Essential Benefits Set Work Group BACKGROUND PAPER August 25, 2009 Essential Benefit Set Work Group
Prepared by: BACKGROUND PAPER
September 4, 2009 TABLE OF CONTENTS
Introduction ................................................................................................................... 1
Proposed Procedure for Evaluating Benefits ............................................................. 4
General Principles
Define the Types of Conditions to be Covered
Define the Types of Services and Protocols to be Covered
Determine the Method for Incorporating Incentives for Adherence
Additional Work Group Considerations
Examples of Included and Excluded Benefits in Typical Plans ................................ 9
Services Typically Covered
Services Typically Not Covered
Practical and Regulatory Considerations in Benefit Design ................................... 12
Current Concepts and Issues Related to EBS Design ............................................. 14
Case Studies in Related Benefit Designs.................................................................. 18
Resources.................................................................................................................... 25
Recommended Extra Reading
Professional Associations, Journals, and Peer-Reviewed Articles
Wider Audience
Opinions / Blogs
Websites
INTRODUCTION
ESSENTIAL BENEFIT SET WORK GROUP CHARGE
Minnesota Statute 62U.08 directs the Commissioner of Health to convene a Work Group
to make recommendations on the design of an “Essential Benefit Set” (EBS). The primary
objective of the EBS is to provide more cost-effective and affordable health coverage by
encouraging greater use of evidence-based health care services and less use of ineffective or lowvalue services. The EBS is specifically required to:
(1)
Provide coverage for a broad range of services and technologies;
(2)
Be based on scientific evidence that the services and technologies are clinically and
cost-effective; and
(3)
Provide lower enrollee cost sharing for services and technologies that have been
determined to be cost-effective.
The Work Group has been established by the Minnesota Department of Health
(MDH) and includes representatives from health care providers, health plans, state
agencies, and employers with expertise in:
•
Standards for evidence-based care;
•
Benefit design and development;
•
Actuarial analysis; or
•
Analysis of the cost impact of coverage of specified benefits.
The Work Group is expected to attend approximately six half-day meetings in September
and October 2009. All meetings will be open to the public. Members are expected to:
•
Review meeting materials ahead of time and be prepared to contribute clear and
focused ideas for discussion;
•
Maintain a statewide and system-wide perspective in generating recommendations
for the EBS;
•
Review and provide comment on a preliminary report to be shared with Work Group
members by October 9, 2009; and
•
Contribute to the development of final recommendations to be submitted to the
MDH by October 31, 2009.
Additionally, members will be asked to provide input on the following key issues: (1)
What health care services should be included in the EBS? (2) Are there services that are not
typically covered by private insurance that should be included? (3) Are there services that are
typically covered that should be excluded? (4) What structure of enrollee cost sharing will
optimize the use of effective care? For example, should deductibles or other cost-sharing
requirements be waived for drugs or services that are deemed to be particularly important for
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managing chronic disease and containing health care cost growth over the long run? Should
higher cost sharing apply for services that are deemed less important or effective? (5) How
could coverage vary under high, medium, and low options?
MDH has engaged CIRDAN Health Systems and Consulting (Cirdan) and its
subcontractor the Minnesota Center for Health Care Ethics (MCHCE) to provide consulting,
actuarial, and facilitation support for the EBS project. After the Work Group makes its
recommendations, an actuarial analysis of the cost of the options will be completed by Cirdan.
PURPOSE OF THE BACKGROUND PAPER
The purpose of this Background Paper is to propose an initial structure and framework for
evaluating EBS coverage options and provide an overview of related research and experience.
The paper includes examples of similar efforts in Minnesota, nationally, and internationally, as
well as other related published research.
Since the Work Group charge to use cost-sharing mechanisms to encourage clinically and
cost-effective services is conceptually similar to Value-Based Insurance Design (VBID), this
issue is discussed in more detail than other topics. Topics discussed include:
•
Specific benefit design options for an EBS;
•
Specific conditions that have typically been considered for VBID or other EvidenceBased Medicine (EBM) insurance designs;
•
Practical implementation and regulatory considerations;
•
Early VBID experience from various companies, employers, states, and countries;
and
•
Actuarial considerations for designing and pricing the EBS.
In addition to VBID, there are several other closely related topics in the health research
and policy literature. While the scope of the Work Group is recommendations for an EBS as
defined in the legislative charge, it is important to be aware of these other topics insofar as they
may affect the success of an EBS plan design. The Background Paper includes a brief discussion
of these topics in the section, “Current Concepts and Issues Related to EBS Design.” While
remaining within the limited scope of the Work Group’s charge, it may be valuable to identify
and prioritize related topics and concepts that the Work Group considers are: (1) very closely
related to and important for the success of an EBS plan design; and (2) of at least indirect interest
as background for informing EBS plan design, but not as closely related to the success of the
study’s recommendations.
Work Group members interested in additional information on specific issues and articles
should refer to the Resources section at the end of the paper for a detailed listing, including
summaries and links to most of the articles and websites. All articles are available upon request
except where limited by copyright restrictions.
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Finally, it should be noted that the Background Paper represents an initial working
document for the Work Group and should not be considered comprehensive. Additional research
will be performed and concepts will be developed as the Work Group defines the EBS.
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PROPOSED PROCEDURE FOR
EVALUATING BENEFITS
GENERAL PRINCIPLES
There is a wide range of research regarding the incorporation of EBM practices and
related cost/benefit analyses in insurance product designs. Prior to reviewing available research,
we propose that the Work Group first discuss general principles for evaluating specific services
and best-practice protocols for incorporation into benefit designs.
1. Determine a list of general principles to be met by the EBS.
2. Define what medical conditions should be covered under the high, medium and
low benefit sets.
3. Define what types of services and protocols will be considered for coverage.
4. Determine a method for monitoring or administering best practices.
5. Determine a method for applying incentives to the protocol or service.
This list of general principles can be used to determine a framework for evaluating related
research and case studies. As the project proceeds, each case study or protocol will be evaluated
against these guidelines, resulting in recommended covered conditions, protocols, and benefit
design structures that will meet the general principles being established by the Work Group. The
following provides a more detailed discussion of these considerations:
In addition to the charge for the Work Group as described, the EBS must meet several
practical criteria for patients, health care providers, and health plans in order to fulfill its
objectives. The following is a partial list of these requirements:
Patients
(1)
Patients must be able to understand which services will be covered by the benefit
set before the services are provided.
(2)
The cost-sharing mechanisms or premium benefit designs must be consistent with
the best practices and be actionable by the patient when making purchasing
decisions.
(3)
The information necessary to make a decision regarding treatment must be
available to the patient at an appropriate time.
Health Care Providers
(4)
Providers must understand how they will be reimbursed for services under the
benefit design.
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(5)
While outside the scope of the Work Group’s charge, for an EBS to be effective it
will be important that the incentives created by the reimbursement methodology are
consistent with the desired best practices and be actionable by the provider.
(6)
Information regarding whether a treatment regimen is covered must be available to
the provider at an appropriate time.
Health Plans
(7)
The performance of providers and patients related to the benefit design must be
measurable and communicated to patients and providers.
(8)
The coverage set must be able to be routinely monitored and modified, when
necessary, to reflect changes in best practices and technology.
(9)
There must be clear agreement of the medical necessity and clinical appropriateness
of the covered service vs. the services that are not covered.
(10) The benefit design and provider reimbursement methodology must not be unduly
burdensome to administer.
The Work Group will need to refine and agree on a set of these or other basic principles
that will provide a basis for viewing case studies and research and a foundation for designing the
EBS. As the EBS is defined, it should be tested against these basic principles in order to ensure
that proposed benefit designs meet the Work Group’s goals and that the final recommendations
can be effectively implemented.
DEFINE THE TYPES OF CONDITIONS TO BE COVERED
Conditions being treated by the covered services in an insurance benefit package can be
categorized into the following broad categories:
•
General prevention
•
Emergent conditions
•
Chronic condition management
•
Elective/lifestyle procedures
Each of these categories presents different characteristics and may be more or less
appropriate for inclusion in a particular component of a benefit design. For example, identifying
proper treatment protocols to determine coverage during a medical emergency can be
complicated and impractical, as compared to the patient and provider considering a cost-sharing
differential related to an elective C-section.
Once included in the benefit set, services provided to treat these conditions are defined
and administered in a similar manner under current insurance regulations and statutes. Some
services within these broad categories may be more or less appropriate for the application of
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differing cost-sharing mechanisms to encourage patient engagement, may be more appropriately
funded differently (such as through premium differentials), or may not be appropriate for funding
under an insurance mechanism at all. The Work Group may want to consider excluding some
services or assigning them to cost-sharing tiers based upon the condition being treated as the
EBS is developed. For example, the inclusion of cost sharing with general preventive services
may create inefficiencies, raise the cost of services, or create unintended disincentives to
obtaining the services.
DEFINE THE TYPES OF SERVICES AND PROTOCOLS TO BE COVERED
All insured services are defined for reimbursement purposes based upon a definition of the
procedure, patient, provider, and medical necessity. Medical necessity definitions range from
complex diagnostics processes to simple qualifications based upon age of the patient. Once the
patient is determined to be qualified for the service, clinical protocols may be grouped into
several basic types:
(1)
Service alone. This bases coverage solely upon the service in question. Routine
evaluations and management or preventive office visits are examples. These benefits are
generally the simplest to administer and incorporate into benefit designs.
(2)
Combination of diagnosis and service event. These are also “single events” and as such
are relatively easy for the patient and provider to understand and can generally also be readily
incorporated into benefit packages. Examples include a regular screening authorized for a
patient with a specific chronic condition, and the treatment of someone who has suffered a
simple fracture.
(3)
Combination of diagnoses, services, evaluation, and time. These are complex protocols
that require clinical evaluation of medical records in order to determine full compliance. These
can range from fairly easily evaluated protocols to step therapy programs, such as in the
treatment of back pain, or progressing from generic or other lower-cost pharmacy options to
high-cost brand drugs. Pay-for-performance (P4P), patient registration into a case management
program, preauthorization, or other more sophisticated benefit designs are generally necessary in
order to implement the benefit.
(4)
Outcomes-based review. Many conditions and treatment programs do not readily lend
themselves to the application of clear guidelines and protocols. Furthermore, many protocols are
based upon clinical consensus rather than rigid scientific analysis. In these cases, an alternative
to monitoring adherence to a protocol may be to monitor patient outcomes. While outside the
scope of the EBS Work Group charge, this approach would identify “best in class” providers and
modify benefit designs to reflect use of providers displaying better outcomes, regardless of the
treatment regimens.
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DETERMINE THE METHOD FOR MONITORING OR ADMINISTERING BEST PRACTICES
Different services, protocols, and best practices will require different implementation
methods. Consideration will need to be given to the various insurance administrative systems
that would be affected by new design changes. The following are some of the administrative
mechanisms that can be used, alone or in combination, to administer a new benefit design:
(1)
Claims adjudication. Variations in cost sharing are commonly administered on the basis
of member type or eligibility status, health care service, and diagnosis. To incorporate this
approach into an EBS, sufficient information must be presented in claims submitted by the
provider.
(2)
Prospective clinical reviews. Coverage determinations could be made using a
prospective approval mechanism, such as preauthorization, Medical Director review, or a case
management process. These approaches could be incorporated directly by the insurer or through
an independent third party.
(3)
Retrospective evaluation of providers. While outside the scope of the EBS design
project, it would be possible to use an evidenced-based protocol or value-based purchasing
strategy to assemble a network of high-value providers through outcome or adherence
measurements. Reimbursement strategies can reinforce value by rewarding providers who
practice according to evidence-based standards. Tiered network strategies could lower cost
sharing for patients utilizing high-value providers.
(4)
Provider education regarding best practices. While outside the scope of the EBS design
project, it would be important that covered treatment options are understood before decisions
regarding treatment are made. Reimbursement practices should reward providers for
improvements in efficiency and outcomes. New coding requirements should be held to a
minimum, but to the extent that they are necessary, should be well understood by providers and
staff.
(5)
Patient education regarding best practices and clinical effectiveness can also be an
effective means of improving outcomes. If monitoring of patient compliance is included,
sufficient information about covered conditions and services must be provided in a convenient
and accessible format so that it can be readily understood and accepted.
DETERMINE THE METHOD FOR INCORPORATING INCENTIVES FOR ADHERENCE
Such methods may include, but are not limited to, the following types of incentives
incorporated into an EBS design:
(1)
Member cost sharing, such as variable copayments, coinsurance, or deductibles. This
may also include consumer-directed plans such as MSAs, HRAs, etc.
(2)
Exclusion of coverage for services that do not meet evidence- or value-based standards.
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(3)
Premium adjustments or discounts based on member participation in or adherence to
incentive programs.
(4)
Provider reimbursement differentials, while outside the EBS project scope, could be
based on participation in consumer education programs, adherence to recommended protocols or
other quality standards.
The incentive system should be consistent and integrated with the overall benefit design for ease
of administration.
Once a standardized approach for assessing best practices and protocols has been
established, case studies and research can be reviewed and focused. The benefit evaluation
approach outlined above can also be used as a model for future modification of the EBS.
ADDITIONAL WORK GROUP CONSIDERATIONS
Additional Work Group EBS design considerations are outlined below. This list is not
intended to be comprehensive, but along with the considerations outlined above is intended to
serve as the basis for beginning Work Group discussions.
(1)
Criteria for assessing effectiveness. Determine which benefits qualify as clinically
effective. Determine an evidence threshold, i.e., how strong does medical evidence need to be
before cost sharing or other incentive methods are used? Strength of evidence could be one of
the factors used in making high, medium, or low design decisions. The Work Group may
consider incorporating the work of existing groups that actively research and develop bestpractice protocols rather than focusing on a review of condition-specific protocols.
(2)
Develop recommendations for how to monitor and maintain the EBS. This should
include changes resulting from updates to comparative effectiveness research and evidencebased guidelines. Building on the work of existing groups should be considered.
(3)
Concept of “value.” The concept of “high-value” services as discussed in much VBID
research raises public policy questions and is not consistent with current commonly understood
definitions of the insurance mechanism. Concept of values vary widely and can be diametrically
opposed depending upon individual vs. population perspectives. The Work Group should define
early in the process the degree to which the concept of value should be directly incorporated into
the EBS, if at all.
(4)
Consumer engagement and incentives. Determine which incentives are most appropriate
for a particular goal and benefit. Identify strategies for consumer engagement and education, and
how to monitor compliance with targeted behaviors. Identify how health information technology
may be used to improve provider and patient communication and knowledge.
(5)
Regulatory structure. Determine use of or response to historic definitions of health
services within health insurance statutes and regulations, including mandated benefits,
experimental or alternative treatments. Develop recommendations on how to minimize the
effects of adverse selection, such as risk adjustment mechanisms, assuming the EBS is going to
be offered along with other more traditional plans.
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Examples of Included and Excluded
Benefits in Typical Plans
The charge directs the Work Group to consider whether services that are not typically
covered by private insurance should be included in the EBS, and whether some services that are
typically covered should be excluded. In addition, the Work Group may also consider a middle
range to “include, but at increased levels of cost sharing.”
The following lists of services are intended to serve as a basis for beginning a Work
Group discussion on benefits that could fall into these decision areas. The review of these
services should be done in the context of applying a broad guideline or outcomes measure as part
of a general benefit design approach, rather than making specific decisions to incorporate each
specific service in statute. The lists are not intended to be considered complete or as
recommendations for the EBS, but as examples of services that are often mentioned in
discussions of this kind. The examples of services are listed in alphabetical order.
SERVICES TYPICALLY COVERED
Services typically covered by private insurance but which could be considered for either
exclusion or additional cost sharing for some categories of patients and circumstances include:

Antibiotics – Overprescribed in treating upper respiratory infections such as cold and
flu.

Antihypertensive Drugs – Relatively inexpensive beta blockers or diuretics often work
better than newer, more expensive calcium channel blockers and ACE inhibitors.

Arthroscopic Surgery for Osteoarthritis – A recent study found no additional benefit
as compared to more traditional patterns of care.

C-Sections – Where the health of the baby or mother is not at risk in a vaginal
delivery. Given the rapid increase in the rate of C-section delivery in the U.S., the
concern is one of overuse as a matter of convenience.

Heart Stents – Overuse concerns after a recent study found it is less expensive and just
as effective to treat many heart patients with drugs rather than angioplasty with a stent.

High-Tech Mammography – Efficacy remains uncertain; a 2007 study found that this
technique failed to improve the cancer-detection rate significantly and resulted in more
needless biopsies. Other studies appear to support a high-tech approach for younger
women with denser breast tissue. Mammography presents an interesting discussion as
it relates to VBID as several articles mention mammograms for women with a first
degree relative with breast cancer as a high-value service worthy of cost-sharing
reductions.
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
Hysterectomies – Some studies have shown that up to 70% of these surgeries are
unnecessary or inappropriate.

Implanted Defibrillators – Cost $90,000 or more over a lifetime; some research
estimates that 1/3 of patients may not need them.

Preventable Hospital Readmissions – When caused by incorrect care while in the
hospital or shortly after discharge.

Radiology Services – High cost combined with high levels of unnecessary imaging
(20% to 50% in one recent study) for certain services that do not help diagnose or treat
ailments. For example, whole-body CT scans which can cost $1,000 or more may be
promoted for detecting early signs of cancer, heart disease, and other abnormalities.
The Food and Drug Administration has concluded there are no proven benefits for
healthy people.

Spinal Fusion Surgery – Efficacy for the most common indications remains unclear.
May lead to more complications than other types of surgery.

Virtual Colonoscopy – A 2007 study report concluded that standard colonoscopy is
better at spotting smaller suspicious polyps. Though less costly than a standard
colonoscopy, the virtual test may not be cost-effective if suspicious findings require
retesting with standard colonoscopy.
SERVICES TYPICALLY NOT COVERED
Services typically not covered by private insurance but which could be considered for
coverage include:

Alternative Medicines – For discussion purposes, defined as encompassing a broad
range of treatments such as acupuncture, homeopathy, and holistic medicine outside of
the form taught in most U.S. medical schools. Some European countries like
Germany, Switzerland, and the U.K. have begun to investigate use of alternative
medicines to assist in the treatment of chronic diseases or cancers.

Additional Mental Health Services – Some experts have concluded that health plans
could reduce acute medical care costs and/or improved outcomes by making mental
health care services more accessible to some patients and better integrated with
primary health services.

Dental Services – Experts point to increasing links between oral health and overall
health status. Evidence supports that a healthy mouth may help ward off medical
disorders. An unhealthy mouth, especially gum disease, may increase risk of serious
health problems such as heart attack, stroke, poorly controlled diabetes and preterm
labor.

Health Education / Coaching – As means of closing gaps in adherence to evidencebased guidelines and reducing barriers to utilization of high-value services. Health
coaching, when properly designed, may support healthy behavior change in areas such
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as cardiovascular disease risk factors, tobacco use, weight management, and stress
management.

Vision – In the U.S., approximately 3,000,000 people aged 40 years or older are
visually impaired and 900,000 are legally blind. Some experts believe that more than
40% of blindness could have been prevented or cured if appropriate treatment had
been provided in a timely fashion. Unfortunately, about half of potentially blinding
eye diseases remains undetected, even among people who have regular access to the
health care system.
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Practical and Regulatory Considerations in Benefit Design
Insurance design that broadly varies cost sharing by clinical and cost-effectiveness is a
fairly recent innovation. An EBS design that incorporates these and other new features presents
a number of potential practical and regulatory challenges, including the following:
(1)
Claims administration – Claims systems must be sufficiently robust to support the costsharing design. Depending on the EBS design, it is possible that additional member or claims
data elements not traditionally stored within claims adjudication systems may be required to
adjudicate EBS cost sharing properly.
(2)
Increases to short-term spending – In an era in which health care budgets are stretched
increasingly thin, lowering cost sharing for certain services may increase the cost of the EBS
plan design. Many studies have found that, in general, increasing cost sharing reduces the cost
of insurance because some costs are transferred to the consumer, consumers migrate to lowercost providers, and utilization is reduced. The intended purpose of cost sharing is to encourage
consumers to be better shoppers through incentives to consider cost and buy only what they most
need from the “highest-value” providers. An unintended consequence is that they may avoid
obtaining needed services.
Conversely, when cost sharing is lowered, insurance program costs generally increase. Again,
three forces are at play: cost is transferred back to the plan, utilization increases, and there is
minimal incentive to seek out lower-cost, more efficient providers. In the case of an EBS design,
lower cost sharing and associated utilization increases are targeted with the goal of promoting
high-value services that will lead to improved health, fewer complications, and possibly lower
cost in the long-term. However, it may take time for these effects to emerge, and in the shortterm costs can increase.
These issues are discussed in greater depth in the VBID research literature. These studies
include discussion of short-term cost increases vs. potential long-term savings. They stress that
the primary benefit of VBID is not cost savings, but the ability to increase consumers’ marginal
value gained from a dollar of health spending. In terms of medical outcomes, VBID attempts to
leverage a given amount of spending but produce better outcomes by incentivizing high-value
services or providers.
(3)
Employee/member turnover – Similar to disease management programs, member
turnover can present a challenge if members do not remain in the program long enough for the
interventions to prove either clinically or financially cost-effective. Preventive services may lead
to improved health status and long-term savings given enough time to work. But today’s
workforce is very mobile, which places a faster return-on-investment requirement on these types
of innovations. The more a program is able to target members who are out of compliance with
evidence-based medicine and whose resulting condition is high-risk, yet correctable, the greater
and faster the benefits, minimizing turnover concerns. Also, requiring these services to be
covered by all insurance programs eliminates or reduces the “free-rider” problem, where the plan
that implements the preventive program incurs the cost, and a plan into which the member
enrolls in the future receives the benefit.
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(4)
Advanced information systems / data challenges – Health information technology is
advancing, but many systems remain unable to communication with one another. Significant
data advances remain to be developed before most will be positioned to quickly and reliably
identify specific out-of-compliance patients or groups of patients in need of services.
(5)
Comparative Effectiveness Research (CER) – Compared to other developed countries,
CER in the U.S. is still quite limited and funded at much lower levels. While significant dollars
are beginning to flow to new research as a result of the recent American Recovery and
Reinvestment Act (ARRA) legislation, many areas of health care practice remain largely
untouched as it relates to CER for the foreseeable future. Additionally, even when research
exists, in many instances there remains a lack of clear evidence about what works and what
doesn’t. For example, some CER research does not directly compare protocols or treatments on
a direct head-to-head basis. As this body of knowledge grows, it will become easier to identify
which services qualify as clinically effective and cost-effective.
(6)
Defining Value – Determining the value of a particular service requires a blend of
clinical, economic, personal, and actuarial judgments. Personal or individual value judgments
may conflict with group or societal judgments. How to weight or resolve such conflict
judgments must be considered before a uniform definition of value can be assigned. Such
conflicts may make a uniform definition impossible unless value to the group is given preference
over value to the individual patient or value is narrowly defined. Unique individual medical
situations further complicate the challenge of developing a uniform method for determining
higher or lower value services.
(7)
Adverse Selection – If a new benefit set that lowers cost sharing for chronic conditions is
offered next to alternative, more traditional plan designs, the new plan may attract a
disproportionate share of members with chronic conditions. If premium rates are not able to
adequately reflect this adverse selection, it may be appropriate to consider the inclusion of some
type of market risk adjustment mechanism to mitigate the impact.
(8)
Privacy and Confidentiality – HIPAA compliance and privacy remain important
considerations in any health care program. To the extent that service and diagnostic data are
used to design and maintain a program, or to personalize cost-sharing incentives as a means of
improving their effectiveness, HIPAA will need to be considered.
(9)
Reporting fraud – A mechanism may be required in the EBS design to identify members
who, by the nature of their conditions or use of services, qualify for lower cost sharing. Some
members who may wish to qualify will not meet the standards. As a result, some providers or
patients could misreport this information in order to become qualified. Providers may benefit
from false improvements in future outcomes or from a feeling that they have helped out their
patients monetarily.
(10) Regulatory/legal challenges – Insurance is an extraordinarily regulated business. New
product designs, no matter how ingenious or well-meaning, must meet all statutory and
regulatory requirements. The EBS design is almost certain to require new legislation even to be
permitted under the state regulatory structure. A complete legal or compliance review is outside
of the scope of the Background Paper, but is likely to be required.
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Current Concepts and Issues Related to EBS Design
The Work Group’s charge touches on several related and overlapping concepts in health
care policy and reform. These include utilizing evidence-based medicine guidelines and
comparative effectiveness research to identify clinically effective and cost-effective services and
technologies. Depending on the final EBS design, a program could also use outcomes measures
and pay-for-performance programs to identify and reward high-value providers.
All of these concepts are also directly or indirectly related to the goal of increasing
utilization of effective services and technologies. The following describes and defines several of
the terms and concepts most closely related based on recent studies and usage:
(1)
Essential Benefit Set (EBS) – This term is not uniformly used. For purposes of the Work
Group’s charge, the EBS is required to:
•
Provide coverage for a broad range of services and technologies;
•
Provide scientific evidence that the services and technologies are clinically and costeffective;
•
Provide lower enrollee cost sharing for services and technologies that have been
determined to be cost-effective; and
•
Include necessary evidence-based health care services, procedures, diagnostic tests, and
technologies.
For comparative purposes, the Minnesota Medical Association (MMA) recently defined an
essential benefit set as a set of services that is sufficiently comprehensive to sustain the health of
an individual (May 9, 2009 MMA Board of Trustees minutes). They determined that an EBS
should represent a minimum coverage guarantee to all Minnesotans and be adequate to maximize
outcomes through all phases of life, yet be affordable. They stressed standardization of the
benefit set, copayments, and deductibles across insurers and buyers. Lastly, they concluded that
an EBS should be supportive of the concept of medical homes.
The State of Oregon’s efforts in mid-2008 on an Essential Benefit Package reflect many similar
perspectives as those of the MMA, but they defined the concept even more broadly. Their
definition incorporates the goals of improving population health, reducing costs, reflecting
Oregonians’ values, and providing a social safety net, all while striving for affordability and
sustainability for individuals and the state. Given these differences, it is important to understand
varying definitions and objectives when comparing research sources that use common terms such
as EBS or other related terms and concepts.
(2)
Value-Based Insurance Design (VBID) – Health reform efforts of the last few decades
have tended to focus on two primary areas: restraining cost growth and improving quality.
VBID builds on prior reform efforts by focusing on the concept of value, which it defines as a
measure of both cost and quality. As such, it is not enough for services to be just high quality or
low cost, but services should be simultaneously considered for both cost and quality. VBID’s
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goal is not necessarily focused on cost savings, but rather on maximizing health outcomes at any
given level of expenditure.
As defined by A. Mark Fendrick, MD, of the University of Michigan’s Center for VBID: “VBID
is grounded in the theory that reducing or removing financial barriers to essential treatments and
high performance providers will steer consumers toward value-based health care and improved
health status.” In this way, he describes VBID as “clinically sensitive, fiscally responsible.”
As the VBID concept has developed over the last 10 years, best practices have grown to include:
•
Reduced or waived cost sharing for high-value services. Higher cost sharing for lowvalue services.
•
Additional attention being paid to the individual patient condition and level of severity. In
doing so, the design is attempting to acknowledge that value of a given service often
depends on the individual receiving that service;
•
The use of disease management and wellness programs to target higher-risk patients and
apply VBID to their specific needs;
•
Patient education;
•
Incentives to use high-value providers;
•
Patient monitoring and compliance requirements as a necessary condition for continued
participation in cost-sharing reductions. These efforts are likely to be made easier as
health information technology improves;
•
Rigorous evaluation of both the clinical and financial aspects of a program to allow for
ongoing refinements to design; and
•
For more complex clinical conditions, the use of medical homes to facilitate the design of
value-based programs that take into account the complex treatment protocols and the
customized needs of higher-risk patients.
Value-Based Purchasing (VBP) is also playing a larger complementary role. VBP attempts to
increase overall value from the bottom up by contracting with high-quality providers and
incentivizing providers to adhere to evidence-based medical practice patterns. A benefit design
could then incentivize members to use these providers by reducing the associated financial
barriers. Several examples are highlighted within the Case Studies section.
(3)
Cost Sharing – This is a mechanism to control utilization and cost, and is emerging in
newer designs as a means to incentivize behavior. Higher cost sharing directly shifts cost to the
patient, thereby lowering cost to the plan and premium payors. Higher cost sharing is a primary
means of controlling over-consumption and encouraging price shopping. A growing body of
evidence from Consumer Directed Health Plans (CDHPs) confirms these effects. However, if
not properly designed, the reductions in utilization could come from both effective and
ineffective or inefficient services.
Evidence from tiered drug formularies provides evidence for this type of risk. With drugs, as for
health services, higher cost sharing contributes to lower utilization. If not carefully designed,
cost sharing can also reduce adherence to pharmacy treatment regimens. For example, reduced
utilization of maintenance drugs used to manage chronic disease may lead to adverse outcomes
Essential Benefit Workgroup Background Paper
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such as expensive, acute care events. A study of Canadian asthma patients showed this effect:
as cost sharing increased, overall costs actually increased when both pharmacy and medical
spending were considered.
VBID relies heavily on changes in cost sharing. Lower cost sharing in the short run often adds
to plan costs. If the program is successful, the use of these high-value services improves member
outcomes and avoids at least a portion of future adverse events. The net overall cost effect,
however, is often not easy to predict.
VBID’s overall financial effect on a given benefit program varies with the degree of cost-sharing
change and how finely and successfully the program is able to target members who will benefit
most from modifying their behavior. The more targeted the program, the lower the program
costs. The more successful the program is at targeting risk caused by lack of adherence to
evidence-based guidelines, the better the return. In general, returns improve in situations where:
•
The risk of bad outcomes is higher, such as for chronic conditions;
•
The cost of bad outcomes is higher, such as expensive emergency room utilization or
repeated hospitalizations;
•
The degree to which cost sharing actually affects behavior is higher; and
•
The degree to which a guideline is successful at preventing a bad outcome is higher.
(4)
Evidence-based Medicine (EBM) – EBM is the conscientious, explicit and judicious use
of current best-available evidence gained from scientific study to make decisions about the care
of individual patients. It seeks to assess the quality of evidence of the risks and benefits of
treatments, including lack of treatment. EBM seeks to clarify those parts of medical practice that
are in principle subject to scientific methods and to apply these methods to ensure the best
possible prediction of outcomes in current medical treatment. In some circumstances, the
development of guidelines or protocols is based on clinical consensus where rigorous scientific
studies are not available or sufficient. It is should also be noted that many aspects of medical
care depend on individual factors such as quality-of-life and value judgments, which may not be
subject to scientific methods.
(5)
Comparative Effectiveness Research (CER) – CER is the conduct and synthesis of
systematic research comparing different interventions and strategies to prevent, diagnose, treat,
and monitor health conditions. The purpose of this research is to inform patients, providers, and
decision-makers about which interventions are most effective for which patients under specific
circumstances. To provide this information, CER must assess a comprehensive array of healthrelated outcomes for diverse patient populations. Defined interventions compared may include
medications, procedures, medical and assistive devices and technologies, behavioral change
strategies, and delivery system interventions. The Federal Coordinating Council for
Comparative Effectiveness Research has released prioritized criteria for additional CER. The
criteria are intended to help guide the $1.1 billion that has been federally appropriated for
comparative effectiveness research in FY 2009 and FY 2010 in the ARRA legislation.
CER could expand knowledge of the relative merits or outcomes of one intervention in
comparison to others. When combined within an evidence-based medicine context, this
knowledge could then better inform a value-based judgment.
Essential Benefit Workgroup Background Paper
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(6)
Pay-For-Performance (P4P) – While not within the scope of the EBS Work Group
charge, it is important to be aware that P4P arrangements are often components of a “value-based
purchasing” strategy as described above. Under these arrangements, providers are rewarded for
meeting pre-established targets for quality and efficiency. This is a fundamental change from
fee-for-service (FFS) payment systems. Disincentives, such as eliminating payments for medical
errors or increased costs, have also been proposed. In the developed nations, the rapidly aging
population and rising health care costs have recently brought P4P to the forefront of health
policy discussions. Pilot studies underway in several large health care systems have shown
modest improvements in specific outcomes and increased efficiency, but limited material cost
savings due to added administrative requirements. Statements by professional medical societies
generally support incentive programs to increase the quality of health care, but express concern
with the validity of quality indicators, patient and physician autonomy and privacy, and
increased administrative burdens.
(7)
Consumer-Driven Health Plans (CDHP) – CDHP is a broad term that incorporates
several health care strategies, many of which are consistent with a value-based design. The goal
of CDHP is to heighten consumer awareness of the cost and utilization of services to incentivize
wise consumption. In practice, the most common CDHP design incentives include:
•
Use of high deductibles, coinsurance, and copayments to incentivize members to take a
more vested interest in the cost and frequency of services utilized;
•
Tiered networks in which members pay higher copayments or coinsurance when using
higher-cost providers;
•
Health Savings Accounts (HSAs) and similar plans in which an account, either an HSA,
Health Reimbursement Arrangement (HRA), or a Flexible Spending Account (FSA), is
combined with a high-deductible plan to provide participants with greater flexibility, often
including rollover of remaining dollars into subsequent plan years; and
•
Information systems to support greater price transparency and prudent purchasing
decisions.
Value-based design is in many ways an extension of CDHPs and presents the opportunity to
improve upon the concept if it is able to provide actionable information regarding effective and
efficient services and providers to patients and educate patients about recommended services that
may otherwise have been under-utilized in a more traditional CDHP design.
(8)
Health Information Technology (HIT) – In addition to comparative effectiveness
research, ARRA has made a substantial investment in the broad areas of HIT. These advanced
information systems seek to improve care by ensuring that the right information is available to
doctors and patients at the right times. Information technology can support VBID if it places the
correct information about effectiveness, evidence-based guidelines, and cost in the hands of
patients and providers to support value-based judgments.
(9)
Medical Home – The Medical Home concept focuses on delivering primary care in a
comprehensive, coordinated, continuous manner. It seeks collaboration between patients and
providers, emphasizes patient needs and preferences, and uses health information technology to
integrate evidence-based medicine. The concept often includes a focus on measuring outcomes
and structuring provider payments with resulting measurable improvement in care.
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Given the overlap of many health care strategies with evidence-based medicine, it is possible that
medical homes may play a role in the EBS. The attention given to prevention, continuous care,
and a close relationship between patient and provider allows one to envision a more customized,
patient-specific use of value-based incentives with ongoing improvement and compliance.
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Case Studies in Related Benefit Designs
The following case studies were selected to provide Work Group members with a sense
for the design characteristics and experiences of early initiatives and to act as a starting point for
discussion. Each example includes a brief summary highlighting the design and key findings.
The examples do not represent an endorsement of any particular approach or agreement with the
conclusions reached. Furthermore, it is anticipated that additional research into case studies will
be performed based upon the suggestions of the Work Group.
Many of the case studies are taken from work done by the University of Michigan Center
for Value-Based Insurance Design, which extensively tracks efforts in VBID and reports on the
results in an effort to further the principals and use of VBID. Some of these case studies are
classified into what Michigan views as the four main design approaches:
(1)
Service-focused – where the design waives or reduces cost sharing for select drugs or
services for all members who utilize them;
(2)
Condition-focused – where the design waives or reduces cost sharing for selected drugs
or services for all members who have been diagnosed with specific clinical conditions;
(3)
Condition- / Severity-focused – where the design waives or reduces cost sharing for
selected drugs or services for all high-risk members with specific clinical conditions who would
be eligible for engagement in a disease management program; and
(4)
Condition- / Severity- / Participation-focused – as an extension of the last approach, with
the added requirement of active participation in disease management, often including clinical
pathways or treatment protocols.
While not within the scope of the EBS project, for background purposes we have also
identified a fifth design approach that applies a VBID approach focused on provider
performance:
(5)
Provider outcomes-focused – This design would waive or reduce cost sharing for patients
using providers who demonstrate the ability to deliver high-value care as measured by outcomes.
Variations could include targeting the reduced cost sharing to specific diagnoses or conditions
where evidence-based practice is clearest.
STATE OF OREGON ESSENTIAL BENEFIT PACKAGE (EBP)
This Oregon version of an EBS attempts to answer the question of what type of coverage
or benefit plan is absolutely essential for safeguarding the health of Oregonians. The EBP is
designed around diagnoses and treatments. It emphasizes prevention, management of chronic
disease, use of evidence-based medicine, primary care, and the concept of medical homes.
The EBP includes a defined set of health care services that aim to be affordable and
financially sustainable. The plan uses a high-deductible design to keep monthly premium costs
down and also to discourage movement out of private insurance and into public programs. An
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enrollee out-of-pocket maximum protects against bankruptcy. The plan is designed to be
foundational in that it provides a minimum floor and no insurance plan should be allowed to
offer lower levels of benefits. Plans, including Medicaid, can offer more benefits or less cost
sharing; however, the low barriers to value-based services are viewed to be part of the minimum
requirements. Companies and individuals could “buy-up” and pay higher premiums.
The EBP coverage is based on the Oregon Health Services Commission’s Prioritized List
of Health Services. This list, which has been in use since the Oregon Health Plan began in 1994,
uses evidence-based medicine in determining coverage priorities.
Cost sharing reflects the placement of a condition/treatment pair on the Prioritized List:
the higher a service’s position on the Prioritized List, the lower the cost sharing. This feature
allows differentiation of services based on levels of “essentiality.” For example, maternity care
is the highest priority on the list and is available with little or no cost sharing. Additionally, little
or no cost sharing is required for preventive care, other “value-based services” targeted at
maintaining individuals with chronic illnesses, basic diagnostic services, and comfort care
services including hospice and palliative care. Finally, lower cost sharing applies to care
provided in a medical home.
Higher cost sharing applies to care provided in specialist offices, emergency rooms, and
hospitals in order to provide incentives for the timely use of primary care when appropriate.
Other diagnostic services have higher cost sharing than basic diagnostic services, with utilization
further managed with evidence-based guidelines when available or prior authorization (where no
guidelines exist) for services with high use, high cost, and/or high variability in utilization.
Ancillary services, such as durable medical equipment, are covered with cost sharing
based on the priority of the condition being treated. Discretionary services are limited by annual
maximums unless they “substantially avert downstream costs or the adverse consequences of a
condition.” Discretionary services may include restorative dental and some vision services. The
EBP excludes services currently not covered by the Oregon Health Plan, including self-limited
conditions, ineffective treatments or treatments that have little impact on health, cosmetic
services, infertility services, and experimental treatments.
STATE OF MAINE / WELLPOINT, INC.
Beginning in late 2002, WellPoint developed four pilot VBID benefit designs. The State
of Maine took part in one of the four designs, waiving or reducing cost sharing for diabetics. A
telephonic education and support program was used. Preliminary results found a marked
improvement in medication possession rate, from 77% to 86%, and $1,300 lower adjustedaverage costs over 12 months of follow-up. In 2009, WellPoint is now offering VBID plans in
all four of the design approaches outlined above.
CATERPILLAR
In 2005, this Illinois-based manufacturer used a combination of features to incentivize
high-value services, including full coverage for well-woman and well-baby care, no cost sharing
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for diabetes drugs, risk stratification based on clinical lab results, free colon cancer screenings,
premium reductions for completing health risk assessments (HRAs), wellness programs, patient
education, and on-site nursing. Results claimed to be positive with improved measurement and
lab results for diabetic enrollees.
SERVICE EMPLOYEES INTERNATIONAL UNION – HEALTH CARE ACCESS TRUST
New in spring of 2009, this pilot program in Minneapolis, Minnesota and Milwaukee,
Wisconsin is for janitorial and security employees. It includes waived copayments for asthma,
hypertension, and diabetes drugs based on information gathered from HRAs. If members are
active in a disease management program they are reimbursed for doctor visit copayments. The
program also covers telephonic coaching for weight loss and smoking cessation. It was designed
to be cost-neutral while improving the health of union members. It is too early to determine the
cost effectiveness of the program. There are plans to expand the program to include other
conditions.
UNITED HEALTHCARE – DIABETES HEALTH PLAN
New in 2009, United Healthcare rolled out the Diabetes Health Plan targeting diabetics
and pre-diabetics looking to better manage their conditions, and employers looking to control
costs for this portion of their populations. The benefits for members who follow medically
proven steps to manage their conditions are free testing supplies and drugs and lower
copayments for doctor visits. Members have access to online monitoring and education tools.
Participants must comply with evidence-based diabetes preventive care guidelines to remain in
the plan.
PRIME THERAPEUTICS – EFFICIENCY PROGRAM
This pharmacy benefit management company, which is owned by ten Blue Cross / Blue
Shield plans, has created the “Efficiency Program.” The program begins to move VBID in the
direction of personalizing the design by stratifying members according to perceived risk of a
future adverse medical event. It also studies pharmacy spending and allows for targeted clinical
programs and benefit designs based on member needs. The program applies to therapeutic
categories that have proven outcome targets and enough claims data to judge adherence.
Benefits include lower cost sharing for drugs, and other services such as disease management
and compliance programs. Additionally, the program exempts participants from step therapy and
prior authorization requirements.
Several additional companies with headquarters in Minnesota, including 3M, Cargill,
Wells Fargo, and Carlson Companies were listed in a number of the research materials as using
VBID in their health benefit programs. We were not able to find specific details, but list them
here given the possible local interest.
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OTHER COUNTRIES
A number of European countries and Australia make greater use of comparative
effectiveness research than the U.S. All of these countries have a central agency with a similar
set of core structural, technical, and procedural principles, including mechanisms for engaging
with stakeholders, governance and oversight arrangements, and explicit methodologies for
analyzing evidence, to ensure a high-quality product for their respective systems. A short
summary of some of these national systems is listed below:

Germany – The Institute for Quality and Efficiency in Health Care (IQWiG) was
established in 2004 to provide Germany's Federal Joint Committee with evidence-based
evaluations of the benefits and cost benefits of health services. IQWiG reviews available
evidence and produces recommendations after an extensive process of consultation with
experts and stakeholders. IQWiG's recommendations are then considered by the Joint
Committee in issuing coverage and payment directives. Under German law, insurance
funds must cover any service that is medically necessary, which means that costeffectiveness analysis can only be used to exclude a treatment from coverage if at least
one equivalent alternative exists.

United Kingdom – The U.K.'s National Institute for Health and Clinical Excellence
(NICE) was established to perform three core functions: (1) reduce unwarranted variation
in practice through the development and dissemination of best-practice evidence-based
standards; (2) encourage fast diffusion and uniform uptake of high-value medical
innovations; and (3) ensure that taxpayers' money is invested in the National Health
Service so that health benefit is maximized. NICE decisions are made by independent
committees of health professionals, academics, and industry and lay representatives.
More than 2,000 experts engage with NICE processes throughout the year. NICE
committees consider comparative clinical and cost effectiveness, social values including
equity, and U.K. and European Union legislation when making their decisions.

Australia – Most prescription drugs are subsidized through the Pharmaceutical Benefits
Scheme (PBS), one of several government programs in which evidence-based decisionmaking is applied to the funding of health technologies. PBS processes are intended to
ensure "value for money" for the Australian taxpayer and to support affordable, equitable
access to prescription medicines. The processes are not intended as a mechanism for cost
containment. The inclusion of a drug on the national formulary depends on the
recommendation of the Pharmaceutical Benefits Advisory Committee (PBAC), which
considers not only the comparative effectiveness but also the comparative costeffectiveness of drugs proposed for listing. While some decisions have been
controversial, the PBS retains strong public support. Moreover, evidence does not suggest
that the consideration of cost-effectiveness has created a negative environment for the
drug industry. Australia has a high penetration of patented medicines, with prices for
some recently approved drugs at U.S. levels.
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SERVICE-FOCUSED CASE STUDIES

Pitney Bowes – In 2002 the company reduced the copayments for drugs that treat asthma,
diabetes, and hypertension. Patients were either placed in a disease management program
or in a secondary program promoting preventive care. Several articles point to cost
savings, one calling them “significant” and another placing a one-year value of $1 million
from reduced complications (it is not clear if the savings were net of program costs). The
articles stress that the success was the result of not simply focusing on cost, but
incorporating disease management and interventions targeting positive outcomes as the
ultimate goal, then working to eliminate barriers to those outcomes. After a number of
years of monitoring the programs and data, the company expanded the program in 2007 to
provide free diabetes and cholesterol drugs to some higher-risk patients. The company
has lowered cost sharing on many preventive drugs as well.

Marriott International adopted a similar approach for drug classes used to treat diabetes,
asthma, and heart disease. The company worked with ActiveHealth Management, a health
data company that is a subsidiary of Aetna, to design its own VBID. ActiveHealth
analyzed patient claims data in order to selectively reduce copayments on certain drugs for
certain patients who had chronic conditions. Jill Berger, Vice President for Marriott’s
health and welfare plan, says out-of-pocket costs for eligible employees went down 27
percent on targeted brand-name drugs and 65 percent on eligible generic drugs, adding,
“Adherence increased, which is exactly what we wanted to see.” Marriott expected its
drug costs to go up, but the company is hoping that hospitalization costs will decrease.
Berger noted that one of the barriers in implementing the new benefit design was getting
the health plans over the administrative challenges of selectively reducing copayments.
Marriott believes the program will save money in the long run and is moving ahead with a
plan to reduce copayments for visits to doctors who treat employees’ chronic illnesses.
CONDITION-FOCUSED CASE STUDIES

The University of Michigan – the MHealthy: Focus on Diabetes program is part of a
prospective, controlled trial of targeted copayment reductions for high-value, underutilized
therapies for individuals with diabetes. Primary outcomes are to include medication
uptake and adherence. Secondary outcomes will include health care utilization and
expenditures. Per the Center for Value-Based Design, this is thought to be the first
prospective controlled trial of copayment reductions targeted to high-value services for
high-risk patients. It will provide important information on feasibility of implementation
and effectiveness of VBID in a real-world setting. Results were not yet available, but
based on the timelines in the article, may be available in the near future. Specific release
timelines were not provided.
CONDITION- / SEVERITY- / PARTICIPATION-FOCUSED CASE STUDIES
Essential Benefit Workgroup Background Paper
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
The City of Asheville, North Carolina highlights this approach, offering free medications
and testing equipment only for diabetics who attend educational seminars. The
pharmacist-driven program first implemented in 1996 for the City (a self-funded
employer) continues to deliver clinical and financial dividends. As a follow-up to the
initial project, the city created the Hickory Project that couples a community pharmacist–
led coaching program with lowered copayments for their employees with diabetes.

QuadMed, a subsidiary of Wisconsin-based Quad/Graphics, sponsors eight worksite
clinics and three pharmacies as part of its VBID. Employees who use the onsite clinics
have lower copayments than for other clinics. If they choose a preferred provider
organization (PPO) network, employees pay a lower coinsurance rate for office visits. In
addition, employees can earn financial incentives for achieving certain healthy behaviors.

Diabetes Ten City Challenge (DTCC) is sponsored by the APhA Foundation with support
from GlaxoSmithKline. Employers taking part in the program provide members with
diabetes a voluntary health benefit that waives copayments for diabetes drugs and testing
supplies if they continue with the program. The program helps people manage their
diabetes with the help of pharmacist coaches and reimburses community pharmacists for
clinical services. The program currently covers 30 employers and hundreds of local
pharmacists in ten cities. The DTCC model of “collaborative care” is available to
employers nationwide through the HealthMapRx website (http://www.healthmaprx.com).
A report published in the May/June 2009 issue of the Journal of the American Pharmacists
Association documents favorable economic and clinical results for employers and
participants. Employers realized an average annual savings of almost $1,100 in total
health care costs per patient when compared to projected costs if the DTCC had not been
implemented and participants saved an average of almost $600 per year. Participants also
improved in all of the recognized standards for diabetes care, including decreases in A1C,
LDL cholesterol and blood pressure, and increases in current flu vaccinations and foot and
eye exams.
PROVIDER OUTCOMES-FOCUSED CASE STUDIES

Hannaford Brothers Company – Beginning in 2004, this supermarket chain in the
northeastern U.S. offered a new program that offered richer benefits for individuals who
use top-tier providers. It supported this value-based purchasing approach by maintaining
data on outcomes for patients and providers. It also included other incentives such as
reduced cost sharing using a Condition/Severity approach and provided healthy behavior
premium credits. Beginning in January of 2008, Hannaford Brothers added incentives to
use non-invasive surgery at a particular medical center in Bangor, Maine, near its
headquarters. Results from the Director of Associate Health and Wellness, Peter Hayes,
include lower absenteeism, improved productivity, improved diabetes health as measured
by lab results, reduced risk of heart attack, and lower cost through choosing top-tier
providers (no specific dollar estimate was provided).

Transplant Networks – Commercial health reinsurers have long recognized the effect that
provider selection has on quality, and as a result, costs in transplantation. These
Essential Benefit Workgroup Background Paper
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catastrophic health events present a unique set of circumstances where the need for
services is usually known in advance and care can often be directed to a center offering the
patient the greatest chance of clinical success. As a result, reinsurers have created
transplant networks which are essentially PPOs of the top credentialed transplantation
“centers of excellence” throughout the U.S. In exchange for a fee or as a benefit under
their reinsurance coverage, they offer participating insurance companies and employers
access to specialized, high-value services in a more controlled, cost-effective manner.
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Resources
We reviewed and summarized the following articles during the course of our Essential
Benefit Set Work Group Background Paper research. Below, we provide the title, author, a brief
summary, and a hyperlink to the article when available. Articles without links are either
restricted or not readily available on the Internet. All articles are available to Work Group
members upon request to any member of the consulting team.
Given the number of articles listed below, we selected a “Recommended Extra Reading”
list for Work Group members. The remaining articles may also be useful and are listed by media
class, including professional associations, journals or peer-reviewed articles, wider audience
articles, opinions and blogs, and website resources.
RECOMMENDED EXTRA READING
•
The Essential Benefit Package – Recommendations of the Oregon Health Fund Board of
Benefits Committee
Oregon Health Fund Board. (2008).
http://www.oregon.gov/OHPPR/HFB/docs/BenefitCommitteeFinal.pdf
A detailed summary is included in the Case Studies section above. Additional information
can be found here:
http://www.oregon.gov/OHPPR/docs/HealthReformResourcesDocs/POLICY_BRIEF_Ess
ential_Benefit_Package_Color_031709.pdf
•
Value-Based Insurance Design
American Academy of Actuaries: Health Care Quality Work Group. (2009, June). Issue
Brief.
http://www.actuary.org/pdf/health/vbid_june09.pdf
This issue brief defines value-based insurance design (VBID), provides an overview of its
prevalence, examines the barriers to implementation, and reviews policy considerations
related to VBID adoption and implementation. One key point is that VBID is still
evolving, but it can be part of a broader effort to better align financial incentives with
improvements in value and quality of care. There are a number of issues policymakers
should address as they consider whether and how to include VBID as part of health reform
including, among others, initial costs, administrative costs, data challenges, and barriers to
personalization. Additionally, if benefit package requirements are included as part of
insurance market reforms, the requirements should be flexible enough to allow for VBID.
Policymakers can also help facilitate the implementation of VBID by financing
Essential Benefit Workgroup Background Paper
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comparative effectiveness research (CER) and by supporting improvements to health care
information infrastructure.
•
Comparative Effectiveness Research
American Academy of Actuaries: Health Care Quality Work Group. (2008, Sept). Issue
Brief.
http://www.actuary.org/pdf/health/comparative.pdf
This issue brief discusses current assessments of health care quality within the U.S. It
reviews the typical process for incorporating new treatment protocols and technologies
into health insurance coverage, both commercially and in government programs. It
reviews policy implications of CER and stresses the need to review both new and existing
treatments and technologies. The brief suggests that CER can add more value if it goes
beyond proving a treatment is safe and effective, to including head-to-head trials that
compare treatments and technologies. Additionally, it could provide value by assisting in
determining which patients respond better to specific treatments. Finally, the brief notes
that the ultimate value of CER depends on its ability to positively influence treatment
decisions, not just insurance and reimbursement decisions. Insurance design and
reimbursement policies can influence treatment by favoring those treatments deemed most
clinically effective and cost effective.
•
Value-Based Insurance Design Landscape Digest
Fendrick, A.M. (2009, July). Center for Value-Based Insurance Design, University of
Michigan.
http://www.sph.umich.edu/vbidcenter/pdfs/NPC_VBIDreport_7-22-09.pdf
This article/digest presents a very complete description of VBID and is the basis for much
of the discussion included in the Background Paper. It contains a thorough description of
alternative approaches, financial impacts, barriers and other implementation
considerations, case studies, and synergies with other reform efforts. The author and the
Center take a strong but well supported advocacy position for VBID. Note that the
University of Michigan’s Center for Value-Based Insurance Design is funded in part by
the National Pharmaceutical Council.
•
A Model for Improving Coverage Policy Decisions
Priester, R., Gervais, K.G., & Vawter, D.E. (1999). The American Journal of Managed
Care. 5 (8), 981-91.
http://www.ajmc.com/issue/managed-care/1999/1999-08-vol5-n8
This article, co-authored by two of the professionals involved with the Work Group’s
efforts through the Minnesota Center for Health Care Ethics, asserts that reasoned and
defensible coverage decisions are essential for a fairer and more efficient health care
Essential Benefit Workgroup Background Paper
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system. Because health care resources are finite, coverage decisions should be informed
by economic evaluations and made from a perspective that attends to the interests of both
individuals and the entire population enrolled in a plan as a whole. Coverage decisions for
all health care interventions should follow a two-step procedure that consists of: (1) the
relatively impartial and objective assessment of an intervention’s eligibility for coverage;
and (2) the distinctively value-laden determination (for which the enrolled population’s
values and preferences should take priority) to cover, conditionally cover, or not cover an
intervention.
PROFESSIONAL ASSOCIATIONS, JOURNALS, AND PEER-REVIEWED ARTICLES
•
Clinical and economic outcomes of medication therapy management services: the
Minnesota Experience
Isetts, B., Schondelmeyer, S., Artz, M., Lenarz, L., Heaton, A., Wadd, W., et al. (2008).
Journal of the American Pharmacists Association: JAPhA..48 (2), 203-211.
The article examines the incorporation of medication therapy management (MTM)
services to patients and measures the clinical effects associated with MTM services.
Findings include improved patient satisfaction in attaining drug goals, improved HEDIS
measures, decreased total health expenditures and a reduction that exceeded the cost of
providing MTM services by more than 12 to 1. The article concludes that patients
receiving MTM services provided by pharmacists, in collaboration with prescribers,
experienced improved clinical outcomes and lower total health expenditures. Clinical
outcomes of MTM services have chronic care improvement and value-based purchasing
implications, and economic outcomes support inclusion of MTM services in health plan
design.
•
Employers’ Use of Value-Based Purchasing Strategies
Rosenthal, M.B., Landon, B.E., Normand, S., Frank, R.G., Ahmad, T.S., & Epstein, A.M.
(2007). JAMA: the Journal of the American Medical Association. 298 (19), 2281.
http://jama.ama-assn.org/cgi/content/full/298/19/2281
The article provides systematic descriptions and analyses of value-based purchasing and
related efforts to improve quality of care by health care purchasers. It describes telephone
interviews with executives at large employers across the US in 2005 and 2006 to
determine the degree to which value-based purchasing and related strategies are being
used by employers. A large percentage of surveyed executives (65%) reported that they
examine health plan quality data, but few reported using it for performance rewards (17%)
or to influence employees (23%). Physician quality information was even less commonly
examined (16%) or used by employers to reward performance (2%) or influence
employees’ choice of providers (8%). The authors conclude that employers as a whole in
2005 and 2006 did not yet appear to be individually implementing incentives and
programs in line with value-based purchasing ideals.
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Still looking for health outcomes in all the wrong places? Misinterpreted observational
evidence, medication adherence promotion, and value-based insurance design.
Fairman, K.A., & Curtiss, F.R. (2009). Journal of Managed Care Pharmacy: JMCP. 15
(6).
http://www.amcp.org/data/jmcp/501-507.pdf
This article looks at the processes used to test effectiveness of drug adherence and
suggests a new approach. The current view that increases in adherence to drug regimens
will directly reduce negative outcomes is misleading, the authors assert, and studies exist
which demonstrate that other prevalent factors play an integral role in outcomes. Highly
adherent beneficiaries, for example, may be more likely to follow an overall healthier
lifestyle. The implication is that additional factors need to be incorporated into VBID and
health care reform to create a more plausible test for VBID. The article points to
“plausibility calculators,” which are available online.
•
Report to the President and Congress
Federal Coordinating Council for Comparative Effectiveness Research, & United States.
(2009). U.S. Department of Health and Human Services.
http://www.hhs.gov/recovery/programs/cer/cerannualrpt.pdf
CER information is essential to translating new discoveries into better health outcomes for
Americans, accelerating the application of beneficial innovations, and delivering the right
treatment to the right patient at the right time. A responsibility exists to provide
information to patients to enable informed decision-making. CER differs from efficacy
research because it is patient-centered and is applicable to real-world needs and decisions.
Efficacy research may not be applicable to a specific situation. The report goes on to
discuss the following: (1) the need for a transparent, open process that seeks public input;
(2) a vision for CER to develop and prosper; (3) definitions and criteria for recommending
priorities; (4) the importance of priority populations and subgroups underrepresented in
traditional research; (5) strategic framework for CER activity and investments to inform
decisions; (6) CER inventory and priority setting; (7) recommendation for future CER
efforts; and (8) the outlook and next steps.
•
Value-based benefit design: using a predictive modeling approach to improve compliance.
Mahoney, J.J. (2008). Journal of Managed Care Pharmacy: JMCP. 14 (6), 3-8.
http://www.amcp.org/data/jmcp/JMCPSuppB_S3-S8.pdf
The article describes the value-based benefit design employed by Pitney Bowes
(specifically, the predictive modeling approach) to improve medication compliance, and
reports the results of this intervention. Value-based design provides a different lever on
pharmacy management and allows for the appropriate drug to be channeled to the
appropriate person. Studies demonstrating the adverse impact of high coinsurance levels
further augment the argument for VBID. At Pitney Bowes, patients were either placed in
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a disease management program or in a secondary program promoting preventive care.
The company selectively cut copayments to achieve these ends and this total value
approach translated into “significant savings.” To develop a successful value-based
benefit design, stakeholders cannot simply cut costs or cut copayments. Action must be
taken as part of a concerted program, coupled with disease management or similar
interventions. "Value based" means that positive outcomes are the ultimate goal, and
barriers to those positive outcomes must be addressed.
•
Diabetes Ten City Challenge: Final economic and clinical results
Fera, T., Bluml, B.M., & Ellis, W.M. (2009). Journal of the American Pharmacists
Association: JAPhA. 49 (3).
http://www.diabetestencitychallenge.com/pdf/dtccfinalreport.pdf
This article assesses the economic and clinical outcomes for the Diabetes Ten City
Challenge (DTCC), a multi-site community pharmacy health management program for
patients with diabetes. It involves employers at ten distinct geographic sites contracting
with pharmacy providers in the community setting. Interventions included communitybased pharmacists who provided patient self-management care services to 573 diabetics
via scheduled consultations within a collaborative care management model. The program
was evaluated for its success in reducing health care costs for employers and beneficiaries
as well as for key clinical outcomes measures. Average total health care costs per patient
per year were reduced by $1,079 (7.2%) compared with projected costs. Statistically
significant improvements were observed for key clinical measures, including a mean
glycosylated hemoglobin decrease from 7.5% to 7.1%, a mean low-density lipoprotein
cholesterol decrease from 98 to 94 mg/dL, and a mean systolic blood pressure decrease
from 133 to 130 mm Hg over a mean of 14.8 months of participation in the program.
Also, between the initial visit and the end of the evaluation period, influenza vaccination
rate increased from 32% to 65%, eye examination rate increased from 57% to 81%, and
foot examination rate increased from 34% to 74%. The conclusion is that the DTCC was
able to successfully implement an employer-funded, collaborative health management
program using community-based pharmacist coaching, evidence-based diabetes care
guidelines, and self-management strategies.
•
Value-Based Insurance Designs for Diabetes Drug Therapy: Actuarial and Implementation
Considerations
Fitch, K; Iwasaki, K; Pyenson, B. Milliman.
http://www.milliman.com/expertise/healthcare/publications/rr/pdfs/vbid-diabetes-drugtherapy-RR12-01-08.pdf
This paper from Milliman focuses on the impact on cost and drug compliance of diabetes
patients when drug copayments or tiers are modified towards lower cost sharing for
diabetic drugs. The article discusses potential barriers to VBID implementation and
provides a framework for determining benefit value of the diabetes drugs.
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Value-Based Insurance Design
Chernew, M.E., Rosen, A.B., & Fendrick, A.M. (2007). Health Affairs. 26 (2), W195.
http://www.sph.umich.edu/vbidcenter/pdfs/w195Chernew.pdf
When everyone is required to pay the same out-of-pocket amount for health care services
whose benefits depend on patient characteristics, there is enormous potential for both
under- and overuse. Unlike most current health plan designs, Value-Based Insurance
Design (VBID) explicitly acknowledges and responds to patient heterogeneity. It
encourages the use of services when the clinical benefits exceed the cost and likewise
discourages the use of services when the benefits do not justify the cost. This paper makes
the case for VBID and outlines current VBID initiatives in the private sector as well as
barriers to further adoption.
•
Grounding Coverage in Value: A Paradigm for Linking Quality and Costs
Rosen, A.B. (2006). Medical Care. 44 (5), 389-91.
http://www.sph.umich.edu/vbidcenter/pdfs/medical_care_editorial_rosen0506.pdf
This article voices support for value-based insurance and also stresses the importance of
individual-based benefits. The article briefly describes the Pitney Bowes health care plan,
which reportedly saved $1 million from reduced complications, Cigna’s 4-tier formulary
option based on lifestyle and lifesaving drugs, and related efforts by the City of Asheville,
North Carolina.
•
Clinically Sensitive Cost-Sharing for Prescription Drugs
Chernew, M.E. & Fendrick, A.M. (2009). Medical Care. 47 (5), 505-7.
http://www.sph.umich.edu/vbidcenter/pdfs/CLINICALLY%20SENSITIVE.pdf
This article cites several studies in which increased prescription cost sharing both
increased and decreased a patient’s overall medical costs. It concludes that cost sharing
should not be applied standard across-the-board, but modified to encourage the use of
higher-value services. The authors recommend a value-based benefit plan that prioritizes
the quality of health care over cost savings.
•
Value Based Insurance Design: Maintaining a Focus on Health in an Era of Cost
Containment
Fendrick, A.M. & Chernew, M.E. (2009). The American Journal of Managed Care. 15
(6), 338-43.
http://www.ajmc.com/issue/managed-care/2009/2009-06-vol15n6/AJMC_09jun_FendrickC338_39_43
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This article provides a general description of VBID and focuses on VBID’s impact on
member adherence to drug treatment plans. Increased drug adherence is linked to
improved member health and potential medical savings. The article briefly describes the
VBID efforts of several public and private health plans and their administrative costs of
implementation.
•
Prescription Drug Cost Sharing Associations With Medication and Medical Utilization
and Spending and Health
Goldman, D.P., Joyce, G.F., & Zheng, Y. (2007). JAMA: the Journal of the American
Medical Association. 298 (1), 61.
http://jama.ama-assn.org/cgi/content/abstract/298/1/61
This article synthesizes published evidence on the association between cost sharing / cost
containment, the use of prescription drugs and non-pharmaceutical services, and health
outcomes. Key findings show that increased cost sharing is associated with lower rates of
drug treatment, worse adherence among existing users, and more frequent discontinuation
of therapy. For each 10% increase in cost sharing, prescription drug spending decreases
by 2% to 6%, depending on class of drug and condition of the patient. For some chronic
conditions, higher cost sharing is associated with increased use of medical services, at
least for patients with congestive heart failure, lipid disorders, diabetes, and schizophrenia.
While low-income groups may be more sensitive to increased cost sharing, there is little
evidence to support this contention. The authors conclude that pharmacy benefit design
represents an important public health tool for improving patient treatment and adherence.
While increased cost sharing is highly correlated with reductions in pharmacy use, the
long-term consequences of benefit changes on health outcomes are still uncertain.
•
Medication Adherence and Use of Generic Drug Therapies
Briesacher, B.A., Andrade, S.E., Fouayzi, H., & Chan, K.A. (2009). The American
Journal of Managed Care. 15 (7), 450-6
http://www.ajmc.com/issue/managed-care/2009/2009-07-vol15n7/AJMC_09Jul_Briesacher_450to456
Using multi-tiered pharmaceutical coverage should not be directly associated with drug
adherence. According to this study, promotion of generic drugs with lower cost does not
always increase the medication possession ratio for enrollees. Testing a large group of
patients 18 years and older with newly regimented drug therapy for adherence over the
course of one year showed no correlation between generic versus brand drug treatment.
The study suggests that enrollees often believe generic drugs have less value than their
branded counterparts. When restructuring benefits, simply promoting generics will not
produce positive results all by itself.
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A controlled trial of value-based insurance design – The MHealthy: Focus on Diabetes
(FOD) trial.
Spaulding, A., Fendrick, A.M., Herman,W.H., Stevenson, J.G., Smith, D.G., Chernew,
M.E., et al. (2009). Implementation Science: IS. 4.
http://www.sph.umich.edu/vbidcenter/pdfs/ImplementationScience4_09.pdf
Diabetes affects over 20 million Americans, resulting in substantial morbidity, mortality,
and costs. While medications are the cornerstone of secondary prevention, many
evidence-based therapies are underutilized, and patients often cite out-of-pocket costs as
the reason. VBID is proposed as a viable solution. The authors describe the design and
implementation of MHealthy: Focus on Diabetes (FOD), a prospective, controlled trial of
targeted copayment reductions for high-value, underutilized therapies for individuals with
diabetes. Primary outcomes include medication uptake and adherence. Secondary
outcomes include health care utilization and expenditures. This may be the first
prospective controlled trial of copayment reductions targeted to high-value services for
high-risk patients. It provides important information on feasibility of implementation and
effectiveness of VBID in a real-world setting. This program has the potential for broad
dissemination to other employers and insurers wishing to improve the value of their health
care spending.
•
A Strategy for Health Care Reform--Toward a Value-Based System
Porter, M.E. (2009). The New England Journal of Medicine. 361 (2), 109-12.
http://content.nejm.org/cgi/reprint/361/2/109.pdf
The author promotes “universal coverage and restructuring the health care delivery
system” as key components to true health reform in the US. He outlines six ideas for
attaining Universal coverage: (1) Change the basis for competition. Health plans should
compete on value and be required to measure and report outcomes so consumers can
choose on the basis of value. (2) Employers should play a role in the insurance system.
They have an interest in their employees’ health and closer & more regular access to
patients/members. (3) Equalize tax deductibility of insurance purchased by individuals and
employers. (4) Make individual insurance affordable with large state or regional pools.
(5) Provide income-based subsidies. (6) Require everyone to have insurance so that
younger and healthier people cannot opt out.
Porter outlines seven ways to restructure health care delivery to organize around value for
patients over their entire “care cycle”: (1) mandatory measurement and dissemination of
health outcomes. “Outcomes must be measured over the full cycle of care… including the
degree of health achieved, the time needed for recovery, and sustainability of recovery”;
(2) create more service bundles and integrated ways to deliver preventive care, wellness
programs, and screenings, such as employer clinics; (3) create integrated practice units
that treat conditions in one place; (4) reimburse as single bundled payment for a condition;
(5) compete for patients based on value at medical condition level; (6) adopt electronic
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medical records (EMR) to “support integrated care and outcome measurement”; and (7)
increase patient compliance via improved patient engagement.
Value-based Insurance Design: A "clinically sensitive" approach to preserve quality of
care and contain costs.
Fendrick, A.M. & Chernew, M.E. (2006). The American Journal of Managed Care. 12
(1), 18-20.
http://www.ajmc.com/media/pdf/AJMC_06decSpeclFendrickSP5.pdf Rising costs and suboptimal clinical quality have spawned efforts to redesign health care
benefit packages. Momentum has gathered behind two trends. The first, represented by
disease management initiatives and pay-for-performance programs, focuses on the quality
of care, and uses tools to manage patient health. The second trend, represented by
increased patient cost sharing and consumer-driven health plans, focuses on the cost of
care and uses financial incentives to alter patient and provider behavior. These two trends
create a conflict for the patient in that disease management programs—designed to
improve patient self-management—aim to enhance compliance with specific clinical
interventions, while rising copayments create financial barriers that discourage the use of
these recommended services. When patients are required to pay more for their health care,
they buy less, even if the intervention is potentially lifesaving. Thus, the challenge for
purchasers is to devise benefit packages that incorporate a range of features that
complement each other in the effective and efficient delivery of care while explicitly
avoiding the unwanted negative clinical effects associated with increased cost sharing.
•
Why Well-Insured Patients Should Demand Value-Based Insurance Benefits
Denny, C.C., Emanuel, E.J., & Pearson, S.D. (2007). JAMA: the Journal of the American
Medical Association. 297 (22), 2515.
http://www.sph.umich.edu/vbidcenter/pdfs/jamavbid%20(2).pdf
This introductory article states that 86% of Americans do not support the denial of health
services for reasons of cost and explains why insured patients might want to reconsider
this position, given the consequences if spending continues to increase at current rates.
Reasons for health care increases are said to be expensive new medical technologies and
no system in place to judge clinic cost and comparative effectiveness. Consequences of
increasing costs are: (1) some insured will lose coverage; (2) the remaining insured will
have lower coverage; and (3) spending will be reduced in other non-health care areas. The
US does not have an “authoritative, independent entity specifically charged with
determining the value of health care services by assessing their comparative effectiveness
and cost effectiveness.” Such an agency could help determine which high-value services
to promote and which low-value services would be discouraged, but not prohibited.
Studies based on drugs and spinal fusions are briefly mentioned.
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Value-Based Insurance Design: A "Clinically Sensitive, Fiscally Responsible" Approach
to Mitigate The Adverse Clinical Effects of High-Deductible Consumer-Directed Health
Plans
Fendrick, A.M, & Chernew, M.E. (2007). Journal of General Internal Medicine. 22 (6),
890-891.
http://www.sph.umich.edu/vbidcenter/pdfs/ajmc_fendrick_editorial_vbid_106.pdf
This article theorizes that although higher cost sharing “across the board” means lower
health care expenditures, it will lead to worse outcomes, in particular for people with
chronic diseases or low incomes. The article criticizes consumer-driven health plans,
saying that people do not have enough information to distinguish between high-value and
low-value services. It argues that, until information is available for patients and doctors to
make informed decisions, that an evidence-based “VBID waiver” should accompany
consumer-driven plans to act as a “safeguard against unwanted clinical effects that are
directly related to misaligned financial incentives.” Initial debate about high value vs. low
value may be diminished by adopting services from existing (and widely accepted) disease
management, pay-for-performance (P4P) and National Committee for Quality Assurance
(NCQA) programs.
•
What Does the RAND Health Insurance Experiment Tell Us About the Impact of Patient
Cost Sharing on Health Outcomes?
Chernew, M.E., & Newhouse, J.P. (2008). The American Journal of Managed Care. 14
(7), 412-4.
http://www.sph.umich.edu/vbidcenter/pdfs/AJMC_08jul_Chernew_412to414_.pdf
This article discusses the RAND Health Insurance Experiment from the 1970s, which has
often been cited as evidence that cost sharing reduces health care spending. The RAND
experiment did not find a link between higher cost sharing and health status or outcomes.
The author suggests that RAND researchers may have misinterpreted the study and, not
only are there negative effects of cost sharing, they may be greater today than they were
during the RAND study because (1) there are more methods and protocols for treating
chronic conditions today, and (2) acute diseases have become chronic diseases with
advances in technology. The author is in favor of patient education, “sophisticated cost
sharing strategies” and a “clinically sensitive approach to cost sharing.”
•
Comparative effectiveness research and evidence-based health policy: experience from
four countries.
Chalkidou, K., Tunis, S., Lopert, R., Rochaix, L., Sawicki, P.T., Nasser, M., et al. (2009).
The Milbank Quarterly. 87 (2), 339-67.
http://www.milbank.org/quarterly/milq_87_2-final-chalkidou.pdf
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The discussion about improving the efficiency, quality, and long-term sustainability of the
U.S. health care system is increasingly focusing on the need to provide better evidence for
decision-making through CER. In recent years, several other countries have established
agencies to evaluate health technologies and broader management strategies to inform
health care policy decisions. The authors reviewed experiences from Britain, France,
Australia, and Germany via the agencies’ websites, legal framework documents, and
informal interviews with key stakeholders. This article includes a matrix of features
identified from the international models studied that offer insights into near-term decisions
about the location, design, and function of a U.S.-based CER entity. While each country
has developed a CER capacity unique to its health system, elements such as the
inclusiveness of relevant stakeholders, transparency in operation, independence of the
central government and other interests, and adaptability to a changing environment are
prerequisites for these entities' successful operation. While the CER entities evolved
separately and have different responsibilities, they have adopted a similar set of core
structural, technical, and procedural principles, including mechanisms for engaging with
stakeholders, governance and oversight arrangements, and explicit methodologies for
analyzing evidence, to ensure a high-quality product for their respective systems.
The article does not provide information about specific drugs or services. It is mainly
about the mechanisms for determining and implementing comparative effectiveness on a
large scale (politics, research, stakeholders, collaboration with academia, dissemination to
providers and patients, etc.). It did, however, in its section about communicating to the
public, mention the following evidence-based websites, which may be of interest to Work
Group members:
http://www.informedhealthonline.org/index.en.html (Germany)
http://guidance.nice.org.uk/ (England)
http://www.nps.org.au/home (Australia)
WIDER AUDIENCE
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Practices Shared for Lowering Costs, Improving Health
Miller, S. (2009, Apr 23). Society for Human Resource Management.
http://www.shrm.org/hrdisciplines/benefits/Articles/Pages/BestPracticesShared.aspx
This article describes alternative health care benefits for three companies: Safeway
(described below), Dow Chemical, and Black and Decker. Dow provides comprehensive
health education programs, onsite wellness centers, screenings, and other benefits, which
have resulted in significant cost savings. Black and Decker provides free “diabetic kits” to
its members, which has produced flat to low-digit health care cost trends over the past
nine years.
•
Comparative Effectiveness: Perspectives for Consideration
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Deloitte Center for Health Solutions. (2009, May 19).
http://www.deloitte.com/view/en_US/us/Industries/article/1367742bdaa12210VgnVCM10
0000ba42f00aRCRD.htm
This study begins by reviewing the current state of CER in U.S. health care. It then
profiles comparative effectiveness systems in the United Kingdom, Australia, Canada and
Germany, examining how CER in these four countries is applied to three illustrative
examples including a diagnostic screen technology, a drug, and a surgical procedure.
Generating better evidence about the costs and benefits of different treatment options
through CER has the potential to “bend the curve” in health care spending and reduce
inappropriate variation in the system. Report findings conclude that for the U.S., a “tools,
not rules” approach, with industry and policymakers working side by side, will result in a
comparative effectiveness model that delivers better value and lower costs.
•
Value-Based Insurance Design Sparks Increased Interest
Miller, S. (2009, Feb 11). Society for Human Resource Management.
http://moss07.shrm.org/hrdisciplines/benefits/Articles/Pages/ValueBasedInsuranceDesignSparksIncreasedInterest.aspx
Increasing cost sharing for low-value service will be more likely to contain costs than the
implementation of new wellness and disease management programs. The number of
current enrollees participating in VBID plans has increased. This increase in enrollment
has created benefits, but cost containment has not been as effective as initially hoped, at
least not at this point.
•
Value-Based Insurance Design in the Medicare Prescription Drug Benefit/An Analysis of
Policy Options
Murphy, L., Carloss, J., Brown, R.E., Heaton, E., Carino, T. [Avalere Health]; Frederick,
A.M., Chernew, M., Rosen, A.B. [Center for Value-Based Insurance Design, University of
Michigan]. (2009, March 3).
http://www.avalerehealth.net/wm/show.php?c=1&id=806 (requires user to submit
personal information)
The focus of this article is on the viability of implementing a VBID program in Medicare
Part D. The paper discusses the potential for a VBID for members with diabetes, more
specifically, possible benefit changes to achieve high-value health benefits, discussion on
the current policy in force, and potential for policy change in the Part D program. The
paper ranks the feasibility and effectiveness of the following options: (1) reduce cost
sharing for specific drugs or drug classes; (2) exempt specific drugs or drug classes from
100% cost sharing in the coverage gap; (3) reduce cost sharing for enrollees with chronic
conditions; (4) reduce cost sharing for enrollees participating in medication therapy
management programs (MTMPs); and (5) reduce cost sharing for chronic condition
special needs plans (CC-SNPs).
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CIGNA study : Americans with CDHPs Reduce Medical Costs without Cutting Care
CIGNA. (2009). Healthcare Reimbursement Monitor.
http://www.healthrespubs.com:16080/news/reimburse.html
A comparison of consumers with a consumer-directed health plan (CDHP) vs. standard
health maintenance (HMO) and preferred provider organization (PPO) plans shows cost
savings can be achieved without sacrificing care. Those with a CDHP have demonstrated
that they are smarter about their care and are becoming more engaged with the support
systems and tools at their disposal. [Note: This article appears to counter some of the
VBID criticisms of CDHP that say consumers forego both high-value and low-value
services.]
•
Small Employers See Big Results in Diabetes Management
Bridge to Care. Journal for Value-based Health Management, 1 (1).
http://www.centervbhm.com/lb/journal.html (registration required)
The development of a VBID program doesn’t need to be applied only to large
organizations. The development of a program aiming at the “low-lying fruit”, such as
diabetes management, can deliver positive results. While drug costs may increase,
reduced overall costs can be generated over a relatively short period of time.
•
Part D Plans Could Adopt Value-Based Insurance Design, But Some Require Legislative
and Regulatory Changes
Brown, J. (2009, Apr 22). Medicare Part D Compliance News.
http://www.aishealth.com/Bnow/hbd042209.html
Currently CMS has regulation in place that complements the needs for implementing
VBID. As of CY2010, Part D plans are allowed to implement reduced cost sharing for
specific drugs or drug classes. Regulation could eventually mandate this type of benefit.
There are, however, other options to implement VBID that would require new law.
Similar laws may already be in place and guiding different program currently in practice.
The methods used by CMS to establish aggregate risk levels could be used to approximate
individuals with certain severe chronic conditions, similar to the process being used to
generate CC-SNP plans. Another program currently being used is the Medication Therapy
Management (MTM) requirement for all Part D plans (CY2010 Part D call letter). It is
suggested that the process to track Low Income Subsidy (LIS) cost sharing may be an
effective way to utilize current regulation in the establishment and management of various
cost-sharing approaches.
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Plan Design Trumps Cost Shifting Employers
Miller, G. (2009, May 27). America’s Health Insurance Plans (AHIP)HI-WIRE).
http://www.ahiphiwire.org/News/default.aspx?doc_id=318054
A trial called MHealthy conducted at the University of Michigan tests the possibility of
lowering overall health care cost growth by increasing adherence to drug therapy. The
focus is to remove financial barriers and increase adherence to evidence-based high-value
therapy by calling on support from practitioners and service providers for insight.
•
Employer Health Asset Management: A Roadmap for Improving the Health of Your
Employees and Your Organization. Chapter 6 - Create A Value-Based Plan Design
The Change Agent Work Group. (2009, June 2).
http://www.nbch.org/documents/CAWG_roadmap_060209.pdf
As health care costs skyrocket, VBID has an opportunity to integrate the cost benefits
across all stakeholders. When designing a value-based program, it is important to allow
the employer, employees, and health plan the ability to provide input. All parties need to
communicate and understand goals to ensure that the plan’s design can be effectively
implemented and produce positive results.
Many organizations using value-based plan design offer incentives and rewards that may
be tied to the following: (1) completion of health risk assessments; (2) healthy profiles; (3)
participation in health behavior change programs; (4) physical activity; (5) diet or
nutrition; (6) weight management; (7) non-smoking status; (8) allergy shots; (9) Health
screenings, such as comprehensive physical exams, blood pressure checks,
cholesterol/HDL testing, body mass index, glucose levels, mammograms, and
colonoscopy screenings; (10) immunization status; (11) behavior change; and (12)
improved health outcomes.
Value-based plan design is about improving access to care in a way that makes good
business sense. Care that is affordable for both the patient and the organization will
produce a return on investment in terms of lower health care cost trends and improved
productivity.
•
Bill Would Test Value-Based Insurance in Medicare
Masterson, L. (n.d.). Population Health Insider.
http://www.healthleadersmedia.com/content/235760/item/4625/topic/WS_HLM2_HOM/
Bill-would-test-valuebased-insurance-in-Medicare.html (limited access)
A white paper recently produced by Avalere Health and the Center for Value-Based
Insurance Design suggests Medicare could implement VBID with little change to
regulation. Of the five most popular options used to apply VBID techniques, three would
require only minor operational change: (1) reduced cost sharing by drug or drug class; (2)
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exempting drugs or drug classes from 100% in the coverage gap; and (3) reducing cost
sharing for CC-SNP plans. All of these options could be immediately applied. On the
other hand, CMS would need to revise its non-discrimination clause to target enrollees
with chronic conditions or those enrolled in medication therapy management (MTM)
programs. Policy change would need to accompany the two other most popular options:
(1) reduced cost sharing for enrollees with chronic conditions; and (2) reduced cost
sharing for enrollees participating in an MTM program.
•
Value Based Insurance Design Captures Prominent Role In Capitol Hill Health Care
Reform Debate
Stroh, J. (2009, Apr 29). Reuters (Business Wire).
http://www.reuters.com/article/pressrelease/idUS181135+29-Apr-2009+BW20090429
Growing support and momentum of VBID have grabbed the U.S. Senate Finance
Committee’s attention. As more organizations expand VBID programs to more “clinically
sensitive” areas, nationwide receptivity is expected to increase. The Center for Health
Value Innovation and the University of Michigan’s Center for Value-Based Insurance
Design provide collaborative support to businesses and organizations seeking to
incorporate VBID into their health plans. The Senate Finance Committee Roundtable
documented the growing momentum that is building around VBID, with specific mentions
in the testimonies of Allan M. Korn, M.D., senior vice president and chief medical officer
of the Blue Cross Blue Shield Association, Peter V. Lee, J.D., executive director, Pacific
Business Group on Health, Debra Ness, president, National Partnership for Women and
Families, and Ron Williams, chairman and chief executive officer, Aetna, Inc., who said,
“…value based insurance is designed so that costs are not a deterrent to individuals in
seeking out the right kind of care.”
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When All Else Fails: Forcing Workers Into Healthy Habits
Wilde Mathews, A. (2009, July 12). Wall Street Journal, Personal Finance Section.
http://online.wsj.com/article/SB10001424052970203577304574274102603258642.html
This is an example of mandating health testing that paints positive initial results. While
many organizations have avoided mandated health testing of employees because of the
possible privacy and legal barriers (for example, the Americans with Disabilities Act),
AmeriGas has used testing and shown promising results. The ability to generate enrollee
participation, an outcome that many other programs have not been able to achieve, has
been the key driver of success. AmeriGas undertook “Operation Save-A-Life” in August
2007 and sent each worker a DVD to explain the effort. The company has not stripped
anyone of insurance following the May 2009 deadline to obtain a physical.
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Potential Medicare Savings Through Prevention & Health Risk Reduction
The Center for Health Research, Healthways, Inc. (2009, July 30). MSN Money (Business
Wire).
http://news.moneycentral.msn.com/ticker/article.aspx?symbol=US:HWAY&feed=BW&d
ate=20090730&id=10190219
The prevalence of multiple chronic conditions affecting the Medicare population
consumes the vast majority of Medicare spending and imposes the potential of an
unsustainable financial burden. Using the current CMS-HCC risk categorization
methodology modeling, any reduction from the current trend of transition to higher-risk
categories is associated with savings for the Medicare program. The research indicates
that there is a major opportunity from the standpoints of cost and longevity resulting from
more focus on population-scale programs. These programs keep healthy people healthy,
mitigate or reduce health risk factors both before and after entry into Medicare, and
proactively manage chronic conditions after onset. The study also predicts that by
preventing or slowing health risk progression, the average Medicare beneficiary would
gain 2.4 to 5.7 years of life expectancy, and savings to the taxpayer would still accrue
despite the associated increases in longevity.
OPINIONS / BLOGS
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HC4HR: Merck Promotes Quality and Value for Patients With Diabetes
Testa, P. (2009, July 9). The New Health Dialogue Blog.
http://www.newamerica.net/
Merck reports “medicine adherence programs have helped diabetics reduce emergency
room and other hospital visits by 50% for those reaching blood-sugar goals and reduced
diabetes-related costs by 24%.” These results come from comparative effectiveness
research Merck and CIGNA say they undertook for promotion of long-term health
improvement.
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How Safeway is Cutting Health-Care Costs
Burd, S. (2009, June 12). Wall Street Journal, Opinion Page.
http://online.wsj.com/article/SB124476804026308603.html
This article describes Safeway’s elective health care plan for its non-union workers – i.e.,
how Safeway uses incentives to reward behavior. Note that President Obama has begun to
mention Safeway in his conversations on health reform. The article states that 70% of all
health care costs are the result of behavior and, therefore, are somewhat preventable.
Most of the costs can be confined to four chronic conditions (cardiovascular disease,
cancer, diabetes, and obesity). Safeway tests each member for these four diseases and
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offers reduced premiums for each chronic disease that the member does not have. If a
member has one of the conditions then he/she pays the full premium amount. The benefit
plan rewards members’ behavior for healthier lifestyle choices (e.g., quitting smoking will
decrease premiums by $312 annually).
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Value Based Insurance Design: Restoring Health To The Health Care Cost Debate
Chernew, M.E., Fendrick, A.M. (2009). Visions for the Future of the U.S. Health Care
System – A Series of Essays Presented by the Society of Actuaries.
http://www.soa.org/library/essays/health-essay-2009-chernew.pdf
This article demonstrates the need for value based insurance, citing better quality of care
for the member than current benefit design allows. In addition, data is provided showing
increased drug adherence for five high-value drug classes as a result of reduced
copayments. It implies that higher drug adherence may improve member health. The
article also lists other services which merit reduced cost sharing such as mammograms for
women with a first-degree relative with breast cancer and higher cost sharing on lowervalue services such as full-body computer tomography scanning.
WEBSITES
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Blue Cross Blue Shield Technology Evaluation Center
http://www.bcbs.com/blueresources/tec/
The Blue Cross and Blue Shield Association's Technology Evaluation Center’s (TEC)
mission is to provide health care decision-makers with timely, objective, and scientifically
rigorous assessments that synthesize the available evidence on the diagnosis, treatment,
management, and prevention of disease.
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AHRQ Evidence-based Practice Centers
http://effectivehealthcare.ahrq.gov/
The Agency for Healthcare Research and Quality (AHRQ) created Evidence-based
Practice Centers (EPCs) in 1997 to synthesize existing scientific literature about important
health care topics and promote evidence-based practice and decision-making. The
expertise of the EPCs is now also used for comparative effectiveness reviews (CERs) or
research reviews on medications, devices, and other relevant interventions. These reviews
use a research methodology that systematically and critically appraises existing research to
synthesize knowledge on a particular topic. An important aspect of the CERs is the
identification of research gaps, as well as recommendations for studies and approaches to
fill those gaps.
Evidence-based Practice Centers:
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- Blue Cross and Blue Shield Association, Technology Evaluation Center (TEC),
Chicago, IL - Naomi Aronson, Ph.D.
- Duke University, Durham, NC - John W. Williams, Jr., M.D.
- ECRI Institute, Plymouth Meeting, PA - Karen Schoelles, M.D., S.M.
- Johns Hopkins University, Baltimore, MD - Eric B. Bass, M.D., M.P.H.
- McMaster University, Hamilton, Ontario, Canada - Parminder Raina, Ph.D.
- Oregon Health & Science University, Portland, OR - Mark Helfand, M.D., M.S.,
M.P.H.
- RTI International--University of North Carolina at Chapel Hill, Chapel Hill, NC Meera Viswanathan, Ph.D.
- Southern California Evidence-based Practice Center--RAND, Santa Monica, CA Paul Shekelle, M.D., Ph.D.
- Stanford University, Stanford, and University of California, San Francisco, CA Douglas K. Owens, M.D., M.S.
- Tufts University--New England Medical Center, Boston, MA - Joseph Lau, M.D.
- University of Alberta, Edmonton, Alberta, Canada - Terry P. Klassen, M.D., M.Sc.,
FRCPC & Brian H. Rowe, M.D., M.Sc., CCFP(EM), FCCP
- University of Connecticut, Storrs, CT - C. Michael White, PharmD.
- Minnesota Evidence-based Practice Center, Minneapolis, MN - Robert L. Kane, M.D.
and Timothy J. Wilt, M.D., M.P.H.
- University of Ottawa, Ottawa, Canada - David Moher, Ph.D.
- Vanderbilt University Medical Center, Nashville, TN - Katherine Hartman, M.D.,
Ph.D.
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Institute for Clinical Systems Improvement
http://www.icsi.org/
ICSI is a non-profit organization that brings together diverse groups to transform the
health care system so that it delivers patient-centered and value-driven care. It is
comprised of 57 medical groups and sponsored by six Minnesota and Wisconsin health
plans. ICSI's mission is to provide more patient-centered and value-driven care by helping
to transform the health care system through health care redesign initiatives, health care
guideline and member quality improvement work.
A listing of ICSI’s health care guidelines, order sets, and protocols can be found here:
http://www.icsi.org/templates/documents.aspx?catID=12&pageID=1
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Care Scientific
http://www.carescientific.com/resources.php
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This Tennessee-based consulting firm has developed a number of VBID calculator tools
that assist in modeling the potential net savings from implementing a VBID for
prescription medications under various scenarios, in terms of copayment waivers and
members targeted. The model uses evidence-based algorithms of pharmaceutical price
elasticity to calculate the compliance increase from pharmacy copayment waivers and
medication efficacy from randomized controlled trials to determine an estimate for the
corresponding reduction in hospital and emergency room visits.
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