What’s Contributing to Unnecessary Health Spending?

reducing low-value care

Reducing low-value care—health care that is cost-inefficient and clinically ineffective—remains a front burner issue for health care stakeholders. It hasn’t been easy to root out or measure low-value care, partly because it depends on clinical nuance – what is unnecessary for one patient might be a very necessary, or high-value treatment, for another patient.

A new study published in Health Affairs sheds some light on how much is spent on low-value care, specifically in the Commonwealth of Virginia. An analysis of the Virginia All-Payer Claims Database revealed more than $586 million in unnecessary costs associated with 44 types of low-value care that included labs, medications, imaging exams, diagnostic procedures and other treatments. According to the study, “among these low-value services, those that were low and very low cost ($538 or less per service) were delivered far more frequently than services that were high and very high cost ($539 or more). The combined costs of the former group were nearly twice those of the latter (65 percent versus 35 percent).”

Although low-value care accounted for 2.1 percent of Virginia’s total health care costs, which are about $28 billion, “demonstrating the relative and excessive use and costs of low-value services is particularly salient because these findings should indicate a pragmatic path to begin their reduction.”

Nationwide, the Institute of Medicine has estimated that low-value care could account for roughly 30 percent of health care spending. Collaborations among national medical specialty societies as well as organizations representing other members of the clinical care team, like the Choosing Wisely initiative, have taken initial steps to reduce that percentage by focusing on areas where there is general agreement about what care is considered low value.

So far, identifying wasteful or unnecessary medical tests, treatments and procedures has allowed physicians to make better decisions about a patient’s care plan based on their unique situation and contributed to a reduction in the cost of care. Yet health care stakeholders recognize that there is more work to be done to identify waste and educate physicians and patients about low-value care.

Last year, researchers from the Altarum Institute, the National Pharmaceutical Council and the Center for Value-Based Insurance Design at the University of Michigan (VBID Center) identified three areas of consensus to begin further efforts to reduce low-value care and improve quality and lower costs. These areas include working to reduce medical errors, providing reliable pricing and quality information about treatments and addressing overuse and overtreatment. More recently, the Task Force on Low-Value Care, led by the VBID Center, identified five services, such as Vitamin D screening, that together account for more than $25 billion in avoidable annual expenditures. All of these efforts to identify and reduce low-value are expected to continue in earnest in the near term. 

For now, as the Health Affairs study suggests, “decreasing wasteful health spending will reduce patient harm and improve the efficiency of delivery by shifting care away from low-value circumstances to clinical scenarios that improve patient-centered outcomes…. (even) minor actions by all clinicians can have a sizable impact on reducing health care spending.”