Addressing barriers to value assessment for health services and procedures

The Inflation Reduction Act (IRA) requires CMS to determine a “lowest maximum fair price” for
certain drugs, and to consider data on costs and health benefits in its decision-making. The law
raises questions about whether similar opportunities exist to achieve savings elsewhere in the
health care system. Prior work suggests such opportunities, but the efforts have also identified
evidence gaps for non-drug interventions as a key barrier. This paper examines goals of the
Broader Value Initiative to help the field generate more and better evidence on the value of
health services and procedures.

Gaps and barriers in value assessment of services and procedures

Health services and procedures comprise the largest share of health spending, but account for
a relatively small share of formal value assessments. Among components of health care costs,
hospital services comprise the fastest growing and largest share (31% of overall health spending).
National spending on hospital services reached $1.3 trillion in 2020 and is expected to grow to
over $2 trillion by 2028. Roughly 44% of health spending in the private market goes to hospital
services. However, research has shown that only 12% of published cost-effectiveness analyses
(CEAs) have focused on care delivery interventions, and 26% on medical and surgical procedures,
compared to 43% for pharmaceuticals (which account for roughly 15% of health spending). A
2019 paper reported that the percent of CEAs focusing on pharmaceuticals at the end of 2017
exceeded the percent of national healthcare expenditure (NHE) devoted to drugs by a factor of
3.2 to 1.

To address the continued growth of health care costs, the field needs more focus on the value
of health services and procedures. Some progress has been made. For example, the Affordable
Care Act established the Patient-Centered Outcomes Research Institute (PCORI) with a
mandate to conduct research and evidence synthesis across the health system, including “health
care interventions, protocols for treatment, care management, and delivery, procedures, medical
devices, diagnostic tools, pharmaceuticals (including drugs and biologicals), integrative health
practices, and any other strategies or items being used in the treatment, management, and
diagnosis of, or prevention of illness or injury in, individuals.”

Some health technology assessment organizations such as Blue Cross Blue Shield Association’s
(BCBSA) Evidence Street (formerly Technology Evaluation Center (TEC)) have used a broad
scope in evaluating health interventions – for example, 216 of their 404 reports published
between January and November 2021 focused on procedures. However, as a subscriptiononly
database, the uptake and impact of their work is unclear and likely limited. Some private
organizations such as Arnold Ventures, the Commonwealth Fund, and the West Health
also have taken steps to focus more on system-wide costs.

Still, substantial gaps in evidence persist for non-drug services, and much of the media and public
policy debate remains focused on medicines. For example, the Institute for Clinical and Economic
(ICER), a nonprofit organization that conducts clinical and economic analyses of health
interventions, has primarily evaluated drug therapies. Between 2015 and 2022, 62 of ICER’s 70
evaluations (89%) have pertained to prescription drugs (2 of the 62 evaluations included both
drug and nondrug therapies). In 2019, ICER announced that it would bolster its efforts to review
nondrug interventions. However, between 2020 and 2022, only 2 of ICER’s 29 completed or
ongoing evaluations have done so.

One reason for the dearth of value assessment for health services and procedures is a lack of
suitable data
. Value assessment requires reliable data on an intervention’s effectiveness and
cost. Unlike the case for drugs, the Food and Drug Administration does not regulate services
and procedures, and thus reliable data on those interventions’ efficacy (e.g., from randomized
controlled clinical trials) are often unavailable.

Robust and generalizable cost data for services and procedures are also often harder to obtain,
reflecting a lack of transparency in the health care system. Although transparency legislation
has sought to address these concerns, hospital compliance is limited. Cost data on services
and procedures
, even when available, are often obtained from disparate administrative claims
databases or cost accounting systems, which may differ in structure and content. Research shows
that information on health services may not be well captured in administrative data, limiting
researchers’ ability to conduct economic evaluations. Moreover, there is often substantial price
for services and procedures. A 2020 report found that prices paid to hospitals by
commercial payers across the country averaged 250% of the amount Medicare pays, and were
as high as 325% in some states. A recent BlueCross BlueShield report found that prices for knee
replacement surgeries in Dallas ranged from $16,772 to $61,585.

Another barrier is a lack of incentives for researchers to conduct value assessments on health
services and procedures. While prescription drugs are protected by intellectual property (IP)
rights, they frequently have competitors during the time of IP protection, providing strong
incentives for manufacturers to demonstrate the product’s value. In contrast, services and
procedures are generally not IP protected, and often do not face the same competitive dynamics.
Although physicians and others may have their own incentives to demonstrate the value of
certain services and procedures
, they tend to be more limited.

The Broader Value Initiative

To further value assessments for health services and procedures, the Research Consortium
for Health Care Value Assessment
formed the Broader Value Initiative in 2022. The initiative
addresses gaps in evidence on the value of services and procedures to advance better value
across the health system.

The Broader Value Initiative is led by a steering committee co-chaired by Peter Neumann and
Dan Ollendorf from the Center for the Evaluation of Value and Risk in Health at Tufts Medical
Center. Steering committee members include Darius Lakdawalla (University Southern California),
Chris Whaley (RAND), Elisabeth Oehrlein (Applied Patient Experience, LLC), and Naomi Aronson
(Blue Cross Blue Shield Association). Steering committee members were selected based on their
expertise in health policy and health economics.

The initiative will offer guidance and best practices for conducting evaluations of services
and procedures, building on efforts of PCORI, BCBSA, and other organizations, such as the
Washington State Health Authority.

Key questions and considerations will include:

  • What policy changes such as public- and private-funded research or educational efforts will achieve greater balance?
  • What can be learned from a growing body of evidence on “low-value” services and procedures?
  • How can real world evidence be used to measure health effects and costs?
  • What sources of cost data can be used and what measures? What other data and methodological barriers exist?
  • What types of modeling approaches and issues that should be explored, such as formal cost-effectiveness analyses and other approaches?
  • What opportunities will come from the rapid growth in real-world data to capture information on costs and health outcomes for health services and procedures?
  • What lessons might be learned from CMS’s upcoming efforts to negotiate drug prices as well as prior demonstration projects focused on other areas of the health system?

To inform our efforts to prioritize a list of services and procedures for evaluation, we will build off
forthcoming Tufts Medical Center team’s research on the relationship between the proportion
of CEAs targeting services and procedures and the proportion of healthcare spending they represent.

The Broader Value Initiative will convene an Expert Panel on Health Care Value. This multistakeholder working group will assemble experts from a range of disciplines and perspectives
including patients, providers, payers, academics, and the pharmaceutical industry to recommend
concrete steps to improve our understanding of the value of health care interventions across the
system. An important component will involve developing and advancing a national agenda on the

In addition to developing and implementing the research agenda, the Broader Value Initiative
will work to raise awareness and build consensus on this topic. One of the key contributions will
be to suggest when and why different types of approaches may be more applicable to services.
For example, can cost minimization approaches be used for common procedures, such as knee
replacement surgery, and generally in situations in which there is a specific outcome?

As a next step, the Initiative’s Expert Panel will propose criteria for prioritizing services and
procedures for assessment and list approximately 25 services and procedures recommended for
initial value assessment research. The panel will also recommend best practices for conducting
value assessment of health services and procedures by addressing misunderstandings or barriers
in the use of data sources, methods, and measures. These and other products of the panel’s
efforts will be shared in future summary reports, conference presentations, webinars, and white


The availability of new data and methods to support value assessment allows for better
understanding the across the entire spectrum of health care. The Broader Value Initiative seeks
to advance value assessment by developing guidance on generating more and better evidence on
services and procedures. Our hope is that, the Initiative’s work will provide useful new tools and
resources for decision-makers and policy-makers across the health care system to improve health
care value and affordability for patients, consumers and society.