Is value-based insurance design experiencing a renaissance?
Think of your favorite movie. Maybe it’s a classic from your childhood or early adulthood. In these days of what’s old is new again, it may experience a renaissance for a new generation. (Full disclosure: I’m a child from the “Back to the Future” years and pause when I come across the original or the sequels on television).
In the past year, we’re seeing a similar renaissance around value-based insurance design (V-BID) — a classic strategy for some employers.
Many employers and other health care purchasers have had V-BID in place for several years, much to the appreciation of their plan members. V-BID lowers or eliminates the out-of-pocket cost for high-value services or medications. The classic example is coverage of generic medications at low- or no-cost to plan members. Pitney Bowes pioneered the strategy in 2002 by lowering the co-payment for some drugs for specific chronic conditions to reduce financial barriers for its members, increase medication adherence, and improve health. Many employers and other purchasers followed suit.
A fresh perspective on V-BID
The growing costs faced by today’s health care purchasers and plan members have many returning to proven strategies like V-BID. Here are a few of the concepts purchasers should revisit as they look to the next plan year.
Enhance health savings account-eligible high deductible health plans with V-BID coverage. In July 2019, and in response to a June 2019 executive order, the U.S. Department of the Treasury released a notice permitting coverage of certain medications and services that treat chronic conditions prior to the plan member meeting the plan deductible. The expansion covers insulin, statins, inhaled corticosteroids, blood pressure monitors, retinopathy screening, and other medications and services, to support individuals with asthma, congestive heart failure, depression, diabetes, hypertension, and other conditions.
Implement V-BID for high-value services and drug classes on a cost-neutral basis. The University of Michigan’s Center for Value-Based Insurance Design partnered with a group of public and private stakeholders to create a benefit design, V-BID X, that covers high-value services at reduced cost-sharing for plan members, financed by an increase in plan members’ cost-sharing for low-value services. While the group developed the benefit design prototype with the individual market in mind, employers and other purchasers can explore the concept with and for their health plan.
Steps for Employers
As employers and other health care purchasers look ahead to the 2021 plan year, there are tangible actions they can take to revisit V-BID in light of these developments.
- Review current data on the covered population, including: (1) Number of plan members with certain chronic conditions who could benefit from these new strategies; (2) Health care cost, utilization, and pl member adherence to medication and services that could be included in a V-BID program; (3) Health care cost and utilization of low-value medication and services to reduce benefits, per V-BID X’s prototype.
- Ask the health plan and pharmacy benefit manager about their perspective on the V-BID updates, what they have implemented, the uptake by other purchasers, and any findings from their experience.
- Analyze the cost impact of implementing V-BID or evaluate it in partnership with a health plan or consulting actuary.
- Secure communications support from a partner with expertise in communicating about high-value and low-value health care services and medications.
With these tangible actions, more purchasers will be poised to bring more value to their benefit designs in 2020 and beyond. Now the question remains: will implementation of V-BID take off like Doc Brown’s DeLorean?