Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Practice Management News

Low-Cost, Low-Value Resource Use Drives $586M in Wasteful Spending

A study showed that unnecessary healthcare spending largely stems from frequent use of low-cost, low-value resource use, such as lab tests for low-risk surgery patients.

Low-value resource use and healthcare spending

Source: Thinkstock

By Jacqueline LaPointe

- Inexpensive low-value resource use resulted in over $586 million, or $9.09 per beneficiary per month, in unnecessary healthcare spending in Virginia, a new Health Affairs study showed.

The total amount spent on low-cost, low-value resource use equaled about 2.1 percent of the state’s healthcare costs, which totaled approximately $28 billion in 2014, researchers found using data from the Virginia All Payer Claims Database from that year.

The claims data revealed that providers in Virginia ordered 5.4 million of the 44 services considered low-value by the American Board of Internal Medicine Foundation’s Choosing Wisely campaign, US Preventive Services Task Force, Medicare’s Healthcare Effectiveness Data and Information Set (HEDIS) criteria, and other clinical guidelines.

About 1.7 million of the services delivered that fell into the 44 services were truly low-value, with 93 percent of low-value resource use involving inexpensive services between $100 and $538 per service and very-low-cost services that were less than $100.

Six of the ten low-value services that accounted for the greatest healthcare spending were either low-cost or very-low-cost. The services included:

• Baseline lab tests for low-risk patients undergoing low-risk surgery, which costs about $487 per service and totaled $227.8 million in unnecessary spending

• Annual electrocardiograms (EKGs) or other cardiac screening for low-risk, asymptomatic patients, which was priced at $298 per service and resulted in $41 million in wasteful spending

• Population-based screening for vitamin D deficiency, with a mean cost of $125 per service and reaching a total of $20.6 million in wasteful spending

• Prostate-specific antigen-based screening for prostate cancer in all men, regardless of age, which carried an average price of $144 per service and totaled $18.9 million in unnecessary costs

• Routine annual cervical cancer screening in women aged 21 to 65 years old, which was priced at about $91 per service and equaled $15.3 million in wasteful spending

Imaging for low-back pain within the first six weeks of symptom onset, in absence of red flags, costing an average of $330 per service and totaling $13.9 million in unnecessary costs

Conversely, only 7 percent of low-value resource use stemmed from high-cost services that were priced between $539 and $1,315 and very-high-cost, which cost over $1,315.

The only high-cost, low-value services that topped the list for greatest healthcare spending included stress cardiac or other cardiac imaging in low-risk, asymptomatic patients ($93.2 million in unnecessary spending), routine head computed tomography scans for emergency department visits with severe dizziness ($24.6 million), EKGs, chest x-rays, or pulmonary function tests in low-risk patients having low-risk surgery ($21.3 million), and routine imaging for uncomplicated acute rhinosinusitis ($17.1 million).

As a result, healthcare spending on low- and very-low-cost services was almost double the total spending on high- and very-high-cost services. Inexpensive low-value resource use accounted for about 65 percent of total spending in Virginia in 2014, whereas expensive low-value resource use represented just 35 percent.

With cheaper, low-value resource use fueling wasteful spending, researchers stated that stakeholders should shift their focus when it comes to programs that take low-value care into account.

“Instead of pursuing a politically charged strategy to reduce the use of high-profile and higher-cost low-value services, an alternative approach that initially targets the reduction of high-volume and less costly items might be a more strategic way to catalyze the movement to tackle the problem of low-value care,” they wrote.

While modifying physician workflows is a difficult task, researchers suggested that programs that intend to decrease the use of cheaper, low-value services may be more successful than those that target costlier services.

“A focus on reducing low- and very-low-cost services is likely to be less controversial than a policy that targets high- and very-high-cost services, because the former strategy would not present a financial threat to any particular clinical specialty or advocacy group, the study stated.

Smaller actions on the part of the clinician under initiatives that emphasize reductions in inexpensive, low-value resource use can have a substantial impact on decreasing unnecessary healthcare spending, researchers concluded.

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