New number-crunching shows Medicare could save itself more than $2.5B a year by just saying ‘No’ to 5 low-value services

In recent years CMS has tried numerous strategies for reducing Medicare spending. None has proven an inarguable success at delivering significant cost savings while optimizing patient outcomes and minimizing clinical risks. 

Two researchers think they’ve found a way to balance all those aims: Clamp down on services deemed to be of “low value,” starting with those graded “D” by the U.S. Preventive Services Task Force (USPSTF). 

In fact, by refusing to pay for just a handful of such services widely regarded as frequent offenders, CMS could save around $2.6 billion a year—59% of the agency’s annual average spend on low-value care.

So report Health economist David Kim, PhD, of the University of Chicago and primary care physician A. Mark Fendrick, MD, of the University of Michigan in a paper posted Aug. 1 in JAMA Health Forum. 

The measure would be feasible by enforcing section 4105 of the Affordable Care Act, Kim and Fendrick note, as that section grants the secretary of Health and Human Services “the authority to provide no payment” for a preventive service that has not received a USPSTF grade of A, B, C or I. (The latter is used when the task force considers the evidence insufficient to gauge a given service’s benefits-to-harms ratio.)

The five services Kim and Fendrick identify as initial candidates for strategic slashing are:

1. Chronic obstructive pulmonary disease screening, 
2. Bacteriuria screening, 
3. PSA tests for prostate cancer screening, 
4. Screening for asymptomatic carotid artery stenosis, and 
5. Electrocardiogram for cardiac screening.

Stringent criteria, specific definitions 

The researchers arrived at their findings after reviewing a 5% random sample of Medicare fee-for-service claims filed between 2018 and 2020. 

In all, they analyzed 47 low-value services. They used eligible enrollees for each service as denominators and the number of patients who actually used the services as numerators. 

To avoid misclassifying clinically necessary services, Kim and Fendrick applied “stringent” eligibility criteria and used highly specific definitions of low-value care. 

“For example, prostate-specific antigen (PSA) screening for men 70 years and older was not considered low value for those with previously elevated PSA levels or a personal/family history of prostate cancer,” the authors explain. 

All confounders considered 

The researchers calculated potential annual savings using not only Medicare payments but also patients’ out-of-pocket expenses. 

To deduce potential nationwide impact, the extrapolated their findings to reflect real-world application of their formula across Medicare’s full population, which is now 65.7 million. 

“Based on claims of 3.7 million beneficiaries, Medicare annually spent $3.6 billion across 2.6 million cases of the 47 low-value services between 2018 and 2020, with an additional $800 million annually paid from out-of-pocket payments,” Kim and Fendrick report. “The top 20 services accounted for 95% of total annual spending ($4.2 billion of $4.4 billion).”

They found COPD screenings and bacteriuria tests, which are typically performed for possible urinary tract infections, to comprise the two most costly low-value services of all. 

Not far behind was imaging, most conspicuously for conditions like plantar fasciitis, headache, fainting and pain in the lower back. 

In coverage of the work by Michigan Medicine’s news operation, Kim stresses the importance of keeping in mind that “our findings don’t include spending on care that follows a low-value test, scan or procedure, which in the case of universal PSA screening has been estimated to be $6 for every $1 spend on screening.”

‘Very policy-relevant’ research 

Fendrick emphasizes that the study’s findings are based on clinical evidence. 

“This research is very policy-relevant as it takes a clinically driven, patient-focused approach to quantifying unnecessary medical spending,” says Fendrick, whose other roles at Michigan include professor of health management and policy as well as director of the Center for Value-Based Insurance Design. 

“This is much more nuanced than ‘blunt’ policies that reduce government spending on healthcare but could harm patients,” he adds.

JAMA Health Forum has posted the study report in full for free.