The passage of the Patient Protection and Affordable Care Act (ACA) in 2010 has led to significant gains in health insurance coverage for many Americans. Despite this, many insured patients still struggle to afford the care they need, given the well-documented increase in deductibles and other consumer cost sharing. Financial barriers to high-value care particularly affect low-income individuals and families, as well as those with chronic conditions. As our country grapples with the impacts of escalating health care expenditures through the discussion and implementation of alternative payment models, itâ€™s important to improve the incentives and coverage provided by health plans to beneficiaries.
Value-Based Insurance Design (V-BID), which aligns patientsâ€™ out-of-pocket costs with the value of services, offers a route to mitigating the negative impacts of increased cost sharing, namely the underutilization of evidence-based, high-value care. For over a decade, numerous private and public payers, employers, unions, and business coalitions nationwide have implemented clinically nuanced V-BID programs, reducing consumer cost-sharing for specified high value visits, diagnostic tests, and treatments. V-BID principles were incorporated in Section 2713 of the ACA, which eliminated consumer cost-sharing for specific preventive care services. Multiple surveys report that the elimination of out of pocket costs for evidence-based screenings, counseling and immunizations is of one of the ACAâ€™s most popular provisions.
Moreover, the Medicare Advantage (MA) V-BID Model has expanded nationwide, giving MA plans the flexibility to reduce cost-sharing for high-value services and visits for specified patient populations. A Health Affairs review of V-BID programs that lowered consumer cost-sharing on targeted drug classes demonstrated that they modestly improved medication adherence without increases in total spending. Another Health Affairs study established how V-BID programs can reduce health care disparities.
Despite the promise of improved quality of care without increasing costs, the lack of a â€œstandardâ€ V-BID plan has slowed implementation in commercial markets, including the federally facilitated ACA exchange and state exchanges. New benefit designs incorporating innovative consumer cost-sharing approaches would be particularly attractive in exchanges, given the lack of flexibility concerning premiums and plan deductibles.
The V-BID X Health PlanÂ
A group of public and private stakeholders sought to demonstrate the feasibility of a benefit package that would reduce spending on low-value services through higher cost-sharing, thereby creating room for more generous coverage for specific high-value care, without the need to increase premiums or deductibles. In addition to the financial savings stemming from reduced access to wasteful or low-value care, improved patient-centered outcomes would result from increased use of evidence-based services and harm reduction in certain clinical circumstances. Ultimately, the product of the workgroup, a cost-neutral V-BID X plan prototype — as determined by an independent actuary — would provide the opportunity for V-BID principles to be readily implemented in the ACA exchanges. (The complete whitepaper describing V-BID X process, plan design and actuarial modeling can be found here, and the concept will be discussed at a July 24 webinar.)
How Does V-BID X Work?
The V-BID X plan reduces consumer cost-sharing for targeted high-value services to zero and reduces cost sharing for some high-value branded drugs by 25 percent. It increases cost-sharing on targeted service categories to offset the added costs resulting from the increased use of, and lower cost-sharing on, the selected high-value services. (See exhibit 1). An ideal version of V-BID X would increase cost-sharing on specific low-value services in specific clinical scenarios (e.g., pre-operative testing in low risk patients undergoing low risk surgery). Given that many of these distinct clinical circumstances are difficult to identify from claims, and nuanced benefit designs are difficult to administer, a limited number of specific low-value services were ultimately targeted. (exhibit 1).
Exhibit 1: High- and Low-Value Services, Service categories, and Drugs Included In The V-BID X Plan
Notes: These tables are taken from â€œV-BID X: Creating A Value-Based Insurance Design Plan For The Exchange Market.â€ They represent a reasonable list of high- and low-value services for a prototype V-BID plan. Each carrier should conduct their own assessment and actuarial modeling. All drugs within the listed high-value generic classes have been modeled with zero cost-sharing. For branded drugs, co-insurance for PrEP was reduced to $0; co-insurance for drugs used to treat Hepatitis C Virus and Anti-TNF agents was reduced to 25 percent.Â
The estimated savings generated from the decreased utilization of these relatively few specific services were not substantial enough to finance the increased coverage of the selected high-value services. Thus, beyond these services, this first iteration of the V-BID X plan increases cost-sharing for targeted service categories that are likely to be overused in many clinical scenarios, (e.g., non-preferred branded drugs, high-cost imaging). To illustrate the difference, a service category would mean, for example, advanced imaging of all kinds (e.g., CT scan or MRI) for any clinical indication. A specific low-value service would mean, for example, a CT scan for a specific indication like uncomplicated musculoskeletal back pain. The former captures more services and is less nuanced than the latter, although we focused on service categories known to be commonly overused.
By using this imperfect, yet targeted, approach to offset the increased cost of covering high-value care more generously, V-BID X explicitly avoids increases in premiums and deductibles. Deductibles have been shown to reduce high- and low-value care use to an equal degree and pose a significant risk for consumers, particularly those who are financially insecure or have multiple chronic conditions. A recent survey conducted by the Kaiser Family Foundation found that for individuals with chronic conditions and high deductibles (at least $3,000 for an individual or $5,000 for a family), 75 percent reported skipping or delaying care.
Implementing V-BID X In The Individual Insurance Marketplace
To create a V-BID X plan prototype, the working group identified a list of the high-value services to be covered more generously, as well as of the categories of overused services for which cost-sharing would increase. Because the assignment of â€œvalueâ€ to specific instances of care can be a potentially controversial process, the following rationale was used when selecting specific high- and low-value services:
- Favor services with a stronger evidence-base and external validation
- Favor services with a high likelihood of being high-value independent of clinical context, and service categories with a high likelihood of being low-value independent of clinical context. (Services with less nuance are easier to implement)
- Focus on areas with most need for improvement
- Consider equity, adverse selection, impact on special populations, and the nature of the risk pool
Exhibit 1 illustrates the high- and low-value services, service categories, and drugs that were included in the prototype V-BID X plan.
It is important to note that the list of services and service categories used in this first iteration of V-BID X represents just one version of what such a plan design could look like. There are a large number of plausible combinations of services and cost-sharing changes that could be used to fit different needs and goals, depending on the carrier and market. While the model V-BID X plan reduced cost-sharing to zero for most of the high-value services chosen by the working group, payers have significant flexibility regarding how to design a version of V-BID X. Key parameters include:
- Selection of high-value services for reduced cost-sharing
- Level of cost-sharing reduction for high-value services
- Selection of low-value services for increased cost sharing
- Level of cost-sharing increase for low-value services
- Determination of the actuarial value of the plan
Key Takeaways Of V-BID X
The development of a cost-neutral benefit design that incorporates V-BID principles is an important step towards ensuring higher quality, more equitable health care for insured Americans. The example V-BID X plan detailed in this post serves as a template, and demonstrates that implementing clinically nuanced benefit design is achievable in commercial markets and exchanges.
The V-BID X prototype illustrates the broad tradeoffs that arise when creating a plan designed to provide more generous coverage of high-value clinical services for which consumers frequently face high levels of cost-sharing in existing plan designs. It is important to note that while coverage is enhanced for high-value care, premiums and deductibles remain unchanged for the V-BID X plan; patient cost-sharing is skewed toward services that are typically overused.Â
V-BID X designs explicitly recognize that it is possible to increase accessibility to services deemed to improve patient-centered outcomes without increasing total health care costs. By abandoning blunt cost-sharing strategies and using a more clinically nuanced approach, V-BID X plans incentivize consumers to use more of the services that improve their health and less of those that donâ€™t. In recognizing that not all health care services produce that same amount of benefit to patients, V-BID X designs are more likely to better meet the financial and medical needs of their beneficiaries.Â
Public and private payers face escalating health care expenditures, and beneficiaries increasingly struggle to afford the care they need as cost-sharing rises. V-BID X represents a clinically driven, feasible approach to reduce the growing out-of-pocket financial burden for essential medical services and medications, paid for entirely by reduced expenditures of less valuable, and indeed often harmful, care.