Health Insurance Value-Based Purchasing

Is VBID gaining a foothold?

The answer is maybe.  Value-based insurance design ties patient cost sharing to the notion of a treatment’s value.  Higher value treatments have lower cost sharing; lower value treatments have higher cost sharing.  The Incidental Economist writes:

In his own practice, Dr. Fendrick feels as if standard insurance is working against him and his patients. “They are deeply concerned about the amount they have to pay out of their own pockets for the things I beg them to do,” he said. “It makes no sense that they pay the same co-payment for a lifesaving drug to treat diabetes or cancer, as for a drug that makes toenail fungus go away.”

This may be changing. The Affordable Care Act includes a V-BID provision, eliminating cost-sharing for more than 100 preventive services, such as vaccinations and cancer screenings. It’s endorsed by four committees of medical experts.

Many large employers and state governments are going further, reducing cost-sharing for high-value care and medications to treat chronic illnesses, like depression and heart disease. This year, the Centers for Medicare and Medicaid Services began a five-year test of value-based design that permits Medicare Advantage plans in seven states to reduce cost-sharing and enhance benefits for enrollees with designated chronic conditions. Bipartisan legislation has been introduced in the House and Senate to expand the program nationwide.

Some treatments are clear blockbusters.  Others are a complete waste of money.  Most treatments, however, are in the middle where higher cost may lead to more patient benefits.  Thus, a key question to be able to implement VBID is to be able to measure value.  That is one thing I am working on through research at the Innovation and Value Initiative.

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