Medicare paid billions for services with little or no clinical benefit, and millions of seniors were exposed to care they likely did not need.
Story Snapshot
- Independent experts found $5.8 billion in low-value services in 2022 fee-for-service Medicare.
- About 36 percent of beneficiaries received at least one such service in 2022.
- Low-value care spans imaging, preoperative tests, and some screenings flagged by federal advisers.
- Advisers say the fee-for-service design rewards volume and fails to block waste.
What the Data Show About Wasteful Spending
The Medicare Payment Advisory Commission, which advises Congress, reports that traditional fee-for-service Medicare delivered between 34 and 71 low-value services per 100 beneficiaries in 2022. The commission estimates spending between $1.9 billion and $5.8 billion on these services, depending on how tightly measures are applied. The broader measure also shows about 36 percent of beneficiaries received at least one low-value service that year. These findings confirm a pattern that has appeared across multiple commission reports over the past decade.
Low-value care means a service that offers little or no clinical benefit, or a case where the risk of harm is greater than the likely benefit. The commission warns that this care not only wastes money, but can expose patients to injury, false alarms, and extra procedures they do not need. Examples often come from imaging, diagnostic and preventive testing, preoperative tests for low-risk surgeries, and some cardiovascular procedures. Federal health policy researchers group at least 31 hospital outpatient tests and procedures as warning signs for low-value care.
Why Medicare’s Design Keeps the Problem Alive
Commission analysts link the problem to how the program pays. In fee-for-service Medicare, a provider is paid for each item, test, or visit. That design gives broad access to doctors, but also rewards volume. Advisers say this encourages more billable services, including ones with limited value, and the current coverage process does not reliably prevent such use. Education campaigns alone have not solved it. Researchers found only small declines in low-value service use in earlier years, even with national outreach to doctors.
The commission and allied researchers have mapped tools that could trim waste without blocking needed care. Ideas include steering patients to proven high-value services with lower out-of-pocket costs, while keeping normal cost-sharing for services known to carry little benefit. Tighter prior authorization for selected tests, stronger clinical decision supports built into ordering systems, and clearer “do not cover” rules for certain scenarios could each help. Policymakers must balance patient access, clinician judgment, and program integrity as they weigh these steps.
What This Means for Patients and Taxpayers
Older adults feel the impact first. An unnecessary scan or lab test can start a chain of follow-ups that bring anxiety, side effects, and extra bills. Taxpayers foot the larger tab when the program pays for low-value care at scale. While the $5.8 billion estimate is a small slice of total Medicare spending, it still reflects real waste that could be redirected to medications, primary care, cancer treatments, or lower premiums and cost-sharing for seniors.
People across the political spectrum see a common thread: a system that too often pays for more, not better. Conservatives point to waste and misaligned incentives. Liberals point to inequities and the burden on patients with fewer resources. Both sides are right to ask why a program built to protect seniors still pays for care that experts say does not help them. The commission’s message is clear and practical: fix incentives, focus coverage on what works, and stop paying for what does not.
Sources:
medpac.gov, agingmedia.com, milbank.org, scribd.com
