Health Plans: Employers Paying Now to Save Later

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VBID departs from the growing trend of passing along costs to consumers.

Many employers are using high-deductible plans as a way to keep costs under control while transferring more of the burden onto consumers, but others are taking a completely different tack. Rather than placing more costs onto employees, they are actually removing cost barriers for those with specific chronic diseases.

The concept, called value-based insurance design (VBID), is a way to reduce copays for medications and services that are most beneficial and increase copays for tests and drugs that are not as worthwhile and sometimes unneeded.

The idea is to promote evidence-based therapies and increase compliance for those who need services most, such as patients with diabetes and hypertension.

VBID pioneers, such as Pitney Bowes and Marriott, eliminated cost sharing associated with diabetes medications and achieved positive cost and quality outcomes. For instance, Pitney Bowes reportedly saved $1 million within a year of implementing the program because of reduced utilization and improved medication compliance.

The downside for businesses is that they may face employee backlash because of charging some employees more for their medications than others who are in greater need. To implement VBID, employers and health plans also need the necessary technology platform and data exchange.

"Tailoring benefit design for unique needs of patients is what everybody wants," says Tanisha Carino, PhD, vice president at Avalere Health in Washington DC. "But when employers in the private sector have gone to implement this, they have faced the hurdle of the data infrastructure to identify the right people and track their progress."

Early adopters of VBID have used the concept for their diabetic employees/members because of the costs associated with the disease and its connection to other health problems. According to the American Diabetes Association, nearly 24 million Americans have diabetes, including 24% who are undiagnosed. There are another 57 million Americans who are considered prediabetic.

Hoping to help diabetics while stopping the path to the disease for prediabetes, UnitedHealthcare recently launched its Diabetes Health Plan, which combines VBID with wellness programs. Started in the self-insured (large employer) market, the Diabetes Health Plan gives incentives, such as free services and medications, online monitoring, wellness coaches, and self-management programs, to diabetics and prediabetics who follow their treatment plans and evidence-based guidelines.

Depending on the patient's condition, the compliance requirements could include regular lab evaluations, exams, preventive care, and wellness program participation. By requiring compliance, UnitedHealthcare is demanding that the individual take responsibility and is reinforcing that individual patients are in control of their health outcomes.

UnitedHealthcare estimates the program will save plan members about $250-$500 per year by not paying for diabetes-related pharmaceuticals and the program could cut the $22,000 that employers pay to care for the average diabetic annually.

"I believe someone who is identified as prediabetic . . . will be highly motivated to participate in a plan like this if they understand the disease," says Tom Beauregard, who is CEO of UnitedHealthcare's United Essentials in Hartford, CT.

There is a downside to VBID's growing popularity, however. Some health insurers are using the term for programs that don't meet its definition. David Mirkin, principal and healthcare management consultant for Milliman in New York City, says one example is an insurer who claims to have VBID programs when in fact it merely incentivizes doctors who perform evidence-based care.

"The reason for that is there is just a lot of buzz. Every insurance company wants to say they have a value-based insurance benefit plan in case an employer wants to use that, and employers want to tell their employees they have a value-based insurance design," says Mirkin.

VBID's popularity has even reached Washington, DC. VBID advocates and policymakers believe the concept could be part of a major healthcare reform package. They think VBID could work in the Medicare population because 23% of Medicare's 26 million beneficiaries have five or more chronic conditions and account for nearly 70% of Medicare spending.

With policymakers now looking at VBID, Avalere Health and the Center for Value-Based Insurance Design recently released a white paper that suggested CMS could incorporate VBID immediately into Medicare Part D and chronic special needs plans.

"You have the potential to have an even greater impact in the Medicare population because the sicker the beneficiary is and the more you can target a value-based insurance design, the better the outcomes are likely to be," says Lisa Murphy, manager at Avalere Health.

Les Masterson

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