What Contributes to Low-value Health Care Spending

By October 17, 2017 Commentary

While there can be arguments about how much unnecessary health spending there is in the US, there undoubtedly is some.  A study published in Health Affairs attempts to ascertain what makes up unnecessary spending.   (HA Article)   The researchers used 2014 data from the Virginia all-payer claims database, which covered about 5.5 million people.  Of course, one of the tricky parts of any such analysis is defining a low-value service.  The authors used 44 specific treatments which prior research had designated as basically unnecessary, including those designated by the Choosing Wisely campaign, by the US Preventive Services Task Force and by other clinical guideline groups.  These services are rarely low-value for all patients, so algorithms have to be applied to determine whether their use in a  particular situation was actually inappropriate.  The top ten most costly, low-value services were, in order, lab tests for low-risk patients undergoing low-risk surgeries ($228 million); cardiac imaging in low-risk patients ($93 million); annual EKGs or other cardiac screening ($41 million); head CT for ER visits ($25 million); non-lab tests for low-risk patients doing low-risk surgery ($21 million); Vitamin D screening ($21 million); PSA screening for all men ($19 million); imaging for sinusitis ($17 million); routine cervical cancer screening ($15 million); and imaging for low-back pain ($14 million).  You will notice that you pretty quickly get down to pretty low amounts of money, even among the top ten.  And you will notice that many of these likely are driven by malpractice fears. (And why didn’t you, doctor, do that simple lab test before this poor injured plaintiff had the surgery.)

The 44 often low-value services were delivered into quartiles by cost; the first quartile typically had a cost under $100, the second a cost from $100 to $538, the third from $538 to $1315 and the fourth about $1315.  Altogether the population received 5.4 million potentially low-value services, of which the algorithm (with the benefit of hindsight) determined that 1.7 million were in fact low-value.  20% of beneficiaries received at least one low-value service during the year.   93% of these actual low-value services were also low-cost.  Although only 7% were high cost, they represented 35% of total unnecessary spending.  Might be easiest to focus on those, since there are far fewer of them.  The total of unnecessary spending, just on these designated services, was $586 million for the year, or a puny 2.1% of Virginia’s total health spending of $28 billion in that year.  Obviously it is an important task to identify ways to get doctors to stop ordering low-value care, but you can see from this analysis that doing so would have only a modest effect on total spending.  And it is even more important, in my judgment, to ensure that patients get all the diagnostics and treatment that they do need, and I am pretty sure that the costs of that at least equal the amount mis-spent on low-value care.  So this isn’t the solution to our spending problem.  As I keep saying, that is all about unit price, unit price, unit price.

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