examining trends in cancer care. Claims-based research has been shown to reliably collect treatment information when the claim is associated with a physician payment, especially high-reimbursing procedures such as surgery or chemotherapy (28–30). However, this study has several limitations. We followed a cohort of Medicare patients; thus, findings may not be valid in younger men. The change in the way SEER classified Gleason scores into WHO grade categories introduced some uncertainty into our trend analysis. Using our primary definition of low-risk disease, men in 2003–2005 had lower grade disease than men before 2003. This shift in the tumor grade of our low-risk cohort led to a false peak in the proportion and the odds of receiving primary AST in 2003. However, there was no change in the definition after 2003; thus, it did not affect measurement of our primary outcome (2004–2005 vs 2003). In addition, whereas methods were designed to minimize bias, residual confounding may exist. Until 2004, SEER did not report the PSA value, only whether it was elevated or not. Thus, our risk stratification did not include an important variable. Moreover, because our analysis covered a long period there is a risk that grade migration may have had an impact on prescription rates. The trend has been to classify the same tumor as higher grade in recent years (31), which could lead to less AST used in low-grade tumors; however, such migration would be expected to have a gradual impact on AST utilization rates, not the sudden impact that we observed.

Medicare changed the profitability of AST delivery in several ways in 2004–2005. Reimbursement for the drug itself was changed from paying 95% of the average wholesale price through 2003 to 80%–85% of the average wholesale price in 2004 to 106% of the average sales price in 2005 ($190 per 1-month depot in 2005) (32). These changes in pricing accounted for the decreased reimbursement we explored in this study. In 2004, Medicare also stopped paying for the nursing visit (CPT code 99211) associated with chemotherapy administration and in 2005 lowered the reimbursement for intramuscular or subcutaneous drug injection (CPT code 96400) by about $30. Because these latter reductions were relatively minor and would have introduced additional variability into our model, we did not include them in our analysis. However, future analyses may inquire about how the structure and timing of office visits for drug delivery changed as a result of these other payment changes.

Although the decline in non-indicated AST prescriptions was associated with a coincident decrease in AST payment, the payment change did not affect indicated therapy. Whereas only about 60% of men with metastatic disease receive indicated AST, this frequency did not suffer when reimbursement declined. The lack of a negative impact on indicated therapy may reflect the possibility that Medicare has identified a reimbursement level that is not far below the provider’s true cost of administration or it may represent an ethical constraint on withholding unprofitable beneficial therapy.