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‘Low-Value’ Medical Lab Tests and Other Overused Medical Procedures Led to $282-Million in ‘Wasted’ Healthcare Spending in Washington State in One Year, Washington Health Alliance Reports

Just eleven common tests and procedures blamed for 93% of low-value services and 89% of wasted spending

Overuse of medical laboratory tests and diagnostic procedures has been a long-standing issue among pathologists and other healthcare providers. Now a Washington State healthcare watchdog organization has put a $282-million price tag on the cost of what it calls “wasteful” spending for “low-value” clinical laboratory tests and other procedures in a single year.

A study by the nonprofit Washington Health Alliance (WHA) examined insurance claims between July 2015 and June 2016 from 1.3 million patients who received one of 47 procedures or tests that had been previously labeled by the US Preventive Services Task Force and Choosing Wisely campaign as overused.

Many pathologists and clinical laboratory managers are familiar with the “Choosing Wisely” initiative. This is a collaboration involving most medical specialty associations. These associations are highlighting a list of medical lab tests and other diagnostic procedures that are ordered inappropriately and with greatest frequency. Thus, the WHA study—involving 1.3 million patients—provides more evidence and credibility in support of the “Choosing Wisely” campaign.

In its study, the WHA determined that, over this 12-month period:

  • More than 45% of the healthcare services examined were determined to be of low value because they have been shown to provide little benefit in certain clinical scenarios;
  • 622,341 (47.9%) patients underwent a low-value test or procedure they didn’t need;
  • 36% of spending went to low-value services, resulting in an estimated $282 million in wasteful spending; and,
  • Eleven common tests, procedures, and treatments—such as: preoperative tests, laboratory studies prior to surgery, and too frequent cancer screenings—account for 93% of low-value services and 89% of the estimated wasted spending.

The WHA found that problematic procedures and tests aren’t necessarily “big-ticket” services but collectively result in unnecessary costs.

“Many of the services are individually low cost, and, therefore, a doctor or patient may not consider it problematic,” Susie Dade, author of the WHA report and Deputy Director at the Washington Health Alliance, told The News Tribune.

“In the alliance’s analysis, we found that about 80% of the low-value services examined for this report are low cost (meaning less than about $500). However, we all pay the price with increased premiums and healthcare costs,” she noted. Precision medicine approaches to personalized healthcare reduces these costs and improves outcomes.

Opportunity for Education/Improvement

The report, “First, Do No Harm: Calculating Health Care Waste in Washington State,” used the new MedInsight Health Waste Calculator from actuarial consulting firm Milliman, to produce the analysis.

The report found the following 11 tests and procedures (listed in descending order based on volume) were the most overused low-value services:

  1. Too frequent cervical cancer screening in women;
  2. Preoperative baseline laboratory studies before low-risk surgery;
  3. Unnecessary imaging for eye disease;
  4. Annual EKGs or cardiac screening in low-risk, asymptomatic individuals;
  5. Prescribing antibiotics for acute upper respiratory and ear infections;
  6. PSA (prostate specific antigen) screening;
  7. Population-based screening for 25(OH)-D deficiency;
  8. Imaging for uncomplicated low back pain in the first six weeks;
  9. Preoperative EKG, chest x-ray, and pulmonary function testing prior to low-risk surgery;
  10. Cardiac stress testing; and,
  11. Imaging for uncomplicated headache.

Nancy Giunto (above left), Executive Director of the Washington Health Alliance, called her state’s results “stunning” and noted the WHA report provides “a clear opportunity to educate patients and engage healthcare stakeholders on areas of improvement.” Such an individualized approach to healthcare is at the heart of precision medicine. She’s shown above with previous WHA Executive Directors Mary McWilliams and Margaret Stanley. (Photo copyright: Washington Health Alliance.)

US Healthcare Culture Partly to Blame

“The list of 11 is a starting point for us,” Dade told Modern Healthcare. “I think they will become a rallying point for coming up with specific education and specific interventions.”

Dade suggests the healthcare culture in the US plays a role in the epidemic of unnecessary testing.

“In some cases patients ask for or agree to things because they don’t realize the potential for harm, be it physical, emotional, or financial, that can happen with unnecessary tests, procedures or medications,” Dade told The News Tribune. “In other cases, tests are ordered by providers, with little input or even awareness of the patient.

“In a ‘more is better’ culture in healthcare, there is a belief that it’s better to have additional tests because it’s better to be safe than sorry. However, this doesn’t account for the potential for different kinds of harm.”

  1. Gilbert Welch, MD, MPH, a professor at The Dartmouth Institute, told National Public Radio (NPR) part of the blame should be placed on a healthcare system that often incentivizes healthcare providers to do more than what is medically necessary.

“The medical system is still dominated by a payment system that pays providers for doing tests and procedures. Incentives matter. As long as people are paid more to do more they will tend to do too much,” Welch said.

Value-based Care the Solution to Overuse

The Washington Healthcare Alliance believes one key to eliminating overuse can be found in the transition from fee-for-service healthcare to value-based reimbursement models. The WHA report states: “We need to keep our collective ‘foot on the gas’ to transition from paying for volume to paying for value in healthcare.” In addition, the alliance suggests value-based provider contacts should include measures of overuse, and not just measures of access and underuse.

The report also suggests consumers take a more active role in their healthcare decision making by asking these five questions before having a medical test or procedure:

  1. Do I really need this test or procedure?
  2. What are the risks and side effects?
  3. Are there simpler, safer options?
  4. What happens if I don’t do anything?
  5. How much does it cost, and will my insurance pay for it?

Clinical laboratories and anatomic pathology groups can help put the brakes on unnecessary laboratory testing and procedures by guiding physicians toward evidence-based medical care and a renewed focus on “do no harm.”

“What we strive for is substantially reducing the risk of preventable harm,” the report states. “Reducing unnecessary overuse of healthcare services is one important way to do this. The result of the ‘more is always better’ culture present in today’s healthcare delivery seems to be ‘first, do something.’ It is time to get back to ‘first, do no harm.”

—Andrea Downing Peck

Related Information:

First, Do No Harm: Calculating Health Care Waste in Washington State

New Study Finds Hundreds of Thousands of Washington Patients Receive Unnecessary Tests, Procedures and Treatments

Washington Residents’ Tab for Unneeded Care in a Year: $280 million-plus

Unnecessary Medical Care: More Common than You Might Imagine

You’re Getting Nickel and Dimed for Low-Value Medical Tests in Washington, Report Says

Falling Inpatient Revenues at Many Hospitals Is Sign of Healthcare’s Transition to New Models of Integrated Clinical Care and Changes in Medical Laboratory Test Utilization

Statistics indicate that inpatient admissions and revenues are falling nationally, a development that affects clinical laboratories in hospitals and health systems

One important trend that directly impacts the medical laboratories of hospitals and health systems is the falling rate of inpatient registrations seen nationally in recent years. What exacerbates this trend is the fact that many payers are cutting the prices they pay for certain inpatient services.

Collectively, these two developments mean less inpatient revenue for many hospitals and that often translates into reduced budgets for the clinical laboratories.

But that is not the whole story concerning inpatient revenue. Spurred by the Affordable Care Act (ACA) and other market developments, payers now want to shift reimbursement away from fee-for-service to new models of reimbursement. This includes capitation or bundled payment models. (more…)

California’s New Health Insurance Exchange May be Unexpectedly Low, but Co-pays for Outpatient Services Are Relatively High

High Co-pays for Lab Tests May Create a Collection Nightmare for Clinical Laboratories
As new facts about the prices of premiums and the amount of patient co-pays for California’s health information exchange—called Covered California—are published, the news is not likely to be favorable for clinical laboratories and anatomic pathology groups in the Golden State.

Of particular note is that Covered California has published a requirement that patients will be charged a $35 co-pay for medical laboratory testing. Some lab industry executives have pointed out that it will be a challenge to collect these co-pays. They expect labs will incur higher costs attempting to collect these co-pays while at the same time seeing a substantial increase in levels of bad debt. However, all of this will not happen until 2014, when Covered California begins providing health insurance coverage.

For one category of insured beneficiaries, there is a bit of good news. Insurance exchange premiums for individuals not covered by employer health plans will be lower than previously expected. Covered California will charge, on average, $321 per month on average for the “Silver,” medium-tier plan, noted Peter V. Lee, Executive Director of Covered California, in a report published by the Wall Street Journal. (more…)