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Value-Based Insurance Design
A. Mark Fendrick, MD
University of Michigan Center for Value-Based Insurance Design
www.vbidcenter.org
Returning Health to the Health Care Debate
 There is little disagreement over the fact there is enough
money in the US health care system
 Therefore, we need to focus on how – not simply how
much – we spend on healthcare
Predicted Life Expectancy Based on
Health Care Expenditure
Dealing with the Health Care Cost Crisis
Interventions to Control Costs
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Generic Drug Programs
Prior Authorization
Disease Management
Information Technology
High Deductible Health Plans
Make Beneficiaries Pay More
Dealing with the Health Care Cost Crisis
Shift Costs to Consumer
 Increase premiums
 Increase “one size fits all” cost sharing for clinician
visits, diagnostic tests and prescription drugs
Copay set on Price, not Value
 Generic drugs - lowest copay
 Preferred brand - middle
 Non-preferred brand - highest
Cost Sharing Should Not Produce
Preventable Reductions in Quality of Care
– The archaic “one-size-fits-all” approach fails to acknowledge
the differences in clinical value among medical interventions
and among patients
– Ideally, higher patient co-payments would discourage the
use of low-value care
Cost Sharing Should Not Produce
Preventable Reductions in Quality of Care
– A growing body of evidence demonstrates that cost shifting
leads to decreases in essential and non-essential care
Value Based Insurance Design
Inspiration
“I can’t believe you had to spend a million dollars to show
that if you make people pay more for something they will
buy less of it.”
Barbara Fendrick (my mother)
Value Based Insurance Design:
More than High-Value Prescription Drugs
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Wellness programs
Prevention/Screening
Diagnostic tests/Monitoring
Treatments
Clinician visits
Physician groups/Hospitals
“Lowe's is
offering
employees
incentives in
the form of
reduced outof-pocket
costs to
come to the
Cleveland
Clinic for
heart
procedures.”
Value Based Insurance Design
Policy Implications
Patient Protection and Affordable Care Act
VBID Included
“2713(c) Valued-based Insurance
Design. –The Secretary may
develop guidelines to permit a
group health plan and a health
insurance issuer offering group
or individual health insurance
coverage to utilize value-based
insurance designs.”
Sec 2713 Interim Final Regulation – July 2010
Strong Support for VBID
“The Departments recognize the
important role that value-based
insurance design can play in
promoting the use of appropriate
preventive services. ”
PPACA Sec. 2713: Certain Preventive Services be Provided without
Patient Cost Sharing
 Receiving an A or B rating from the United States Preventive Services
Taskforce
 Immunizations recommended by the Advisory Committee on
Immunization Practices
 Preventive care and screenings supported by the Health Resources
Administration (HRSA) for infants, children and adolescents
 Additional preventive care and screenings recommended by HRSA for
women
PPACA Sec. 2713: Certain Preventive Services be Provided without
Cost Sharing – Role of Networks
 When a provider network exists, no requirement to provide coverage for
recommended services delivered by an out of network provider
 Department of Treasury guidance allows steerage to high value locations
WITHIN networks [e.g. ambulatory centers instead of in-hospital
colonoscopy]
Interim Final Regulation – July 14, 2010
Definition of Value-Based Insurance Design
“Value-based insurance designs include the
provision of information and incentives
for consumers that promote access to and
use of higher value providers, treatments,
and services.”
Request for Information Regarding V-BID in Connection With
Preventive Care Benefits – Dec 2010
“this RFI solicits additional
information on specific examples and
best practices of VBID for
recommended preventive services, as
well as data used to support and
inform VBID benefit design,
measurement, and evaluation in
the context of recommended
preventive services. ”
National Quality Strategy– March 2011
Consumer Incentives and Benefit Designs
“Some employers and private health
plans already use the evidence-based
programs to promote better health.
Similar approaches can improve
adherence to recommended
medications, which many Americans
fail to take, often due to cost. At the
Federal level, HHS is promoting
value-based insurance models.”
Value-Based Insurance Design
More Health at Any Price
V-BID Center Symposium 2011:
State of Value-Based Insurance Design:
Policy, Implementation, and Tools
The
Evidence,
October 4, 2011
The University of Michigan Center for Value-Based Insurance Design
is the leading advocate for development, implementation and
evaluation of VBID programs
www.vbidcenter.org