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Three unrecommended preventive services cost Medicare $325 million annually

by Robin Lasky, Contributing Reporter | May 13, 2021
Business Affairs Insurance

For the year 2020, total improper payments by Medicare are estimated to have exceeded $42 billion.

The issue of waste, and specifically payments for low-value medical services, is by no means limited to government provided healthcare programs. For instance, a 2020 survey similarly found that more than $5.5 billion is wasted annually by commercial insurance providers arising from payments for low-value services.

Roughly 25% of overall U.S. healthcare spending is wasted according to some estimates. Waste falls into a variety of categories within healthcare, and given how consolidated, interconnected, and complex the U.S. healthcare system is, attempts to ameliorate waste in one area may potentially produce more of it in another.

As to what the $478 million ultimately represents, in light of the uncertainty surrounding payment and Medicare reimbursement, the authors believe there is more work to be done.

“It is possible that Medicare or supplemental commercial insurers did not pay for a portion of these services, and that some may have led to higher out-of-pocket spending by the patient," said Oronce. "Our work should serve as an important starting point, but future studies should use alternate sources of data (such as claims data) to confirm our spending estimates.”

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