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

Practice Management News

Reducing Use of Low-Value Services Cuts Healthcare Costs

While stakeholders spent over $32.8 million on low-value services in 2013, promoting more appropriate resource use can help providers reduce healthcare costs.

By Jacqueline LaPointe

- Providers can substantially lower their healthcare costs by reducing the use of low-value services, even though these services account for a substantially small portion of healthcare spending, according to a recent study by the RAND Corporation and the University of South California.

Providers can cut healthcare costs by reducing the use of low-value medica services

Healthcare stakeholders spent approximately $32.8 million on 28 low-value medical services in 2013, representing 0.5 percent of total healthcare spending, researchers reported. Low-value services totaled more than $22 per person annually.

“Our findings add evidence to the notion that reducing overuse of medical procedures could improve quality while reducing spending,” said Rachel Reid, a physician scientist at RAND Corporation and lead author of the study.

“The services in this study reflect many clinical areas and types of care, but still are a small portion of all the low-value care patients receive,” Reid added. “The potential savings from reducing these low-value services and others are substantial.”

The healthcare industry spends over $750 billion each year on services and goods that are considered wasteful. A primary driver of wasteful healthcare spending is overtreatment, which accounts for nearly $200 billion annually.

READ MORE: Is Radiation Overuse Contributing to Higher Healthcare Costs?

Using insurance claims data for over 1.46 million adults enrolled in commercial payer plans, researchers set out to discover how providers can cut down on wasteful spending, especially on medical services that do not produce significant patient outcome and care quality improvements.

Researchers identified the top performed low-value services, including triiodothyronine measure in hypothyroidism with 1.5 percent of patients receiving it, imaging for non-specific back pain (1.3 percent), and imaging for non-complicated headaches (one percent).

Healthcare stakeholders spent the most on spinal injections for lower-back pain with $12.1 million, followed by $3.6 million on imaging for uncomplicated headaches and $3.1 million on imaging for non-specific low-back pain.

While most patients did not undergo many of the commonly performed low-value services, providers still have the opportunity to reduce healthcare costs by further limiting the use of certain services that cost the industry millions each year, stated the study. Only 7.8 percent of patients in the study received low-value medical services in 2013.

Providers can also strengthen cost-cutting strategies by identifying patients that are frequent utilizers of low-value services, researchers reported. The study found that patients who are male, older, black or Asian, lower-income, or enrolled in a Consumer-Directed Health Plan were less likely to incur low-value spending.

READ MORE: Healthcare Price Variation a Challenge for State, Local Leaders

Researchers also found that southern, middle Atlantic, and mountain regions maintained larger proportions of low-value healthcare spending.

“Disparities in healthcare cut two ways – it can cause poor access to high-value care among vulnerable patients and overuse of low-value care among more-advantaged groups,” said Neeraj Sood, a professor at the University of South Carolina Price School and Director of Research at the Leonard D. Schaeffer Center for Health Policy. “Both need attention.”

While the study primarily used private payer data, researchers argued that reducing overtreatment, particularly by limiting the use of low-value services, can also affect Medicare spending.

“Areas with high Medicare spending also seem to have greater use of low-value services among those with commercial insurance” Sood stated. “This confirms that there are opportunities for cost savings, and that both private insurers and Medicare can benefit from efforts to reduce use of low-value care.”

Earlier this month, the American Hospital Association released a guide on how providers can reduce the use of low-value services to cut healthcare costs and improve the quality of life for some patients.

READ MORE: Lean Primary Care Improves Physician Productivity, Costs

The industry group pinpointed several hospital-based procedures that providers should review and discuss with patients before performing, including blood management service in inpatient settings, antibiotic prescriptions, inpatient admissions for ambulatory-sensitive conditions (e.g. lower back pain and asthma), use of elective percutaneous coronary interventions, and ICU use for imminently terminal illness.

The AHA explained that reducing resource use of low-value services can help providers decrease healthcare costs, but it can also significantly improve quality of life. For example, some medical services have led to over-diagnosis and over-treatment, especially for cancer patients, which leads to longer, more aggressive treatments. Oftentimes the earlier diagnosis has not been proven to improve mortality rates.

Hospitals should implement patient engagement strategies that promote shared healthcare decision-making and offer providers educational resources on appropriate resource use, the industry group advised. Healthcare organizations can also lower healthcare costs by using quality measures to track overuse of non-beneficial services, distribute specialty society clinical practice guidelines, encourage the use of clinical decision aids, and provide channels of communication for patients and providers.

Monitoring and improving resource use will also be critical for earning value-based incentive payments under MACRA. The proposed Merit-Based Incentive Payment System (MIPS) includes a resource use category in which providers can earn points towards higher payment adjustments.

“As one of the more intense healthcare resource users, hospitals and health systems have a responsibility to encourage appropriate and consistent use of healthcare resources and give providers the tools to better communicate with patients about appropriate use of resources,” wrote the AHA.

Dig Deeper:

What is Healthcare Revenue Cycle Management?

Providers Save Healthcare Costs via Medication Adherence


Join 30,000 of your peers and get free access to all webcasts and exclusive content

Sign up for our free newsletter:

Our privacy policy

no, thanks

Continue to site...