Improving Healthcare Quality Through Comparative Effectiveness Research and Value-Based Insurance Design

The American Journal of Pharmacy Benefits, Fall 2009, Volume 1, Issue 3

The President of the National Pharmaceutical Council discusses how comparative effectiveness research and value-based insurance design can reduce costs and improve healthcare quality.

Leaders from a broad array of healthcare stakeholder organizations convened last spring at the White House to discuss strategies for “bending the curve” to reduce the nation’s overall healthcare spending. Together, the organizations pledged over the next 10 years to reduce the growth of national healthcare spending by 1.5 percentage points each year, which equates to more than $2 trillion in savings from projected levels.1 This was a significant first step toward addressing important cost control issues at the heart of comprehensive health reform.

According to Office of Management and Budget Director Peter R. Orszag, PhD, economists estimate that $700 billion2 of the $2.4 trillion3 spent annually on healthcare is unnecessary and could be saved without harming the quality of patient care. The question, then, is how to identify the unnecessary $700 billion and separate it from the valuable and necessary care delivered each day. Dr. Orszag and President Obama himself have emphasized that one way to address this question is through comparative effectiveness research (CER), which is determining the relative benefits of 2 or more medical treatments for the same condition. By examining which treatments are better suited for patients with specific conditions, federal policy makers expect CER to improve the quality of care with the secondary goal to slow the growth of healthcare spending in the United States.

In general, healthcare stakeholder organizations are supportive of CER, although questions remain about how the federal government will prioritize the treatments to be compared, how it will conduct and disseminate test results, how these results will be used by healthcare providers, and whether subpopulations will be taken into account. Comparative effectiveness research can eventually lead to better clinical decision making, health outcomes, and may help to reverse spending growth when coupled with other programs.4

But the broader question is how to ensure the overall value of healthcare. Value means improving the clinical benefit for the money spent, or getting more healthcare out of every healthcare dollar. Given the strong interest in healthcare reform and CER in Washington, there is a growing trend by companies and local governments—and now Congress, with the introduction of legislation—to address the concept of healthcare value through implementation of value-based insurance design (VBID). In a study supported by the National Pharmaceutical Council, A. Mark Fendrick, MD, Co-Director of the Center for Value-Based Insurance Design at the University of Michigan, has said that VBID “incorporates complementary features to produce effective and efficient care delivery, to ultimately maximize health outcomes at any level of health care expenditure.”5

Value-based insurance design programs adjust patients’ out-of-pocket costs for health services based on the clinical benefit to the individual patient, which could be clarified through CER or other evidence-based evaluations. Under VBID, the more clinically beneficial the treatment, the lower the patient’s cost share; employers and plan sponsors then actively promote those treatments and interventions that keep their people well. As an example, a visit to a cardiologist for someone with chronic heart disease is of higher value than a visit to a dermatologist for someone with acne, so the copayments should reflect that value. Such a system reduces the number of unnecessary tests and procedures—as well as hospital visits—that drive up healthcare costs while ensuring that individuals with the greatest needs will receive proper care.6

Companies such as Marriott, Caterpillar, and JP Morgan, and local governments like the city of Asheville, North Carolina, already have adopted VBID strategies with some success. To succeed at a company, VBID programs should adhere to certain principles: ensuring patients are engaged and held accountable; removing barriers to care such as financial ones; aligning incentives among all stakeholders (ie, patients, doctors, and payers); developing a comprehensive communications plan; and making data available for analysis.7 The better the data, the better the system is at identifying high-risk patients.

Some companies are moving VBID a step further by taking a broad view of the burden of health conditions, including not only medical and pharmacy costs but also costs associated with lost productivity. According to a recent National Pharmaceutical Council—supported study, these conditions include depression, obesity, arthritis, back/neck pain, and anxiety, all of which are major drivers of presenteeism, which occurs when employees with health conditions are present at their jobs but unable to perform at full capacity. Addressing these kinds of health issues can help to improve overall worker health and productivity, thus increasing the overall value of the care delivered to both employer and employee.8

Both VBID and CER could assist public and private payers in reducing healthcare costs while improving the quality of healthcare services and employee health. These programs already are leading to a healthier workforce, with reductions in absenteeism, presenteeism, and medical disability. Implementing them on a wider scale could help policy makers reach their goal of improving quality in the system while bending the curve of overall healthcare spending in the right direction.