Health Insurance Quality Value-Based Purchasing

Oregon’s Test of Value-Based Purchasing

More quality at lower cost has been the mantra of payers for many years.  But how do we make  this goal a reality?

Value-based insurance alters cost sharing structure so that beneficiaries have low levels of cost sharing for cost-effective services and high compayments for low value items.  I report by Joan Kapowich (2010) looks at Oregon’s public employee benefit boards decision in 2010 to adopt an improved value-based insurance design system.  “Oregon’s Public Employees’ Benefit Board and Educators Benefit Board design and purchase benefits for the two largest employee groups in the state: 128,000 state and university employees and dependents, and 155,000 public education employees and dependents.”

The revised value-based purchasing structure eliminates cost sharing for 17 preventive services.  For instance, patients have $0 out-of-pocket costs for periodic health appraisals; vaccinations;  screenings for breast, cervical, colon, and prostate cancer; and tobacco and weight management programs.  Copayments for generic drugs were minimal.  All these services fall into Tier 1 coverage.  “Tier 2 is a standard commercial plan designed to include cost sharing. Tier 3 is designed to reduce the use of preference-sensitive or supply-sensitive services but not to impede access to essential care…Tier 3 includes a separate deductible, higher out-of-pocket maximums, and a coinsurance percentage double that of tier 2 for specific types of care, including emergency room visits; arthroscopy; hip and knee replacement; hysterectomy; magnetic resonance imaging, computed tomography, and positron emission tomography scans; upper endoscopy; coronary angioplasty and stents; and spinal surgery.”

Yet these plans did face some opposition.  For instance, using the term “preference-sensitive” or  “supply-sensitive” did not fly with patients.  Instead, the board renamed Tier 3 as the “additional cost tier.”  In addition, treatments and hysterectomies were originally included in Tier 3 coverage, but this move was considered “too contentious” and they were moved to Tier 2.  The reasoning: “Certain cardiac treatments are performed for emergency care, and certain hysterectomies are performed for cancer care. Emergency treatments and cancer care were excluded because they require prompt treatment.”

Will the VBP work?  The spending and patient outcome measures from 2011 will reveal the results.

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