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HomeHealthcareAddiction TreatmentTobacco cessation as a profit center

Tobacco cessation as a profit center

By Edward Anselm, Medical Director | Public Health Advocate, Icahn School of Medicine at Mount Sinai

Smoking cessation is among the most cost-effective clinical preventive services1 and is considered to be “the gold standard of healthcare cost effectiveness”2. So why are most health insurers, ACOs, medical groups, and doctors performing so poorly? Yes, the prevalence of cigarette smoking has declined to new lows, but overall tobacco use continues at approximately the same level of 48 million adults3. Younger smokers have adopted vaping or oral pouches while the prevalence of smoking among people over 65 has remained constant for the last eleven years4. Older smokers have accumulated more tobacco-related morbidity and are likely to generate greater expected medical expense5.

Although the majority of people who use tobacco recall being advised to quit by their doctors6, only 38% of those who attempted to quit smoking receive effective treatment, with 36.3% receiving medication, 7.3% receiving counselling, and 6.4% received optimal treatment with  both counseling and medication7. This undertreatment may explain the high relapse rate of people making those attempts8. The barriers to implementing evidence-based tobacco cessation interventions have been studied and consistently point to lack or training, lack of support, low confidence in the success of the intervention, and low reimbursement8-10. Although there have been many papers exploring how to overcome these barriers11-14, there has been little discussion of the economics of tobacco cessation from the perspective of health care systems, ACOs, and medical practices.

Fee for service revenue enhancement. For many practice settings fee-for-service models still drive margins, and the reimbursement appears low relative to the effort required15. Several recent reports suggest that academic medical centers are not billing for tobacco treatment even when services are being provided16,17, and that the aggregate value of cessation services if provided at every visit would be substantial17,18. For example, EMR data from WellSpan Health, a system in Pennsylvania and Maryland, showed that if every eligible tobacco cessation encounter were billed, the three-year reimbursement potential would total $5.9 million. A simple XL spreadsheet that incorporates local smoking prevalence, reimbursement rates, and patient volume can be used to model costs for any fee for service practice is available here.

Most EMRs under-report the prevalence of tobacco use which exceeds 19% of the adult population3. The U.S. Public Health Service Guidelines recommend interventions for every tobacco user at every visit, regardless of their readiness to quit. Repeated follow-up sessions further increase effectiveness of the cessation counselling19. CMS (Centers for Medicare & Medicaid Services) guidelines, adopted by most payors, allow for up to eight cessation counseling sessions per patient, per year20 CMS also allows tobacco cessation counseling to be delivered by auxiliary staff and billed by the supervising practitioner when delivered by auxiliary staff and billed by the supervising practitioner when delivered “incident to” an office visit21.

Getting value from value-based contracts. The impact of tobacco cessation for value-based contracts may be even greater as it is one of the few preventive services that is both cost-effective and produces a direct return on investment 2,22. A 2024 Wisconsin study showed that a systems change approach to smoking cessation, including the hire of tobacco treatment specialists, showed that patients in a smoking cessation registry had an net reduction of $35 in monthly health care costs23 for patients listed in a smoking registry. It is not difficult to calculate the total PMPM impact by dividing that value by the prevalence of smoking. If the prevalence of smoking is the same as the national prevalence the effect of the program would be $3.50 PMPM (per member per month). Additional savings are likely in subsequent years24. A close review of the economic evaluation included the cost of medication, which is carved out of most managed care contract. Even if included, the cost of medication is substantially lower now that the most commonly prescribed medication, varenicline, is available in generic form. The cost drops from $300 per month to $27. Placement of tobacco treatment specialists in the practice setting is not the only systems change possible. The Smokefree Support Study program demonstrated the cost effectiveness of providing intensive tobacco treatment for patients with cancer telephonically25. Other options include engaging all of the staff in the practice to provide counselling support26 or simply requiring the physicians and mid-level practitioners spend more time with each patient who uses tobacco.

Calculating the cost. While developing the cost-effectiveness analysis of smoking cessation with cancer25, the researchers published a tool that could be used to calculate program costs for a variety of intervention designs27. The Cost Calculator Smokefree Support Study Cost Calculator can be adapted to a variety of models. In most practice settings the pharmacy costs are carved out so remember to zero out the cost of prescription medication. If prescription costs are included, be sure to adjust the cost of varenicline to the generic cost.

Putting it all together. Although calculation of the economic returns can be straightforward, estimating the return on investment requires a more complete evaluation of the current tobacco treatment model.  Any program selected should be rooted in a strong systems change protocol which requires support of clinical leadership, identification of champions, and many other elements outlined in CDC’s Tobacco Cessation Change Package.

The economic value of tobacco cessation can be captured with maximal efforts to support tobacco treatment. These interventions are cost-effective and produce measurable returns on investment. This intensification of tobacco treatment functions in fee for service, value-based and mixed environments. Additional insights and resources are available at Tobacco Treatment as a Profit Center — Edward Anselm, MD

Edward Anselm, MD

Clinical Assistant Professor of Medicine, Icahn School of Medicine at Mount Sinai
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