A $1,877 ear piercing, and other ways the health industry wastes money, according to ProPublica

An "epidemic" of unnecessary medical treatment, ranging from a $1,877 ear piercing to more than $2,000 in potentially needless testing for a benign cyst, is wasting billions in health care costs every year—and there's no easy fix to the problem, Marshall Allen writes for ProPublica/NPR's "Shots."

Learn more: How to reduce avoidable cost and utilization

Spotlight on costs

According to industry experts, the country's health care system "wastes $725 billion annually," Allen writes. Of that, a 2012 report from the National Academy of Medicine estimates about $210 billion is spent on unneeded or excessively costly treatment.

For instance, a woman whose daughter underwent a minor outpatient procedure on her tongue was charged an additional $1,877.86 for her daughter's ear piercings—an added procedure the surgeon offered to do and the woman believed to involve no additional costs. The woman, Margaret O'Neill, said she would have never agreed to the piercing had she known the cost.

According to O'Neill, her insurer refused to cover the cost, citing it as a cosmetic procedure, and the hospital for several months refused to rescind or lower the bill. Finally, after several phone calls and letters to the hospital from O'Neill and ProPublica, the hospital's self-pay manager in a letter said the charge—while "correctly documented, coded, charged, and billed"—would be removed "as a one-time courtesy adjustment."

In a separate incident, a Washington D.C. attorney, Christina Arenas, who had a history of noncancerous cysts in her breasts, was charged $2,361 for a series of potentially unnecessary mammograms, ultrasounds, and cyst-fluid testing. Arenas, who had to pay most of the costs herself because of her insurance coverage, appealed the charges to the group that provided her care, as well as to her insurance company and the Washington, D.C. attorney general's office—all of whom declined to help reduce the bill.

Since then, Arenas has had her cysts drained at her gynecologist's office—for about $350—or has self-drained them, a practice discouraged by medical professionals.

A larger trend

According to Allen, the two instances spotlight a broader epidemic of unnecessary care across the industry, particularly for mammogram services.

For instance, a 2015 study in Health Affairs estimated that the overdignosis and false-positive costs associated with breast cancer screenings total more than $4 billion per year. And while overtreatment seems largely fueled by worried patients and physicians wary of malpractice charges, industry stakeholders acknowledge that the services can be a "cash cow" for providers and hospitals, Allen writes. 

Vikas Saini—president of the Lown Institute, a think tank focused on making health care more affordable and effective—explained that throughout the health care industry, "providers are getting constant messages from superiors or partners to maximize revenue. In this system we have, that's not a crime. That's business as usual."

But another issue is simply variance in how doctors approach care, Allen reports. While multiple experts—including Barbara Levy, VP of health policy for the American College of Obstetricians and Gynecologists, and Jay Baker, chair of the American College of Radiology's breast imaging communications committee—agreed that Arenas had been overtreated, they differed in their opinions of how much.

For example, one provider said he likely would not have ordered a mammogram for Arenas after ultrasounds showed cysts, while Baker noted that Arenas' radiologist might have ordered a mammogram because he spotted something unusual about the cysts in the ultrasound imaging.

'The whole system is broken'

The system is also difficult for patients to navigate, Allen reports.

For example, Missy Conley and Jeanne Woodward—employees at Medliminal, a company that challenges incorrect and inflated medical charges on patients' behalf in exchange for a part of the recouped costs—pointed out that resolving billing disputes can take months, and patients frequently opt to pay the bill or let it go to a collection agency instead of continuing a challenge. "The whole system is broken," Conley said.

Saini added that patients often aren't able to act as informed consumers, given they don't have any control over the care they require and face challenges trying to compare costs. Moreover, when medical evidence indicates multiple care possibilities, patients are usually unable to distinguish between what procedures might be necessary and what might be unnecessary. And patients frequently don't have time to research all their options, Saini said. "It's sort of this perfect storm where no one is really evil but the net effect is predatory," he said.

Potential savings

While the problem of unnecessary care may be difficult to address, research suggests that the savings from solving it could be substantial, Allen writes, citing two studies conducted by Dong Chang, the director of the ICU at Harbor-UCLA Medical Center.

In one of the studies, published in JAMA Internal Medicine, Chang and colleagues researched the appropriateness of care delivered within his ICU and found that more than 50% of patients "were potentially either too well …  or too sick … to benefit from ICU care or could have received equivalent care in non-ICU settings."  The researchers concluded, "ICU care is inefficient, devoting substantial resources to patients less likely to benefit."

In the second study, Chang and colleagues assessed the use of intensive care at 94 hospitals in Maryland and Washington for four conditions that can result in a need for ICU care, such as diabetic ketoacidosis and pulmonary embolisms. They found a substantial variation in the proportion of patients whom the hospitals placed in intensive care: One hospital, for instance, put 16% of diabetic ketoacidosis patients in the ICU, while another put 81% of such patients in an ICU.

Ultimately, if all the hospitals studied had acted similarly to those with lower rates of intensive care, it would have saved about $137 million—savings that on a nationwide level could translate to billions in saved costs, Allen writes. And according to the study, ICU patients often received more invasive care without substantial differences in outcomes: Hospitals that used intensive care the most had no better survival rates than those who used it the least (Allen, "Shots," NPR/ProPublica, 11/28).  

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