Value-based Insurance Design – The next steps

June 1, 2017 / By Steve Delaronde

Value-based Insurance Design (VBID) is an approach used by healthcare payers to promote a patient’s use of high-value services. Conversely, it can also be used to discourage the use of low-value services. Over the past 20 years, most VBID programs have been limited to reducing copayments for medications that are considered beneficial to treat specific chronic diseases, such as asthma, cardiovascular disease and diabetes, with the goal of improving outcomes and reducing costs. While this approach has often demonstrated cost savings, widespread adoption has not occurred. This may be about to change with the advent of pilot VBID programs in 2017 for two major government plans – Medicare Advantage and TRICARE.

VBID began with the Asheville Project in 1997 when the city of Asheville, North Carolina waived member copays on diabetic drugs and supplies for city employees with diabetes in exchange for attending educational and counseling sessions delivered by pharmacists.  A 5-year follow up study demonstrated better outcomes, such as lower HbA1c levels, as well as lower costs for persons enrolled in the program compared to those not enrolled, particularly for higher-risk patients.  It was not possible, however, to determine if cost savings was primarily due to medication cost reductions, increased patient engagement in managing their condition, or both.

Reducing barriers to high-value medications for those who could not otherwise afford them may not be enough to sustain outcomes and savings. While this approach addresses the issue of cost and affordability, many of the targeted medications, such as antihypertensives, statins, and oral diabetes medications are already available as low-cost generic alternatives. Affordability becomes an issue for costlier medications that are often not part of VBID programs, such as those that treat hepatitis C, multiple sclerosis and rheumatoid arthritis.

The real benefit of VBID may be the supportive services that have typically been offered along with medication copay reductions.  Patients that are actively engaged in managing their health are likely to experience better outcomes and lower costs.  All patients are not the same, however.  Social determinants, such as socioeconomic status, disease type and severity, and the stage of health behavior change all influence how readily and actively a patient is able to engage in managing their health.  Improving patient engagement is a primary objective of value-based care programs, including Patient-Centered Medical Homes (PCMH) and Accountable Care Organizations (ACO). There is an opportunity to selectively integrate VBID into these programs and target high risk members in this group to receive financial incentives associated with VBID.

The challenge for healthcare payers is to determine how to selectively target the patient segments that will respond most favorably to each component of a VBID program. This not only requires additional program designs, as well as rigorous evaluation methods to verify outcomes, but data is needed from multiple sources. Socioeconomic risk scores, patient stage of change assessments, patient acuity and segmentation measures, as well as the ability to stratify and prioritize patients for specific program interventions are all important data components for achieving the positive outcomes and cost reductions that are expected with VBID.

Incenting patients to take medications and obtain services that are considered high-value services may not be enough, however, to realize the short-term outcomes and cost savings that most payers are seeking. A focus on reducing low-value services will be required to realize more substantial and sustainable cost savings. The Rand Corporation identified some of the services that contribute to the $200 billion in overtreatment costs in the United States, including hormone tests for thyroid problems, imaging for low-back pain and imaging for uncomplicated headache. Spinal injection for low back pain was the greatest contributor to overall costs for low-value services.

There is a sufficient base of literature as well as a body of peer-led recommendations that include the Choosing Wisely campaign in the United States, as well as its adaptation in 12 countries, that provide the foundation for identifying and measuring low-value services. There are other widely used methods for identifying preventable hospital admissions, readmissions, complications and emergency room visits, as well as potentially preventable healthcare services ordered by primary care physicians and specialists, such as low-value procedures, imaging and laboratory tests. These can be offered to patients, but at a higher proportion of cost sharing than services that are considered high-value.

Additionally, it may not be enough to only focus on patient incentives and disincentives. As long as the fee-for-service system persists, coupled with a provider’s tendency to be thorough rather than efficient in their approach to patient care, then low-value services are not likely to decrease.  Value-based care will be successful when value-based reimbursement is fully operational. Recommendations that are produced by such initiatives as the Choosing Wisely campaign will be heeded when they become more than just guidelines for practice and actually have low or no reimbursement attached to them.

Steve Delaronde is director of analytics for populations and payment solutions at 3M Health Information Systems.