Low-Value Services in Value-Based Insurance Design

Year in Research Nominee for 2010

This article examines the benefits and challenges of developing programs that impose disincentives for low-value medical services.

While a number of programs encourage consumption of high-benefit services through low out-of-pocket costs, little effort has been made to create programs that drive down consumption of low-value health services. In this article, the authors define low-value health services, identify the benefits of programs that deter use of low-value services, and discuss the challenges of implementing such programs.

To identify potential low-value medical treatments, the authors searched the Tufts Medical Center Cost-Effectiveness Analysis Registry, which is a database of 1,700 cost-effective analyses. They identified two types of medical services as low-value: those that caused more harm than benefit, and those that provided only marginal health benefits (defined as costing more than $100,000 per quality-adjusted life year.)

Key Findings:

  • Low-value medical services with high costs included several types of cancer treatments, positron emission tomography in Alzheimer’s disease, and lung volume reduction surgery.
  • Developing policies to discourage use of low-value medical services poses several analytical challenges, including how to determine which services are of lowest value and how to design plans to encourage targeted consumption where it would be of significant benefit.
  • The greatest political challenge to implementing policies addressing low-value medical services is a strong resistance to explicit rationing within the health system.

Low-value medical services contribute to sky-rocketing health care costs in the United States. While many programs currently encourage increased consumption of high-value medical services, few if any attempt to curb consumption of low-value medical services. Without such programs in place, it may be difficult to control the steady rise in national medical costs.