The cost of treating severe psoriasis has risen dramatically, and treatment options vary widely in terms of cost and efficacy. However, little information is available on the relative costs of home phototherapy and other long-term management options, specifically in the context of managed care. A payer-perspective cost model was developed to estimate and compare the direct expenditures associated with a 30-year course of various treatments for severe psoriasis. Within two years of treatment initiation, home-administered ultraviolet B phototherapy was less costly than any of the other treatments examined, including methotrexate, psoralen plus ultraviolet A, the retinoid acitretin, and new biologic agents. In addition, the efficacy and safety profile of home ultraviolet B phototherapy make it an excellent choice for extended management.