Fast-Tracking Value-Based Insurance Design on Exchange Marketplaces

August 07, 2019 - Believing that having a standard value-based insurance design (V-BID) plan could fast-track the implementation of value-based insurance design principles, a team of researchers from the University of Michigan and the Health Care Markets and Regulation Lab at Harvard Medical School worked with America’s Health Insurance Plans (AHIP) and various private stakeholders to develop and test a standard V-BID model. They call it VBID X.

“By eliminating or reducing cost-sharing for high-value services, VBID holds promise in reducing financial barriers to needed medical care, improving adherence to prescribed treatments, and achieving better health outcomes,” AHIP explained in their recent post about the study. “And, by targeting low-value and commonly overused services, it can also help reduce waste in the health care system, protect patient safety, and slow down health care cost growth.”

The goal of the study was to keep deductibles and premiums the same while encouraging use of cost-effective treatments over wasteful ones. In doing so, the plan not only incentivizes effective healthcare spending but also makes treatments with stronger results more financially accessible.

The team established certain principles for VBID X, such as maintaining the same actuarial value (AV), or premium level.

“V-BID specifically calls for lower cost-sharing (including exemption from the deductible) for high-value services, such as those used to treat and prevent the progression of chronic disease, and higher cost-sharing for low value services, such as those identified by the Choosing Wisely initiative,” the study explained.

But  the researchers found that the trade-offs to maintain the same deductibles while increasing cost-sharing for high value services were hard to balance. Instead, the study found that the best approach was to increase cost-sharing on categories of services, rather than on individual services, in order to make high-value services accessible.

The team applied cost-sharing changes to a hypothetical Silver metal plan, which holds the majority of Affordable Care Act exchange enrollees.

In absence of raising deductibles—which would have violated the study’s original principles—raising the cost-sharing for specific low-value services was the alternative.

For example, in order to give members greater access to effective, preferred brand drugs, this model would lower the patient’s copay on the medication and raise copay on a treatment considered lesser value, such as physical, speech, and occupational therapy.

High value-services were defined as services backed by evidence-based validation, that were responsive to cost-sharing, and that would not change in value based on the clinical context. Other factors included equity of services, adverse selection, impact on special populations, the risk pool, and whether the services were used to measure provider performance by being an HEDIS quality measure.

Ideally, the marginal increase on copays for other services would not be so excessive as to place those services out of reach.

This approach also had its own shortcomings. The value of a service—whether it is high or low—will always depend upon the patient’s condition, so it would be impossible to perfectly execute this solution. What is raising cost-sharing for a low-value service for one patient could be raising cost-sharing for a high-value service for another.

With the study’s parameters, increasing the cost-sharing for some low-value services impacted the actuarial value of the metal plan. In order to offset the 1.4 percent rise in the plan’s actuarial value due to the high-value services, the VBID X team increased copays for certain services, in some cases by 15 to 50 percent.

The research team offered five key steps to help other carriers develop their own VBID X plans:

• Develop a list of high-value services
• Develop a list of low-value services
• Raise the cost-sharing by service category
• Mark cost-sharing for high-value services down to non-zero levels
• Reduce premiums by a smaller amount than the study modeled

There are many potential advantages to having V-BID plans for ACA exchanges. The plans might increase the use of high-value services and medications and decrease usage of low-value, potentially harmful care. Such plans could also decrease the out-of-pocket burden, especially for chronically ill patients, and reduce health disparities.

Each plan, the study emphasized, would have to be adapted based on the demographic and conditions.