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DECEMBER 28, 2010

Preventive Services Without Cost Sharing

New private health plans must pay for screenings and other preventive services. Will the benefits outweigh the costs?

What's the issue?

The Affordable Care Act requires new private health insurance plans to fully cover the costs of 45 recommended preventive services as of September 23, 2010. This means patients pay no deductibles or copayments or otherwise share costs of these services. As of January 1, 2011, the health care law also requires coverage for a new annual wellness visit under Medicare and eliminates cost sharing for recommended preventive services covered by that federal program.

The law also gives state Medicaid programs financial incentives to cover preventive services for adults and supports initiatives to improve public understanding of the benefits of lifetime preventive services. This brief examines the importance of preventive services, the expansion of access to those services required by the new law, and the pros and cons of expanding access to screenings and other tests that might increase costs without necessarily improving health outcomes.

What's the background?

The term "prevention" encompasses a wide range of activities, from broad public anti-smoking campaigns to immunizing infants and children against infectious diseases. The term "preventive services" usually pertains to clinical services, such as those typically provided in a health care setting. "Primary" preventive services, such as vaccinations or prescribing medications to help people quit smoking, are aimed at preventing disease. "Secondary" preventive services are designed to catch disease early so it can be treated; an example is a mammogram. "Tertiary" prevention aims to slow progression of a disease once someone already has it, and to enable him or her to function as normally as possible; an example is lowering the "bad" cholesterol of someone who's already suffered a heart attack.

Benefits and Costs: Preventive services have the potential to help people live longer, avoid disease and disability, and be healthier and more productive. However, these improvements may have complex effects on costs. They can redistribute costs across the health care system and may particularly affect Medicare spending. Some preventive services, such as childhood immunizations, may reduce long-term health care spending. However, it is more likely that a preventive service may be considered "cost-effective" rather than cost-saving. "Cost-effective" means that the benefits of improved health outcomes outweigh the costs associated with preventive service and the long-term consequences of getting the service (such as radiation exposure from routine mammograms).

Determining which preventive services should be provided, when, how often, and to whom, can be complicated. In addition to having positive outcomes--for example, when a cancerous breast tumor is found early and treated effectively--preventive services can also have negative consequences, such as risks of excessive radiation from mammograms or computed tomography (CT) scans. Screenings may also be inaccurate, giving "false positives" (meaning that it appears as if disease is present when it really isn't) or "false negatives" (meaning that no disease appears present when in fact it is). False positives may lead to biopsies or other interventions that may be costly, inconvenient, or even harmful to patients.

Screenings may also identify cases in which disease is present, but would never progress to a level that requires treatment. A classic example is some forms of prostate cancer, which may progress very slowly. Yet individuals in whom such prostate cancer is identified may still undergo surgery or treatment that will have other side effects, even if the cancer itself might never have made them sick. In addition, preventive services themselves can be costly. Resources have to be spent to provide vaccinations or perform screenings on a broad population, even though many of those vaccinated and screened would never have contracted disease in the first place.

Complications and Controversies: The complicated relationship between the costs and benefits of prevention can sometimes lead to controversy. For example, in 2009 the United States Preventive Services Task Force (USPSTF) revised its breast cancer screening recommendations, increasing the age at which routine screening mammograms should begin from 40 to 50 and recommending screening every other year rather than every year. The task force said it worried about recommending routine screening without also making women aware of the harms, such as false positives, unnecessary biopsies, and "overdiagnosis" of cancers that would not otherwise have been identified. The new recommendations conflicted with recommendations by other groups, including the American Cancer Society. As a result, the revised USPSTF recommendations have not been widely adopted. The health reform law mandates coverage based on the recommendations in place before the November 2009 USPSTF revisions.

The mammography screening controversy also has highlighted several fundamental issues surrounding preventive services: Many preventive services have the potential for harm, and the risks and benefits of screening services can be difficult to assess, predict, and balance. Scientific evidence supporting use of services often has limitations. As the body of evidence grows, it must be reconciled with the practice of medicine in order to encourage doctors to consider and act on the latest science. Also, the evidence must be translated into terms that are understandable to the general public. The controversy also emphasizes the need to weigh the costs of screening people who are not sick with the gain from early diagnosis of individuals who could benefit from early treatment.

In the end, the net benefit of a preventive service is determined by evaluating the prevalence and severity of the disease being identified or prevented, the cost and accuracy of the intervention, and the risks associated with treating individuals falsely diagnosed with the condition or who would not otherwise receive treatment. This analysis may differ for different populations based on complicating factors or limitations in the evidence available. For example, the USPSTF has begun refining its approach to developing recommendations to better address the preventive needs of older people.

Making Recommendations: Recommendations issued by the USPSTF are considered to be the "gold standard" for this type of analysis. The USPSTF is a panel of primary care providers, most of them affiliated with major academic medical centers, who are experts in prevention and evidence-based medicine. The panel is convened by the Agency for Healthcare Research and Quality, which is part of the US Department of Health and Human Services (HHS).

When analyzing a particular preventive service, the USPSTF estimates the benefits and harms based on a review of the clinical evidence. It then makes a recommendation about use of the service. The results are shown as one of five letter grades: "A" or "B" means the service is recommended and that the benefit of it is moderate to substantial. A grade of "C" means that the task force recommends against routinely providing the service, although there may be a small benefit for an individual patient. A "D" grade also means the service is discouraged and that there is moderate or high certainty that the service has no net benefit, or that the harms outweigh the benefits. A grade of "I" indicates there is insufficient evidence to determine the balance of benefits and harms. Exhibit 1 shows USPSTF grade and practice recommendations.

Exhibit 1
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The USPSTF does not consider financial costs when making its determinations, but does summarize available information on costs and cost-effectiveness in its recommendation statements. Recommendations may be based on age, gender, and risk factors. For example, certain routine screenings may be recommended for people age 50 and over, but not necessarily for younger people.

The USPSTF has issued recommendations about preventive services for cancers, such as breast and colorectal cancers; heart disease, including cholesterol screening; diabetes; injury and violence; infectious disease; mental health and substance abuse; obstetric and gynecological conditions; vision and hearing disorders; and sexually transmitted diseases including HIV, syphilis, chlamydia, and gonorrhea. The USPSTF no longer makes recommendations about immunizations for adults and children, as those are now developed by the Advisory Committee on Immunization Practices, a panel of experts advising the Centers for Disease Control and Prevention.

Prevention and Health Insurance: Whether a particular individual receives a recommended preventive service often depends on whether the service is covered by health insurance, and how much the individual has to pay toward the service ("cost sharing"). Some states require that certain services be covered by private insurance policies, and may also require that the services be offered without any deductible or cost sharing. Most private plans cover some preventive services, such as childhood immunizations. However, prior to passage of the Affordable Care Act in 2010, there was no national requirement that private insurance plans cover a basic set of services.

Medicare, the federal health insurance plan for the aged and disabled, does cover a set of preventive benefits, including screening for colorectal, breast, and cervical cancers; bone mass measurement; and certain immunizations. The Centers for Medicare and Medicaid Services (CMS) also has the authority to expand Medicare coverage to services that are recommended by the USPSTF, and has used that process to provide coverage for HIV screening and for tobacco cessation counseling. Since 2005 Medicare also has covered a physical exam for new beneficiaries called the "Welcome to Medicare Physical."

What's In The Affordable Care Act?

The health reform law expands coverage of preventive services both within private health insurance plans and within Medicare and Medicaid. For private health plans, the new requirements are as follows (see Exhibit 2):

Exhibit 2
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• Effective September 23, 2010, new group and individual plans must cover services recommended by the USPSTF with a grade of A or B, immunizations recommended by the Advisory Committee on Immunization Practices, and other services for which there is strong supporting scientific evidence and which are recommended by HHS. This requirement does not apply to "grandfathered" health insurance plans (see the Health Policy Brief published October 29, 2010, for more information).

• New plans must cover the services listed above without applying deductibles or coinsurance for in-network services. However, they can apply cost sharing to out-of-network services. HHS expects that plans will pass along the cost of providing additional coverage of preventive services in the form of 1.5 percent higher premiums.

Medicare Requirements: Many recommended preventive services were already covered by Medicare without deductibles and coinsurance for various reasons--including because prior law eliminated cost sharing. But the Affordable Care Act expands Medicare coverage for preventive services considerably as of January 1, 2011. For example:

• The "Welcome to Medicare" physical will now be covered with no cost sharing for beneficiaries.

• An annual "wellness" visit will be covered for beneficiaries with no cost sharing. During the visit, a physician or health team supervised by a doctor will gather information on individual and family medical history; identify the beneficiary's providers and medications; obtain basic data on height, weight, waist circumference, and blood pressure; and establish a personalized screening schedule for the next 5 to 10 years.

• Certain services, such as depression screening and functional status screening, will also be covered by Medicare if they are provided in the initial wellness visit.

• A "health risk assessment" during the annual wellness visit will also be covered. The assessment is intended to identify chronic diseases, injury risks, modifiable risk factors, and urgent health needs of the individual. HHS is required to develop guidelines for such assessments by March 23, 2011, and to involve the public in the process.

• Preventive services given A or B recommendations by the USPSTF will be covered by Medicare with no cost sharing.

• Three vaccines will now be covered with no cost sharing: influenza vaccines, the pneumococcal vaccine, and hepatitis B vaccine.

Exceptions: The Affordable Care Act did not alter existing coverage and cost-sharing arrangements for certain specific services. For example:

• Screening services covered by Medicare but not recommended by the USPSTF--such as digital rectal exams for prostate cancer, glaucoma screening, diabetes self-management training services, and barium enema furnished as a colorectal cancer screening service--are still subject to the deductible and cost-sharing requirements.

• Vaccines other than those for influenza, pneumonia, and hepatitis B that are covered under a different part of Medicare, known as Part D (usually described as the Medicare prescription drug benefit), are still subject to the Part D deductible and cost sharing.

Finally, the Affordable Care Act also gave CMS authority to eliminate coverage or payment for preventive services that are not recommended by the USPSTF. CMS has chosen not to exercise this authority yet but may do so in the future.

Medicaid: Medicaid is the public health insurance program for low-income people that is jointly funded by the federal and state governments. State governments administer the program and determine which items and services are covered within a broad framework of mandatory and optional services. The federal government provides at least 50 percent of the funding for Medicaid and a higher percentage in poorer states.

States are already required to cover services for children that are considered optional for other populations, including screening and preventive services. Under the Affordable Care Act, and starting in 2013, Medicaid programs that cover optional diagnostic services for adults will also be required to cover preventive services and immunizations recommended by the USPSTF and the Advisory Committee on Immunization Practices. The federal government will pay an additional 1 percent of the cost of those recommended preventive services if they are provided with no cost sharing.

What's next?

Improved access and reduced cost sharing for preventive services under the Affordable Care Act are expected to increase the use of these services. Patients who formerly had been paying out of pocket for these services are likely to benefit. The impact of greater use of preventive services is expected to grow over time, as the number of private health insurance plans that are considered grandfathered (and not subject to the coverage requirements) decreases.

HHS is continuing to implement provisions related to the Medicare coverage for preventive services and will hold an open meeting in early 2011 to develop guidelines for the health risk assessment included in the annual wellness visit.


Bernstein, Jill, Deborah Chollet, and G. Gregory Peterson, "Issue Brief: Encouraging Appropriate Use of Preventive Health Services," Mathematica Policy Research, Number 2, May 2010.

Centers for Disease Control and Prevention, "Surveillance of Screening-Detected Cancers (Colon and Rectum, Breast, and Cervix)--United States, 2004-2006," MMWR 2010;59 (No. SS-9), November 26, 2010.

Cohen, Joshua T., and Peter J. Neumann, "The Cost Savings and Cost-Effectiveness of Clinical Preventive Care," The Robert Wood Johnson Foundation, Research Synthesis Report No. 18, September 2009.

Hillman, Bruce J., and Jeff Goldsmith, "Imaging: The Self-Referral Boom and the Ongoing Search for Effective Policies to Contain It," Health Affairs 29, no. 12 (2010): 2231-6.

Maciosek, Michael V., Ashley B. Coffield, Thomas J. Flottemesch, Nichol M. Edwards, and Leif I. Solberg, "Greater Use of Preventive Services in U.S. Health Care Could Save Lives at Little or No Cost," Health Affairs 29, no. 9 (2010): 1656-60.

US Department of Treasury, US Department of Labor, US Department of Health and Human Services, "Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Coverage of Preventive Services Under the Patient Protection and Affordable Care Act," Federal Register 75, no. 137 (July 19, 2010): 41726-60.

US Preventive Services Task Force, "USPSTF A and B Recommendations," August 2010.

About Health Policy Briefs

Written by:
Amanda Cassidy

Meitheal Health Policy
(Cassidy previously worked for the
Centers for Medicare and Medicaid
Services, in the Office of Legislation
and the Center for Medicare

Editorial review by
Ed Neuschler
Senior Program Officer
Institute for Health Policy Solutions

Mark V. Pauly
Department of Health Care Management
The Wharton School
University of Pennsylvania

Ted Agres
Senior Editor for Special Content
Health Affairs

Susan Dentzer
Health Affairs

Health Policy Briefs are produced under a partnership of Health Affairs and the Robert Wood Johnson Foundation.

Cite as:
"Health Policy Brief: Preventive Services Without Cost Sharing," Health Affairs, December 28, 2010.

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