Value-Based Insurance Design: Improving Adherence Through Shifting Benefit Designs
The past several decades have seen unprecedented advances in therapeutic and technological solutions to the diagnosis, treatment, and prevention of human disease.
The past several decades have seen unprecedented advances in therapeutic and technological solutions to the diagnosis, treatment, and prevention of human disease. Despite improvements to patient-centered and population health, however, attention is more focused on health care expenditures. Health care spending in the United States is higher than in any other developed nation in the world—and continues to rise. There is a strong bipartisan consensus that our current level of spending and rate of growth is not sustainable for the long-term future of our country. To address this problem, future discussions among stakeholders must shift from how much to how well we spend our health care dollars.
Most efforts to control costs or improve quality of care focus on provider-side initiatives. These efforts have led to changes in the infrastructure (eg, accountable care organizations, medical homes), processes (eg, virtual visits), and financing (eg, bundled payments) of care. Unfortunately, less emphasis has been placed on finding ways to engage consumers in bringing more value to the care they receive.
One consumer-side method that insurers use to control health care spending is cost shifting: requiring beneficiaries to pay more, whether it be through higher premiums, deductibles, or co-payments for clinic visits, pharmaceuticals, or diagnostic tests. The majority of health insurers, including Medicare, carry out consumer cost sharing in a “one-size-fits-all” scheme, in that consumer out-of-pocket costs are standardized for every service within each category of care. The clinical value of the services provided is not taken into account in this payment model.
Naturally, when the cost-sharing burden on consumers is increased, there is a decrease in the use of both nonessential and essential care.1,2 Increasing cost sharing for prescription drugs has been shown to decrease patient adherence to their medication: a meta-analysis looking at the cost-sharing/drug adherence relationship for a variety of pharmaceuticals showed a statistically significant decline in adherence after cost sharing was increased, with the highest rates of nonadherence among those with lower incomes and chronic diseases.3,4 This is particularly worrisome given the rising prices of prescription drugs in the United States, as well as the increase in enrollment in high-deductible health plans (HDHPs). Although increasing cost sharing can be a short-term fix for cutting costs of care, it may create financial barriers that prevent patients from accessing prescription drugs and high-value services that are critical to their health.
In order to mitigate cost-related nonadherence and encourage consumers to take on a more active role in their care by seeking high-value services, private-sector payers began to implement the value-based insurance design (V-BID) concept more than a decade ago.
The V-BID premise calls for a benefit structure that reduces consumer cost sharing for evidence-based services and high-performing providers based on the principles of “clinical nuance.” These principles recognize that (1) medical services and providers differ in the amount of health produced and (2) the clinical benefit derived from a specific service depends on the consumer using it, who provides it, and where it is delivered.5 V-BID programs that lower cost sharing for targeted services have consistently demonstrated improved adherence, with no net increases in total expenditures when compared to plans without clinically nuanced cost sharing.6
Three examples demonstrate how a clinically nuanced cost-sharing approach can improve patient outcomes and adherence to prescription drugs, as well as save health care dollars:
- The Post-Myocardial Infarction Free Rx Event and Economic Evaluation (MI FREEE) trial examined the long term health and economic benefits of eliminating cost sharing for secondary preventive medications in patients after their first myocardial infarction (MI), including beta-blockers, angiotensin-converting enzyme inhibitors, angiotensin receptor blockers, and statins. Compared to the group with normal cost sharing, patients with zero cost sharing for these medications had increased adherence, fewer cardiovascular events, and reduced incurred costs.7 The trial also demonstrated that the effect of zero cost sharing for the aforementioned drugs had a larger benefit in nonwhite patients. (Demographic characteristics of this study were measured as only nonwhite and white.) This cohort had significantly reduced readmission for a major vascular event or coronary revascularization, as well as a 70% reduction in total health care spending compared with those with normal cost sharing.8
- Starting in 2012, the Connecticut implemented its Health Enhancement Program (HEP) aimed at improving health and cutting costs for state employees. The HEP reduced co-payments for recommended preventive care visits and prescription medications to treat chronic disease. After 2 years, the growth of health care spending in Connecticut decreased. In addition, the program has resulted in higher numbers of office visits and increased adherence to medications for heart disease, blood pressure, cholesterol, and diabetes, and the number of visits to the emergency department has decreased.9
- Under the preventive health provisions of Section 2713 of the Affordable Care Act and recommendations of the United States Preventive Services Task Force (USPSTF), aspirin for the prevention of cardiovascular disease is an important, life-saving intervention when the potential benefit due to a reduction in MIs outweighs the potential harm due to an increase in gastrointestinal hemorrhage.10 The USPSTF recommends the provision of aspirin for men aged 45 to 79 and women aged 55 to 79. This recommendation demonstrates one aspect of clinical nuance: the value of a medication or service depends on the needs of those receiving it. In contrast, patients outside the recommended age range should not be eligible for zero cost sharing. Such a nuanced approach ensures that patient cost sharing is eliminated or substantially reduced when a medication or service is clinically indicated, while allowing health plans to impose higher co-payments for services that lack strong clinical evidence to support their use.
With broad multi-stakeholder and bipartisan political support, momentum for V-BID continues to grow among public and private payers. Currently, hundreds of public payers utilize V-BID principles to enhance health outcomes and constrain cost growth. In September 2015, the Centers for Medicare & Medicaid Services announced a V-BID model test available to Medicare Advantage (MA) plans in 7 states: Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee.11 This demonstration will be implemented on January 1, 2017, and continue for 5 years. Participating MA plans will be allowed to alter enrollee benefit structures and cost sharing to incorporate V-BID design elements for the treatment of 7 chronic conditions: diabetes, chronic obstructive pulmonary disease, congestive heart failure, past stroke, hypertension, coronary artery disease, and mood disorders.
The MA demo will be the first time that lowering cost sharing for specific populations of patients has ever been allowed in Medicare. This will be an important opportunity to understand how V-BID principles can be applied successfully across a spectrum of diseases and hopefully guide all public and private payers toward designing smarter benefit structures that emphasize value over volume.
As more provider-facing initiatives are implemented, it is critically important to align these supply-side programs closely with tools intended to engage consumers. The impact of such carefully aligned clinically nuanced approaches to contain costs and improve quality of care will be far greater than any single strategy can achieve.
Taylor Eagle is a research assistant at the University of Michigan Center for Value-Based Insurance Design (V-BID Center) (vbidcenter.org). He graduated with a BS in neuroscience from the University of Michigan in 2012. He is interested in creating a more proactive and preventive health care system. Prior to working at the V-BID Center, he studied at University of Michigan Medical School for 2 years.
Susan Lynne Oesterle is the business manager for the University of Michigan Center for Value-Based Insurance Design (V-BID Center). In this role, she manages and coordinates all aspects of the V-BID Center’s activities. Her degrees and experience span the fields of business, finance, administration, and education, and have prepared her for the challenges of managing the academic research and public policy focus of the V-BID Center.
A. Mark Fendrick, MD, is a professor of internal medicine and a professor of health management and policy at the University of Michigan. Dr. Fendrick conceptualized and coined the term “value-based insurance design” (V-BID) and currently directs the University of Michigan Center for Value-Based Insurance Design (V-BID Center) the leading advocate for development, implementation, and evaluation of innovative health benefit plans. His research focuses on how clinician payment and consumer engagement initiatives impact access to care, quality of care, health care disparities, and health care costs. Dr. Fendrick is an elected member of the Institute of Medicine of the National Academy of Sciences, serves on the Medicare Coverage Advisory Committee, and has been invited to present testimony before the US Senate Committee and the US House of Representatives. He is the co-editor in chief of the American Journal of Managed Care and is an editorial board member for 3 additional peer-reviewed publications. He remains clinically active in the practice of general internal medicine.
- Trivedi AN, Rakowski W, Ayanian JZ. Effect of cost sharing on screening mammography in Medicare health plans. N Engl J Med. 2008;358(4):375-383. doi: 10.1056/NEJMsa070929.
- Trivedi AN, Moloo H, Mor V. Increased ambulatory care copayments and hospitalizations among the elderly. N Engl J Med. 2010;362(4):320-328. doi: 10.1056/NEJMsa0904533.
- Goldman DP, Joyce GF, Zheng Y. Prescription drug cost sharing: associations with medication and medical utilization and spending and health. JAMA. 2007;298(1):61-69.
- Eaddy MT, Cook CL, O’Day K, Burch SP, Cantrell CR. How patient cost-sharing trends affect adherence and outcomes: a literature review. P T. 2012;37(1):45-55.
- Chernew ME, Rosen AB, Fendrick AM. Value -based insurance design. Health Aff (Millwood). 2007;26(2):w195-w203.
- Lee JL, Maciewjewski M, Raju S, Shrank WH, Choudhry N. Value-based insurance design: quality improvement but no cost savings. Health Aff (Millwood). 2013;32(7):1251-1257. doi: 10.1377/hlthaff.2012.0902.
- Choudhry NK, Avorn J, Glynn RJ, et al; Post-Myocardial Infarction Free Rx Event and Economic Evaluation (MI FREEE) Trial. Full coverage for preventive medications after myocardial infarction. N Engl J Med. 2011;365(22):2088-2097. doi: 10.1056/NEJMsa1107913.
- Choudhry NK, Bykov K, Shrank WH, et al. Eliminating medications copayments reduces disparities in cardiovascular care. Health Aff (Millwood). 2014;33(5):863-870. doi: 10.1377/hlthaff.2013.0654.
- V-BID in action: a profile of Connecticut’s Health Enhancement Program.” The University of Michigan Center for Value-Based Insurance Design website. http://vbidcenter.org/wp-content/uploads/2014/10/V-BID-brief_CT-HEP-final.pdf. Published January 2013. Accessed November 24, 2015.
- V-BID in action: preventive care coverage in the Patient Protection and Affordable Care Act. The University of Michigan Center for Value-Based Insurance Design website. http://vbidcenter.org/wp-content/uploads/2014/10/Prevention2713-Brief-Nov-2013.pdf. Published November 2013. Accessed November 24, 2015.
- CMS unveils value-based insurance design model for Medicare Advantage. The University of Michigan Center for Value-Based Insurance Design website. http://vbidcenter.org/wp-content/uploads/2015/09/Manatt-Memorandum-on-Medicare-Advantage-VBID-Model-Test-9.1.15-1.pdf. Published September 8, 2015. Accessed November 24, 2015.