Value-based insurance: Don’t let your consumer-driven health plan be a barrier to necessary care

Consumer-driven health plans (CDHPs) have been increasing in popularity because they appear to be custom-made for this era of health insurance reform. The growth makes sense for a number of reasons. Most of the reasons are related to reduced medical costs and increased engagement by members, including a greater interest in and knowledge of costs and quality of care.
“There is, however, evidence to show that with CDHPs, essential medical services often will be curtailed if individuals have to pay an increasing amount of their own money,” says John Mills, senior director of Consumer Products at UPMC Health Plan. “What is needed is a value-based insurance design element to those plans that would deliver highly valued services at little or no out-of-pocket costs.”
Smart Business spoke with Mills about the concept of value-based insurance designs and how they can interact with CDHPs to make sense for consumers and companies.
What is value-based insurance design?
Value-based insurance design encourages consumers to use high-value drugs and health care services by reducing or eliminating cost sharing for those treatments. This is also known as evidence-based benefit design because the services and treatments have been proven, through extensive research, to be effective.
The plans provide a high level of clinical benefit for the money spent. According to a 2008 study by the American Journal of Managed Care, 20 to 30 percent of large employers implement some form of value-based insurance design.
How do value-driven plans work?
These insurance plans seek to increase health care quality and decrease costs by using financial incentives to promote more cost-efficient health care services and increase consumer choice. Health benefit plans can be designed to include coverage for evidence-based care and services that are shown to reduce costs and improve health.
For example, when a plan covers what is considered preventive care — wellness visits, blood pressure treatments, diabetes medications, etc. — at low or no cost, it can result in savings down the road by avoiding more costly treatments. A benefit plan can also include disincentives for unnecessary or repetitive health choices, or for procedures that produce a positive outcome that could have been produced for a lesser cost.
How can value-based insurance improve CDHPs?
Studies have shown that value-based design improves access to health care services while helping patients adhere to prescribed medical treatments. But research has also shown that when CDHPs require a financial penalty for medical treatment, consumers tend not to make the long-term health care decisions that are necessary to improve care and that, in some sense, CDHPs can create barriers to necessary care.
That’s where a value-based design comes into play. If structured correctly, such plans encourage the use of high-value drugs and health care services by reducing or eliminating cost sharing for those treatments.
What constitutes value-based design?
Value-based insurance design has grown out of the evidence that even modest co-payments can discourage use of a drug or service and that those who have high cost-sharing are less likely to follow treatment regimens prescribed by their doctors. With a lowering (or elimination) of out-of-pocket costs, value-based insurance enables consumers to afford the care they need. This can lead to improved health outcomes.
A 2014 study by the University of Michigan Center for Value-Based Insurance Design found that millions of Americans could benefit from expanded coverage of CDHPs that incorporated value-based insurance design principles in order to better meet the needs of chronically ill persons and those at high risk for developing chronic conditions.

Enrollment in CDHPs has grown from 11.4 million to 15.5 million in 2013, according to America’s Health Insurance Plans, a trade organization. The Affordable Care Act emphasizes increased quality and efficiency in health care through access to preventive services and providing appropriate treatment. Value-based insurance design fits right into that.

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