Health Plans That Nudge Patients to Do the Right Thing

The following originally appeared on The Upshot (copyright 2017, The New York Times Company).

As health care costs rise, Americans are increasingly on the hook to pay more for their care. This trend is more than just annoying — asking consumers to pay more for everything deters many from getting the care they need. What would happen if, instead, health plans offered more generous coverage of high-value care, but less generous coverage of those services that provide little or no health benefit?

This idea is known as value-based insurance design. Though not widespread, V-BID is not new. It was pioneered nearly 20 years ago by Dr. Mark Fendrick, a physician and professor at the University of Michigan, and Michael Chernew, a Harvard economist. (“Value” in V-BID plans is usually set according to longstanding measurements of quality established by decades of study of medical records.)

In his own practice, Dr. Fendrick feels as if standard insurance is working against him and his patients. “They are deeply concerned about the amount they have to pay out of their own pockets for the things I beg them to do,” he said. “It makes no sense that they pay the same co-payment for a lifesaving drug to treat diabetes or cancer, as for a drug that makes toenail fungus go away.”

This may be changing. The Affordable Care Act includes a V-BID provision, eliminating cost-sharing for more than 100 preventive services, such as vaccinations and cancer screenings. It’s endorsed by four committees of medical experts.

Many large employers and state governments are going further, reducing cost-sharing for high-value care and medications to treat chronic illnesses, like depression and heart disease. This year, the Centers for Medicare and Medicaid Services began a five-year test of value-based design that permits Medicare Advantage plans in seven states to reduce cost-sharing and enhance benefits for enrollees with designated chronic conditions. Bipartisan legislation has been introduced in the House and Senate to expand the program nationwide.

In 2018, the Department of Defense will pilot a V-BID program that reduces cost-sharing for high-value medications and services, trying to improve the care and outcomes for American military personnel.

Does value-based insurance work? The Medicare Advantage and Department of Defense programs will tell us more, but experience with commercial V-BID programs suggests it’s a promising approach.

Several studies show that value-based “carrot” programs — those that help patients with chronic illnesses stay out of the hospital by reducing cost-sharing for high-value medications — increases medication use, at least modestly. Of course, if patients are paying less for medications, someone else — employers and health plans — pick up that part of the tab.

But making high-value drugs less expensive can offset other health care spending. One study of 6,000 heart attack patients compared one group that received their drugs free with those whose regular insurance had co-payments of $10 to $25. Patients receiving free drugs increased their use of them — and the additional insurer drug costs were offset by a decrease in hospital procedures.

Another study, of reduced cost-sharing for diabetic medications, showed that patients took their medication more regularly and used other, costly services less. Emergency department visits dropped 36 percent, and hospitalizations fell 13 percent.

Value-based programs need not focus exclusively on drugs. In 2010, I.B.M. encouraged greater use of primary care by eliminating cost-sharing for primary care visits. A study of the effect on children found increases in primary care visits and vaccinations, and decreases in expensive emergency department and specialist visits.

In 2011, Connecticut started the Health Enhancement Program for state employees, which required participants to obtain high-value primary and chronic disease preventive services — like screenings, physical examinations and other guideline-based services — and lowered cost-sharing for them. The use of those services and medications for chronic conditions increased, while emergency department use decreased during the program’s first two years.

Though programs like these improve patients’ health and quality of life, they don’t necessarily save money. That’s the finding of a large programby Blue Cross Blue Shield of North Carolina. In 2008, the insurer reduced cost-sharing for hypertensionhyperlipidemia, diabetes and congestive heart failure medications for more than 700,000 policy holders. Their overall health care spending remained comparable to that of similar patients insured by other plans that did not use a value-based design.

“For the most part, V-BID isn’t a way to save money,” Mr. Chernew said. “What it can do is shift health care use from lower- to higher-value care.” In doing so, it can also provide more financial protection for people who have regular need for maintenance medications and care.

If reducing cost-sharing for high-value care is the “carrot” approach, increasing it for low-value care is the “stick.” Though less common, stick approaches have been tested, too. A program by a large public employer in Oregon raised cost-sharing for sleep studies, upper gastrointestinal endoscopies, advanced imaging services and certain types of overused procedures, like surgery for back pain. Although clinically appropriate circumstances exist for each service, copayments were raised $100 to $500 only for those specific situations where their use was deemed not medically necessary.

An evaluation demonstrated that consumers responded to these higher out-of-pocket costs. Targeted services fell by about 12 percent over all, though some fell more than others. For example, sleep studies and low-value surgery use fell by about 20 percent. But advanced imaging use fell by only 7.7 percent.

It may be inevitable that health insurance comes with cost-sharing. But there’s no reason it can’t be applied in ways that also help patients do the right thing, nudging them toward high-value care and decreasing incentives to pursue low-value care.


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