Source: University of Michigan Center for Value-Based Design

While not new, value-based insurance design (V-BID) is getting a lot of attention as a way to improve health outcomes and reduce costs. The Centers for Medicare and Medicaid Services (CMS) began a 5 year pilot with MedicareAdvantage plans in 7 states. The goal is to reduce cost sharing and improve the health of enrollees with chronic conditions.

TRICARE will launch a pilot program to improve the health for military personnel in 2018. Many private insurers have also embraced the V-BID model.

What is V-BID?

Dr. Mark Fendrick, a physician and professor at the University of Michigan, pioneered the concept nearly 20 years ago. The University refined the model, which “is built on the principle of lowering or removing financial barriers to essential, high-value clinical services.” It is based on the tenants of clinical nuance, which focuses on how well we spend our healthcare dollars rather than on how much we spend.

The Carrot and Stick

The model uses the carrot and stick approach. Positive incentives include lower or no co-payments for necessary medications and services that add value. Disincentives include higher copayments for services that are considered of low value or benefit. The approach redistributes resources to get more value and health improvement for the dollars spent.

Does V-BID Work?

It is too early to tell, but studies show that the model is improving health outcomes and increasing medication adherence.

The Carrot Approach

• Making high value drugs less costly decreased the number of hospital procedures. A NEMJ study of 6,000 heart attack patients showed that patients who received their medications for free were less likely to need procedures than those who had to pay $10-$25 for their drugs.
• Reduced cost-sharing led to a decrease in ER utilization. A study showed that reducing cost-sharing for diabetic medications reduced utilization of the hospital emergency room by 36%, and hospitalizations fell 13%.
• When members of the Connecticut Health Enhancement Program were required to get high-value primary and chronic disease preventive services, like screenings:
• Utilization of services and medications increased
• ER use decreased.
• Eliminating cost-sharing for children’s primary care visits increased utilization. A study of the effect on children found increases in primary care visits and vaccinations, and decreases in expensive emergency department and specialist visits.

The Stick Approach

• Increased cost-sharing for low-value care decreased utilization. A public employer in Oregon increased cost-sharing from $100-$500 for non-medically necessary sleep studies, upper gastrointestinal endoscopies, advanced imaging services, and certain types of overused procedures, like back surgery. Results showed that utilization of the targeted services decreased almost 12% percent over all. Specifically:
• Sleep studies and low-value surgery use decreased roughly 20%.
• Advanced imaging utilization decreased by only 7.7%.

A V-BID program administered by Blue Cross Blue Shield of North Carolina improved patients’ health and quality of life, but didn’t necessarily save money. The insurer reduced cost-sharing for hypertension, hyperlipidemia, diabetes, and congestive health failure medications for more than 700,000 policy holders. Overall health care spending remained comparable to that of similar patients insured by other plans that did not use a V-BID model.

How Can You Measure the Success of Your V-BID Program?

Whether you have an existing V-BID program or are considering implementing one, you need to be able to evaluate the program’s performance. The best way to gauge your program is to put healthcare data analytics to work for you.

A healthcare data analytics vendor that integrates data across all your medical and pharmacy programs will give you the most comprehensive view:

• Health services utilization
• Medication utilization
• Medication adherence – are your members getting their prescriptions filled as ordered?

The vendor should refresh your data at least monthly to give you real-time information about your costs and the health of your population. Integrating additional data sources like absenteeism, workers’ compensation, and disability will provide a 360-degree view of your population.

Understanding what is driving your costs is critical for managing them. A healthcare data analytics vendor can deliver the insight you need to make impactful benefit design changes that control your costs, improve population health, and make healthcare more affordable for your members.

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