Medicare Wastes $4.4 Billion A Year On Low-Value Medical Services, Study Finds

ANN ARBOR, Mich. — American seniors are receiving billions of dollars’ worth of medical care that may not help them, and Medicare is footing most of the bill. A new study reveals that Medicare beneficiaries receive $4.4 billion annually in medical services that offer little to no clinical benefit, with $3.6 billion paid by Medicare and $800 million in out-of-pocket costs.

These so-called “low-value” tests, procedures, and screenings are commonly used despite evidence showing they provide minimal benefit and sometimes cause harm. Services like prostate cancer screening for elderly men, spinal injections for low back pain, and head scans for routine headaches are among those identified as overused.

Dr. David Kim from the University of Chicago and Dr. A. Mark Fendrick from the University of Michigan analyzed 47 medical services frequently labeled low-value. Their research, published in JAMA Health Forum, estimates how much money could be saved if such services were reduced or eliminated across the Medicare system.

The $4.4 billion estimate includes both what Medicare pays directly and what beneficiaries contribute in out-of-pocket payments. These services are classified as low-value based on national guidelines and expert consensus that they generally do not improve outcomes in the populations receiving them.

Which Medical Services Drive the Most Medicare Spending?

The study used Medicare claims data from 3.7 million beneficiaries between 2018 and 2020, representing a 5% sample of the national population aged 65 and older. The researchers applied strict criteria to avoid mislabeling necessary services as wasteful. For example, men with a history of elevated PSA levels or prostate cancer were excluded from the low-value prostate screening group.

Twenty of the 47 services accounted for 95% of all low-value spending. Among the most costly: screening for chronic obstructive pulmonary disease (COPD) in asymptomatic patients, testing for bacteria in urine without urinary symptoms, and use of feeding tubes in patients with advanced dementia. While the first two were specifically identified as “most costly,” the third was listed among the top 20, though its relative ranking was not specified in the text.

Five of the services studied, including PSA testing for prostate cancer, screening for asymptomatic carotid artery stenosis, and electrocardiograms for routine cardiac screening, received a “grade D” from the U.S. Preventive Services Task Force (USPSTF), meaning they are not recommended due to lack of benefit or potential for harm. These five services alone accounted for $2.6 billion of the $4.4 billion annual total.

Most Common Low-Value Medical Services

The study also looked at which unnecessary services are most frequently performed. Four of the top five were imaging procedures: for plantar fasciitis (heel pain), headaches, syncope (fainting), and low back pain. Although “imaging for plantar fasciitis” appears at the top of the prevalence chart, the paper does not explicitly say it was the most common overall. It is, however, among the most frequently used low-value services.

Other high-prevalence services included prostate-specific antigen (PSA) testing in older men and spinal injections for low back pain. The study does not specifically list all 20 services in the main text, but they appear in accompanying figures.

The authors recorded 2.6 million instances of low-value care each year in their 5% Medicare sample. When scaled to the national Medicare population of 65.7 million people, that suggests tens of millions of such services are delivered annually.

Hidden Costs of Unnecessary Medical Care

The $4.4 billion figure likely underestimates the true cost of low-value care. The study authors describe their estimate as conservative, since it does not include the cost of follow-up care often triggered by an unnecessary test or procedure, a phenomenon known as a “care cascade.”

For example, a previous study cited by the authors found that each dollar spent on low-value PSA screening resulted in an additional $6 in related downstream costs among Medicare Advantage enrollees. These costs stem from additional tests, appointments, and procedures, though the specific nature of the care cascade was not detailed in this new paper.

Beyond financial waste, patients may also face real harms from unnecessary services. These include exposure to radiation, complications from invasive procedures, and emotional stress from false positives. Some treatments, such as feeding tubes for dementia patients, may even lower quality of life without improving survival.

How to Save Billions and Improve Care

The Affordable Care Act grants the U.S. Health and Human Services Secretary the authority to stop Medicare payments for preventive services that receive a USPSTF grade D. By eliminating payments for just the five most expensive grade D services, the study estimates that Medicare could save $2.6 billion annually.

Other reforms could include adding prior authorization requirements for select services, modifying electronic health record order sets to remove low-value options, and increasing clinician education around evidence-based guidelines.

Still, eliminating low-value care entirely will be difficult. Providers may “game” the system by recoding services to bypass restrictions; for example, coding a head scan ordered for syncope as one for trauma. Some may substitute other unnecessary services. Patient expectations and fear of malpractice lawsuits can also drive overuse.

Nonetheless, the potential for savings is substantial. Reducing or eliminating services that don’t help patients could redirect funds toward those that do—while also protecting people from unnecessary interventions.

Disclaimer: This article summarizes a peer-reviewed study from JAMA Health Forum and reflects the authors’ analysis of Medicare claims data from 2018–2020. Some estimates are extrapolations and may not represent actual future savings. Interpretations of downstream effects and potential harm are based on referenced studies and expert consensus.