Background: Low-value care is a pervasive problem in the US, defined as the use of a health service for which the harms or costs outweigh the benefits. Low-value surgery may be less likely in systems that utilize salaried reimbursement as opposed to fee-for-service. The Military Health System (MHS) offers an appealing setting for investigating low-value care, given that it comprises both salaried (i.e., Direct Care: treatment delivered by military treatment facilities (MTFs) operated by the Department of Defense (DoD)) and fee-for-service (i.e., Private-Sector Care: treatment delivered through civilian facilities using the TRICARE insurance product). This study aimed to examine the influence of reimbursement models on low-value surgical care using a broad range of elective interventions performed among MHS beneficiaries in both sectors. We hypothesized that the prevalence of surgical low-value care would be lower in the direct care environment compared to the private sector. Methods: We used the MHS Data Repository (MDR) and performed a cohort study to compare low-value surgery over the 2016-2023 fiscal years. We identified patients aged 10 and older who underwent acromioplasty, partial meniscectomy, shoulder rotator cuff repair, wrist arthroscopy, or ankle arthroscopy. These surgeries are commonly performed in the MHS. The primary outcome was the comparison of low-value care in direct care to private sector care. An interaction between the environment of care and year of surgery was retained in all models. Multivariable logistic regression analyses were used to adjust for case-mix. Secondary analyses were limited to non-active duty individuals to account for differences in low-value care for each surgical procedure. Results: We included 304,908 procedures over the studied time period. Partial meniscectomy (42%) was the most common procedure, followed by acromioplasty (29%). The percentage of low-value surgery in direct care was 20%, compared to 35% in the private sector. After adjusting for case-mix, the private sector demonstrated significantly greater odds of low-value surgery overall (OR 1.41; 95% CI 1.38, 1.45). Low-value surgery was significantly lower in both sectors for 2020-2023 compared to 2016-2019 (Direct care: OR 0.78; 95% CI 0.73, 0.83; Private sector: OR 0.93; 95% CI 0.91, 0.96). When limiting to non-active duty personnel, low-value ankle arthroscopy (OR 0.60; 95% CI 0.46, 0.77; p<0.001) and low-value partial meniscectomy (OR 0.55; 95% CI 0.51, 0.59; p<0.001) were both significantly less likely in the private sector. Conclusions: In this cohort study of 304,908 surgical procedures, direct care demonstrated a significantly lower likelihood of low-value surgery in both 2016-2019 and 2020-2023 compared to private sector care. Improvements were seen with 22% lower odds of low-value care from 2016-2019 to 2020-2023 in direct care. In the same timeframe, there was only a 7% reduction in the odds of low-value care in the private sector. However, the provision of low-value care in direct care was not uniform across all procedures. We found that low-value partial meniscectomy and ankle arthroscopy were more likely in the direct care. Further research is warranted to explore factors that could explain the underlying etiology behind the provision of low-value procedures.