As health care costs continue to rise, payers are turning to innovative strategies, such as value-based insurance design (VBID), to improve quality, maximize health care costs for the care most needed by plan participants, and improve costs at long term. VBID is intended to save employees and their self-funded employers money by directing employees to high-value health care.
According to CENTER FOR DISEASE CONTROL AND PREVENTION, The National Pharmaceutical Council and the University of Michigan’s Center for Value-Based Insurance Design highlighted four key approaches in their 2009 Value-Based Insurance Design Landscape Digest:
DESIGN FOR SERVICE
Eliminate or reduce co-payments for certain healthcare services or medications (e.g. cholesterol tests, asthma medications), regardless of who uses them.
DESIGN FOR CONDITION
Elimination or reduction of copays for patients with specific clinical diagnoses (e.g. hypertension, prediabetes) for related services or drugs.
DESIGN FOR GRAVITY CONDITIONS
Eliminate or reduce copays for patients who are at high risk of disease (or costly complications) and could benefit from participation in disease management programs.
DESIGN BY DISEASE MANAGEMENT CONDITION
Eliminate or reduce copays for high-risk patients who actively participate in disease management programs. VBIDs will be most successful for employers if they consider their employees’ needs, demographics, and perspectives when designing the appropriate VBID approach for their employee population.
By designing their benefit plans to reduce or remove out-of-pocket costs for high-value health care services, employers incentivize their employees to seek care from low-cost, high-quality providers. When employees use high-value healthcare services, their employers can then afford to provide access to high-value care at little or no cost to their employees, further encouraging them to seek out high-value care.
Get more health for the money
Employers need to think not only about how much they spend on health care, but how well they spend it. There are several changes that can help employers who want to apply value-based insurance design improve their health plan design and get more health for their money, not just less sick people.
First, employers should think about how they want to allocate their healthcare dollars. For example, a self-funded company may want to spend more on disease prevention and care for people with chronic conditions to avoid high healthcare costs in the future. By thinking strategically, they can replace a one-size-fits-all approach with a plan that addresses major chronic conditions in their workforce.
Employers can also combine incentives and deterrents in their health benefit plans. They may consider changing what they charge employees for certain diagnostic visits and certain types of medications. Employers can align their benefit structure to make it easier for patients to access high-value treatments and services, but require patients to put more effort into obtaining low-value treatments and services. The Alliance is seeing more employers do this with Direct Primary Care, offering free primary care to employees to focus more on prevention than treatment.
Improved patient outcomes
With commercial healthcare spending at more than $1 trillion annually and rising, conversations about health outcomes are gaining traction. In addition to reducing healthcare spending over time, value-based insurance design can improve morale, increase retention, and reduce the number of employees with short- and long-term disabilities. A 2022 Humana Study and MGMA notes that 67 percent of primary care practice leaders surveyed said value-based principles improved the quality of care their patients received.
Emerging technologies and practices can be used to strengthen provider approaches to value-based care and improve health outcomes, including:
- Embrace virtual healthcare delivery to help reduce the cost of care and increase access and interaction with high-risk patients.
- Clinically integrate supply chains to enable healthcare systems to reduce costs by optimizing medical supplies and equipment purchasing decisions on a cost-effective basis.
- Leverage AI to match patient data from disparate medical records, predict diagnoses and outcomes, and reduce waste and fraud.
Creating a VBID-based health plan is only part of the challenge of reducing costs and improving the quality of care. Employers who take a value-based approach must also be willing to explain it to their employees and other publics. Fortunately, value-based insurance design is easy to explain: It removes financial barriers to services that will make people healthier.
If you would like to learn more about value-based insurance design, Contact us.
Melina Kambitsi, Ph.D., SVP, Business Development and Strategic Marketing, The Alliance [email protected] | 608-210-6643
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