Value-Based Insurance Design (V-BID) is a potential solution built on the principle of lowering or removing financial barriers to essential, high-value clinical services.  V-BID plans align patients’ out-of-pocket costs, such as copayments and deductibles, with the value of services.  These innovative products are designed with the tenets of clinical nuance in mind.

The concept of clinical nuance, implemented using value-based insurance design, is a key innovation already widely implemented in the private and public payers.  It recognizes two important facts about the provision of medical care: 1) medical services differ in the amount of health produced, and 2) the clinical benefit derived from a specific service depends on the consumer using it, as well as when, where, and by whom the service is provided.

 

By reducing cost-sharing for high-value services (i.e. “carrots”), patients are more likely to adhere to those services, which can reduce long-term healthcare spending through improved health outcomes, which reduces the number of costly complications.  The “stick” method of increasing cost-sharing for low-value services will disincentivize patients from utilizing those services that produce little clinical value, ultimately reducing the amount of money spend on unnecessary medical services.  By combining the “carrots” and “stick” methods, the potential savings from reducing unnecessary care can be used to lower premiums or reduce cost-sharing for high-value care.  If the incremental spending on high-value services is lower than the decrease in spending on low-value services, then V-BID can reduce overall healthcare spending.

The aim of Value-Based Insurance Design (V-BID) is to improve individual and population health.  Rather than working to change the total cost of care, which can be a very complicated issue, V-BID focuses on aligning the patient’s out-of-pocket costs with the clinical value of the service or medication.  The reality is that Americans don’t care about total health care costs, they care about what it costs them.  V-BID can lower patient costs for the care they need most, improving patient-centered outcomes without increasing total expenditures.  For a useful demonstration on how V-BID works to increase access to high-value medications and services, view our V-BID X and Drug Cost Iceberg initiative pages.

Defining whether or not a service is high-value or low-value is a difficult and nuanced task.  This is because the clinical benefit of a service is never always high-value or low-value.  The designation of whether a service is high or low-value depends on who receives it, who provides it, and where it’s provided.  There are multiple efforts aimed at identifying, quantifying, and reducing the use of low-value services such as the Choosing Wisely initiative which identifies low-value services, and the Task Force on Low-Value Care that compiles lists of low-value clinical services for purchasers to target for reduction.  View more information related to low-value care here.

The goal of V-BID is to achieve more health for every healthcare dollar spent.  There are many emerging patterns that illustrate the impact of incentive-based V-BID programs such as increased utilization of targeted services, with minimal to no increase in direct medical expenditures.  There is also evidence of improved medical adherence, obesity rates, decreased inpatient admissions, ED visits, and low-value imaging services.

Examples of V-BID strategies are present in both the public and private sector:

  • Section 2713 of the ACA, titled “Coverage of Preventive Health Care Services” requires issuers offering group or individual health insurance plans to provide coverage for specified preventive services without a beneficiary copayment or a contribution toward a deductible.
  • In September 2015, the Centers for Medicare & Medicaid Innovation (CMMI) announced the Medicare Advantage Value-Based Insurance Design Model Test, allowing plans to vary benefit designs for enrollees with specified clinical conditions, socioeconomic status, or both.

V-BID principles have also been incorporated into state health reform initiatives:

  • In 2011, Connecticut implemented the Connecticut Health Enhancement Program (HEP) which lowers patient costs for certain high-value primary care and chronic disease preventive services, coupled with requirements that enrollees receive these services.
  • CMS regulations finalized in 2013 allow states to implement certain forms of V-BID-based flexibility within the cost-sharing bounds.
  • The Healthy Michigan plan eliminates copays to promote access to services that prevent the progress and complications of chronic disease and allows other cost-sharing reductions for enrollees who participate in healthy behaviors defined by the state.

Yes.  Much like no two conditions are treated alike, no two conditions are paid for entirely the same way. V-BID involves clinically-nuanced adjustments of patient cost-sharing to reflect the value of a medical service to that specific patient.  These adjustments come through the typical methods payers use to adjudicate healthcare costs to patient through co-pays, deductibles and coinsurances.  With the rise of precision medicine technologies and patient-driven spending the need for nuanced benefit design will be as or more important than ever. 

Yes.  Within the sphere of health policy, V-BID remains one of the few ideas that enjoys broad bipartisan support.  V-BID interventions have been implemented on both the state and federal level by bodies managed across the political spectrum.  In fact, on February 9, 2018, President Trump signed the Bipartisan Budget Act of 2018, which includes the expansion of the CMMI Medicare Advantage Value-Based Insurance Design (V-BID) Model to all 50 states.