Up to a fifth of the NHS's work does not benefit patients and could cause harm, the health minister has said.
In a speech Mark Drakeford called on the Welsh health service to adopt a policy of "prudent medicine" prioritising resources on proven care.
It could mean surgery like tonsil removal may not be offered if it was considered of little benefit and antibiotics prescriptions could be cut.
It has led to criticism that the policy could see health services rationed.
But one of Wales' most eminent doctors warned the NHS faced financial collapse unless changes were adopted.
In practice the changes could involve not offering patients surgery, for example to remove tonsils, if it was considered to be of little benefit.
It could mean limiting the amount of drugs used for chronic pain management and reducing the number of antibiotics prescribed by GPs.
The policy was announced during the health minister's speech to the NHS Confederation Conference, From Rhetoric to Reality - NHS Wales in 10 years' time, in Cardiff.
Mr Drakeford said the plan would lead to better care and help "get the maximum value for every pound you spend in the NHS".
"It means starting with the things that are the most basic, most proven and most likely to work. And you try those first. And if those things don't work then of course you move on," he said.
"What research studies show is that while the health service sets out to do good in people's lives it doesn't always succeed.
"So we know people come into hospitals and they acquire infections... we know over prescribing antibiotics in the long run does more harm than good.
"Studies show that almost 20% of what every modern health service does either does no good or does harm.
"Every health board has lists of procedures they don't normally offer because they're not effective... what I want to do is make that a national list so we do this on a concerted national basis."
But the policy has been attacked by the Welsh Conservatives' shadow health minister Darren Millar who suggests it amounts to rationing services at a time of dwindling resources.
"Patients should be entitled to timely treatment in accordance with their clinical needs and to suggest otherwise is very concerning," he said.
"Rationing services and forcing patients to wait longer for treatment to help health boards meet their financial targets cannot be the answer to increasing demand.
"Instead, the Welsh Labour government must reprioritise its budget and put a halt to the record-breaking budget cuts they are imposing on the health service."
But Professor Sir Mansel Aylward, a key health advisor to the Welsh government, speaking to BBC Wales, rejected those claims saying a policy of "prudent health care" will see money better spent.
"This is not a matter of money alone - it's about delivering quality and benefit to patients and getting rid of waste harm and variation," he said.
"Why should we spend perhaps 35% of the budget of NHS Wales on things that don't work.
"That's not rationing it's saying we're giving people the quality they expect.
"We're reducing the harm they face and we're showing we're doing this in as economic and efficient a way as possible.
"Why should we expose people to an operation or the complications of post-operative recovery when we know what's being done doesn't work."
Sir Mansel, who is also chair of Public Health Wales, also argues unless the changes can be implemented in the next two years, the Welsh NHS could find itself in a "bleak financial position".
He added: "I think the next two years are critically important but we will be managing.
"However after that it is bleak unless we do something that will make a difference [financially].
"If nothing is done within the next couple of years we will be at a place that is very near collapse."
Welsh Liberal Democrat leader Kirsty Williams said it had long been known that Wales spent more on healthcare per patient than other parts of the UK but with "worse outcomes".
"As a member of the health committee we have been told repeatedly by health officials at every level of the NHS that we are spending money on the wrong things," she said.
"I am pleased that the Welsh government has finally woken up to this fact.
"However, the devil will be in the detail and I will be looking at the proposals very closely to ensure that patients in Wales are not losing out as a result."
Mr Drakeford insisted he had not made any calculations about how much money could be saved if the policy was adopted.
He conceded the policy would involve putting an extra responsibility on individuals to take better care of themselves.
"Prudent medicine makes sure those with the most urgent needs get to the front of the queue and get seen first," he said.
"But prudent medicine definitely also means saying to the citizen as well as the service there are things you can do differently and we need to do differently if we are to go on having a health service in the future."