Value-based insurance design: pills on an EKG recording 2048 x 1367

Imagine you’re a physician caring for a patient with high cholesterol. You have educated her about the importance of maintaining a healthy lifestyle and prescribed a statin to lower her risk of a cardiac event. You’ve discussed the potential negative clinical consequences of not taking her medicine as prescribed. You ask if she is regularly taking her medication, and she admits that she is not— she cannot afford it. Sometimes she splits her pill in half or skips days to make each prescription last longer. What do you do?

As Americans are being asked to pay more for medical care in the form of copayments and deductibles, one in four Americans reports having difficulty affording their prescription drugs. Value-based insurance design (V-BID) is one potential solution that may increase access to high-value drugs without increasing overall medical spending.  In a recently published Health Affairs article, researchers reviewed the latest evidence on V-BID.

What is Value-Based Insurance Design?

V-BID is built on the principle of lowering or removing financial barriers to essential, high-value clinical services. V-BID plans align patients’ out-of-pocket costs, such as copayments and deductibles, with the value of services to the patient. They are designed with the tenets of “clinical nuance” in mind – in that the clinical benefit derived from a specific service depends on the consumer using it, as well as when, where, and by whom the service is provided.

Does it work?

Yes – according to a literature review published in the July 2018 issue of Health Affairs. The researchers found that V-BID programs which reduced consumer cost-sharing for clinically indicated medications resulted in increased adherence at no change in total spending. In other words, decreasing consumer cost-sharing meant better medication adherence for the same total cost to the insurer.

The review examined studies that reduced consumer cost-sharing for high-value medications, focusing on specific chronic diseases for which a generic medication was available. It examined a variety of drug classes, including anti-diabetics, asthma medications, and statins. Of the 796 included studies, the V-BID model was associated with significant improvement in medication adherence in all but a small handful of cases. However, there were little data on patient-centered outcomes and health care quality.

Of the 9 included studies that evaluated health care spending, the Health Affairs reviewers found that all measured a decrease or no net change in total spending. This suggests that increases in pharmaceutical spending by plans were offset by decreases in spending for other health care services, such as emergency department visits or hospital stays. The review suggests that V-BID plans which reduce cost-sharing for high-value services are cost-neutral.

Could Value-Based Insurance Design save money?

Currently, there are no published controlled studies on V-BID programs that limit the use of low-value care through increased consumer cost-sharing. Thus, the Health Affairs review covered only V-BID programs that reduce consumer cost-sharing for high-value services. Low-value care is defined as care that offers little to no clinical value or exposes patients to unnecessary harm, such as diagnostic testing before low-risk surgery or non-clinically indicated Vitamin D screening tests. It is estimated that the U.S. spends upwards of $200 billion per year on low-value care.

The authors noted that increasing the cost-sharing for low-value services would provide immediate and substantial savings to the plan. These savings would create headroom to allow for an increase in spending on high-value services. Thus, the authors predict that using value-based insurance design to limit low-value care would ultimately save cost.

Imagining a Value-Based Future

Provider-facing initiatives such as accountable care and bundled payments encourage clinicians to prescribe medications that produce healthy outcomes for patients. However, these incentives do not always correspond to incentives in patients’ benefit design, particularly if high cost-sharing acts as a deterrent for high-value services and medications. Value-based insurance design aims to align these incentives to encourage patients and providers to choose the clinical service of the highest value to the patient.

In the case of high cholesterol, cost-related non-adherence to statins could potentially lead to a preventable heart attack or stroke. The ultimate goal of a V-BID model is to increase access to and encourage the use of medications like statins to prevent the downstream need for interventions like coronary artery stents.

The value-based insurance design model strives to change the conversation from “how much” we spend to “how well” we spend in an effort to remove cost-related barriers and ultimately improve health.

Reimagine: you’re a physician caring for a patient with high cholesterol. You have educated her about the importance of maintaining a healthy lifestyle and prescribed her statins to reduce her risk of a cardiac event. She is now enrolled in a V-BID plan which reduces the out-of-pocket costs of high-value medications, like statins. Now that she can afford her prescription, she takes the medication as prescribed. Such a scenario improves patient-centered outcomes, aligns with provider quality metrics, and increases the efficiency of health care spending—a win-win-win for patients, clinicians, and payers.

A. Mark Fendrick M.D., Margaret F. Shope, B.S. & Caroline E. Richburg
A. Mark Fendrick, M.D. is the Director of the University of Michigan Center for Value-Based Insurance Design and Professor at the University of Michigan in the Departments of Internal Medicine and Health Management and Policy. Dr. Fendrick received a bachelor’s degree in economics and chemistry from the University of Pennsylvania and his medical degree from Harvard Medical School. He completed his residency in internal medicine at the University of Pennsylvania where he was a fellow in the Robert Wood Johnson Foundation Clinical Scholars Program. Dr. Fendrick conceptualized and coined the term Value-Based Insurance Design (V-BID) and currently directs the V-BID Center at the University of Michigan [www.vbidcenter.org], 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, and health care costs. Dr. Fendrick has authored over 250 articles and book chapters and has received numerous awards for the creation and implementation of value-based insurance design. His perspective and understanding of clinical and economic issues have fostered collaborations with numerous government agencies, health plans, professional societies, and healthcare companies. Dr. Fendrick has been to 49 of the 50 U.S. States. He's looking forward to visiting North Dakota someday to round out the list! Margaret F. Shope, B.S. graduated from the University of Michigan in April 2018 and plans to pursue a joint degree in medicine and public health. Her interests include holistic patient-centered care and the impact of healthcare policy and structure on individual health. She joined the V-BID Center team to gain skills and insights to better serve her future patients as a clinician and advocate, and because she aligns with their mission of lowering financial barriers to high-value clinical services. Outside of the office, Margaret loves to run, hike, swim, ski, and be outdoors as much as possible. Caroline E. Richburg is a rising senior at the University of Michigan pursuing a Bachelor of Science in Biomolecular Science and Anthropology. After graduating, she plans to attend medical school to pursue a career as a physician. Her time working in Mumbai, India led her to develop an interest in global health and urban underserved communities. Caroline strives to combine medicine and anthropology to reduce health disparities and to study the social determinants of health. Through her work with the V-BID Center, Caroline hopes to learn more about the policy side of medicine. Outside of school and work, Caroline enjoys ballet, running, and playing with her pet bunny, Bun Foof.

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