Fee-for-Service Models Linked to Higher Odds of Low-Value Surgical Procedures

Health care systems and patients may benefit from shifting from fee-for-service (FFS) reimbursement models to salaried payment structures, according to a new study published in JAMA Network Open.¹

The findings align with prior research demonstrating that low-value care is less common in larger, integrated health systems. Low-value care often results from varying physician and patient beliefs, lack of ideal clinical approaches, or strong patient preferences. These factors may lead physicians to recommend surgical interventions that offer limited benefit based on a patient’s current clinical state. Unnecessary procedures increase costs and pose risks of complications or adverse events—issues that tend to be more pronounced in FFS environments.¹

Although many physicians paid under FFS models—such as those reimbursed by CMS—participate in value-based care initiatives, incentives can vary. Programs such as the Hospital Readmissions Reduction Program penalize excessive 30-day readmissions for conditions like heart failure or pneumonia, encouraging hospitals and clinicians to critically evaluate treatment pathways.²˒³ However, these programs overlay, rather than replace, the core FFS structure.

The study analyzed TRICARE health care claims within the US Military Health System (MHS) from 2016 to 2023. A total of 304,908 surgical procedures were initially identified; the most common was partial meniscectomy (42%), followed by acromioplasty (29%).¹ Additional procedures included rotator cuff repair and wrist or ankle arthroscopy. Well-defined literature was used to identify the selected procedures as frequent markers of low-value surgical care.

Patients 10 years and older who underwent outpatient surgery were included. Those with diagnoses of infection, tumor, or trauma at the time of surgery were excluded. The mean patient age was 47.2 years, and 189,648 (62%) were male patients. Of them, 12% identified as Black, 57% as White, and 8% as other race.

Overall, 98,150 procedures (32%) met criteria for low-value care. Among these, 54,553 (56%) occurred between 2016 and 2019 compared with 43,597 between 2020 and 2023, demonstrating a steady decline in low-value surgical intervention over time.

The final analytic cohort included 233,133 procedures with complete data for regression analyses. Procedures performed in private-sector care (FFS) had significantly higher odds of meeting low-value criteria (OR, 1.41; 95% CI, 1.38-1.45; P < .001).¹

The odds of low-value care were higher between 2016 and 2019 than between 2020 and 2023 across both care sectors (direct care: OR, 0.78; 95% CI, 0.73-0.83; P < .001; private sector: OR, 0.93; 95% CI, 0.91-0.96; P < .001). Furthermore, outpatient procedures performed in the private sector consistently demonstrated higher odds of low-value care compared with direct care in both time periods.

The study had several limitations, including an inability to identify the causal factors driving differences in low-value surgical care across environments. Also, the second analysis excluded active-duty service members, which limits generalizability. Additionally, researchers could not evaluate nonpayment-related factors—such as surgical practice culture, access to specialists, or evolving clinical guidelines—that may also influence low-value care rates.

“Changing the reimbursement model from FFS to salaried may be associated with as much as a 41% change in the odds of low-value surgical intervention,” the authors concluded.¹

References
1. Schoenfeld AJ, Holly KE, Cirillo MN, et al. Surgical Low-Value Care Between Fee-For-Service and Salaried Health Care Systems. JAMA Netw Open. 2025;8(12):e2546213. doi:10.1001/jamanetworkopen.2025.46213
2. McCrear S. Timely outpatient follow-up reduces hospital readmissions. AJMC^®. November 4, 2025. Accessed December 2, 2025. https://www.ajmc.com/view/timely-outpatient-follow-up-reduces-hospital-readmissions
3. Hospital readmissions reduction program. CMS.gov. August 11, 2025. Accessed December 2, 2025. https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/hospital-readmissions-reduction-program-hrrp