Value Based Insurance Design
The premise of Value Based Insurance Design, and the focus of VBID Health, is to align patients’ out-of-pocket costs, such as copayments and deductibles, with the value of health services. By reducing barriers to high-value treatments (through lower costs to patients) and discouraging low-value treatments (through higher costs to patients), these plans can improve health outcomes. Studies have linked lower copayments for drugs to higher compliance, which ultimately has potential to yield long-term savings as a result of healthier enrollees and more productive employees. Value Based Insurance Design (VBID) Health specializes in designing and promoting health benefits plans that get more health out of every health care dollar spent.
Dr. Fendrick and Dr. Chernew of the VBID Health Team are recognized in academic and policy circles as two of the “fathers of Value Based Insurance Design” and have been researching the concept for over a decade.
Dr. Fendrick is the Director of the Value Based Insurance Design Center at the University of Michigan and has authored over 200 articles and book chapters on the quality and cost implications of medical care. At VBID Health he focuses on the “demand side” of health care – mainly recommending ways to redesign health insurance products so they get more health out of every health care dollar. Dr. Chernew is a Harvard Professor of Health Economics and the Vice Chair of the Medicare Payment Advisory Committee (MedPAC). At VBID Health he focuses on the “supply side” of health care – studying health care payment policies and recommending more efficient models.
The health care law, formally known as “The Patient Protection and Affordable Care Act”, recognizes Value-Based Insurance Design. Section 1001 of the law creates a new section 2713 of the Public Health Service Act, which calls for health plan coverage of preventive health services, and features Value-Based Insurance Design. The law says:
”VALUE-BASED INSURANCE DESIGN — The Secretary may develop guidelines to permit a group health plan and a health insurance issuer offering group or individual health insurance coverage to utilize value-based insurance designs.”
In December 2010, the Secretaries of the Departments of Treasury, Health and Human Services, and Labor issued a “Request for Information Regarding Value-Based Insurance Design in Connection With Preventive Care Benefits” to inform implementation of this section of the law. Additionally, many states are looking for ways to ensure health plans featuring Value-Based Insurance Design are featured on the new health insurance exchanges.
The Administration continues to support VBID. In the spring of 2012, The Department of Health and Human Services also recognized the value and benefits of VBID in the Actuarial Value and Cost-Sharing Reductions Bulletin, which states:
”We also recognize the need to accommodate innovative plan design features that are meaningful to consumers, such as Value-Based Insurance Designs that vary the copayment or coinsurance for items and services based on expected value.”