Value-Based Insurance Design: A New Approach to Affordable Care

Value-Based Insurance Design is a game-changer for affordable care. It's a new approach that focuses on providing patients with the best possible care while also keeping costs under control.

Research has shown that Value-Based Insurance Design can reduce hospital readmissions by up to 20%. This is a significant improvement, especially for patients with chronic conditions.

By shifting the focus from traditional fee-for-service models, Value-Based Insurance Design can also reduce healthcare costs for patients. In fact, a study found that patients who received value-based care had 15% lower healthcare costs compared to those who received traditional care.

This approach also encourages patients to take a more active role in their healthcare, which can lead to better health outcomes.

Value-Based Insurance Design is a strategy that minimizes or eliminates out-of-pocket costs for high-value services in defined patient populations. High-value health care services are identified through evidence-based analysis, and the more clinically beneficial and cost-effective the service is for a patient group, the lower the out-of-pocket costs.

The American Academy of Family Physicians (AAFP) supports flexibility in the design and implementation of VBID programs. The AAFP has outlined 10 principles for VBID programs, which emphasize the importance of involving practicing physicians in the development of VBID programs.

Practicing physicians must be actively involved in the development of VBID programs, and VBID program design related to specific medical/surgical conditions must involve appropriate specialists. This ensures that VBID programs are tailored to the needs of specific patient populations.

High-quality, evidence-based data must be used to support the development of any targeted benefit design. Treatments or services for which there is insufficient or inconclusive evidence about their clinical value should not be included in VBID programs.

The methodology and criteria used to determine high- or low-value services or treatments must be transparent and easily accessible to physicians and patients. This allows for clear understanding of the incentives and disincentives built into the plan design.

Coverage and cost-sharing policies must be transparent and easily accessible to physicians and patients, with educational materials available to help patients and physicians understand the plan design. Plan designs that include higher cost-sharing or other disincentives to obtaining services designated as low-value must include an appeals process.

Physicians retain the ultimate responsibility for directing the care of their patients, and VBID should not restrict access to patient care. Designs can use incentives and disincentives to target specific services or treatments, but should not otherwise limit patient care choices.

VBID should encourage innovations in Medicare Advantage and Medicaid managed care plans, and should encourage patients to seek out and receive the care they need before ending up in the emergency room or hospital. This can help prevent unnecessary hospitalizations and improve patient outcomes.

The concept of Value-Based Insurance Design (VBID) has a fascinating history that spans over two decades. VBID was first introduced in 2004 by Dr. Alan Garber and Dr. Mark Fendrick at the University of Michigan.

The initial goal of VBID was to reduce healthcare costs by making high-value services more affordable for patients. This was achieved by lowering or eliminating copays and coinsurance for essential services, such as preventive care and chronic disease management.

The first VBID program was implemented at the University of Michigan's faculty and staff health plan, which led to a 16% reduction in healthcare spending. This success story caught the attention of policymakers and healthcare leaders, who began to explore the potential of VBID on a larger scale.

VBID has since evolved to incorporate new technologies and data analytics, allowing for more precise and personalized approaches to value-based care. This evolution has enabled VBID to be applied in various settings, including employer-sponsored health plans and Medicare Advantage programs.

Research has shown that cost sharing can significantly impact the use of high-value services. In 2001, a study published in the American Journal of Managed Care introduced a novel design for cost-sharing mechanisms that takes into account the potential clinical benefit of services.

Cost sharing can lead to underuse of essential services, especially those with strong evidence of clinical benefit. A review of published evidence found that charging patients more reduced the utilization of high-value services such as cancer screenings and drugs for chronic diseases.

Studies have demonstrated that reducing cost sharing can increase the use of high-value services. For example, a study on Pitney Bowes' program that eliminated copayments for statins found that adherence increased by 2.8 percent.

Computer simulations have also shown that reducing copayments for diabetes and hyperlipidemia treatments can save lives and money. A study on one large employer's V-BID initiative found that reducing copayments for five chronic medication classes increased adherence in four of the five classes.

Reducing cost sharing can also lead to better health care outcomes. A study on Blue Cross Blue Shield of North Carolina's efforts to eliminate or reduce copayments for medications found that adherence for enrollees with diabetes, hypertension, hyperlipidemia, and congestive heart failure increased between 1.5 and 3.8 percent.

The impact of cost sharing on health care utilization is complex and multifaceted. However, it is clear that cost is one of many factors that contribute to nonadherence to potentially life-saving interventions.

Pitney Bowes is often celebrated as one of the first companies to implement a Value-Based Insurance Design (V-BID) program, which provided co-pay relief for drugs to treat asthma and diabetes.

This program demonstrated that V-BID is feasible, acceptable to employees, and produces clinical and economic returns.

A 2008 survey reported that 12 percent of employers use some form of V-BID strategy.

By 2008, another survey reported that up to 30 percent of employers were using some form of V-BID strategy.

Employers like Aetna Insurance, the City of Asheville, North Carolina, Marriott International, the State of Maine, Well-Point Inc, United HealthCare, and the University of Michigan have also been early adopters of V-BID.

These pioneers have helped spread the use of V-BID among a diverse and growing number of entities.

Two large employers, Pitney Bowes and Blue Cross Blue Shield of North Carolina, have implemented V-BID programs that have shown significant increases in medication adherence.

Pitney Bowes' program, which eliminated copayments for statins, increased adherence by 2.8 percent.

Blue Cross Blue Shield of North Carolina's program, which eliminated or reduced copayments for medications, increased adherence for enrollees with diabetes, hypertension, hyperlipidemia, and congestive heart failure by 1.5 to 3.8 percent.

These results demonstrate the potential of V-BID to improve health outcomes and reduce costs.

Value-based insurance design has been incorporated into federal law through the Department of Health and Human Services, along with the Internal Revenue Service and the Department of Labor, which issued an interim final rule in July 2010.

This rule defined V-BID as including the provision of information and incentives for consumers that promote access to and use of higher value providers, treatments, and services. The Departments recognized the important role that value-based insurance design can play in promoting the use of appropriate preventive services.

The Affordable Care Act, also known as Obamacare, included V-BID principles in section 2713 (c), which requires all health plans to include certain preventive services without a copayment for the patient. Section 2713 (c) states that the Secretary of Health and Human Services issued guidelines for implementing health reform in September 2010.

In 2011, Connecticut implemented the Health Enhancement Program for state employees, which followed the principles of value-based insurance design by lowering patient costs for certain high-value primary and chronic disease preventive services. The program required enrollees to receive these services, and nonparticipants were assessed a premium surcharge.

Federal and State Policies play a crucial role in shaping the healthcare landscape. In July 2010, the Department of Health and Human Services, along with the Internal Revenue Service and the Department of Labor, issued an interim final rule (IFR) implementing the portion of PPACA that eliminates copayments for certain preventive services.

This regulation created the first definition of V-BID in federal law, defining it as the provision of information and incentives for consumers that promote access to and use of higher value providers, treatments, and services. The IFR stated that the Departments recognize the important role that value-based insurance design can play in promoting the use of appropriate preventive services.

In September 2010, these regulations went into effect for private plans, providing an opportunity to conduct rigorous evaluations of the clinical and economic implications of waiving cost sharing for high value preventive services.

In 2010, the Affordable Care Act (ACA) incorporated Value-Based Insurance Design (V-BID) principles into Section 2713 (c), requiring all health plans to include certain preventive services without a copayment for the patient.

The ACA's guidelines for implementing health reform, issued in September 2010, included guidelines for V-BID implementation, setting the stage for its inclusion in national health reform.

The Connecticut Health Enhancement Program, implemented in 2011, was a voluntary program for state employees that followed V-BID principles by lowering patient costs for high-value preventive services and requiring enrollees to receive these services.

This program led to increased utilization of recommended services, improved medication adherence, and decreased emergency room utilization in the first two years.

The acceptance of V-BID principles was fueled by the recognition that higher levels of cost sharing hindered the use of high-value services, and the implementation of V-BID demonstration projects allowed for the opportunity to prove this hypothesis.

Pitney Bowes, an early adopter of V-BID, provided co-pay relief for drugs to treat asthma and diabetes, demonstrating the feasibility and acceptability of V-BID to employees and producing clinical and economic returns.

The Department of Health and Human Services, along with the Internal Revenue Service and the Department of Labor, issued an interim final rule in July 2010 that implemented the portion of PPACA that eliminates copayments for certain preventive services, creating the first definition of V-BID in federal law.

This regulation went into effect for private plans in September 2010 and provided an opportunity to conduct rigorous evaluations of the clinical and economic implications of waiving cost sharing for high-value preventive services.

V-BID was explicitly mentioned in the HHS National Quality Strategy in March 2011, highlighting its importance in promoting the use of appropriate preventive services and addressing rising costs in the healthcare system.

The Connecticut Health Enhancement Program is a great example of value-based insurance design in action. It was implemented in 2011 for state employees and lowered patient costs for certain high-value primary and chronic disease preventive services.

The program required enrollees to receive these services, and nonparticipants were assessed a premium surcharge. This approach led to increased utilization of recommended services, improved medication adherence, and decreased emergency room utilization.

In fact, a 2016 evaluation found that these positive outcomes were achieved in the first two years of the program, relative to control populations in other states.

The Connecticut Health Enhancement Program was a voluntary program implemented in 2011 for state employees. It lowered patient costs for high-value preventive services and required participants to receive these services.

In the first two years of the program, utilization of recommended services increased. This was a significant improvement, especially considering the program's focus on evidence-based preventive care.

Nonparticipants in the program, including those removed for noncompliance, were assessed a premium surcharge. This financial incentive aimed to encourage participation and adherence to the program's requirements.

Medication adherence improved among participants, which is a crucial aspect of managing chronic diseases. This improvement was likely due to the program's emphasis on preventive care and its requirements for participants to receive recommended services.

In January 2008, Blue Cross Blue Shield of North Carolina instituted a value-based insurance design program for medications to treat diabetes, hypertension, hyperlipidemia, and congestive heart failure.

This program lowered copayments for brand-name medications for all of the insurer's enrollees, which is a significant reduction in out-of-pocket costs.

Generic copayments were waived only for employers that opted into the program, providing a clear incentive for participation.

Adherence to medication improved for enrollees, with gains ranging from 3.8 percentage points for patients with diabetes to 1.5 percentage points for those taking calcium-channel blockers.

Employers that opted into the program saw improved adherence among their employees, which is a valuable outcome for both the employer and the employee.

Value-based insurance design has shown promise in reducing healthcare costs and improving patient outcomes. By shifting the focus from volume-based care to value-based care, patients can receive more comprehensive and coordinated care.

The concept of "shared decision making" is a key component of value-based insurance design, where patients are empowered to make informed decisions about their care. This approach has been shown to improve patient satisfaction and health outcomes.

One example of a value-based insurance design program is the "Tiered Copayment Program" discussed in the article, which offers lower copays for patients who receive care from high-value providers. This approach has been successful in reducing healthcare costs and improving quality of care.

Value-based insurance design also relies on data analytics to identify areas for improvement and optimize care delivery. The article mentions the use of "predictive analytics" to identify patients at high risk of hospitalization, allowing for targeted interventions and improved outcomes.

By incorporating value-based insurance design principles, healthcare providers can create a more patient-centered and cost-effective care delivery system. This shift in focus has the potential to improve patient outcomes and reduce healthcare costs in the long term.