The Value of Value-Based Insurance Design

The ongoing shift in our health care payment and delivery system from volume-based to value-based has generated a lot of attention, especially with the U.S. Department of Health and Human Services’ announcement about broadly implementing value-based care in the next two years. Consequently, interest in programs that could improve the quality of care while lowering cost continues to grow. One such example includes value-based insurance design (V-BID). 

Under a V-BID program, the alignment of financial incentives – for patients and providers – encourages the use of high-value care, while discouraging the use of low-value or unproven services.

In order to achieve high-value care, V-BID encompasses several key principles: value equals the clinical benefit achieved for the money spent; health care services differ in the health benefits they produce; and the value of health care services depends upon the individual who receives them. The more clinically beneficial a therapy is for a patient, the lower the patient’s cost share. Thus, V-BID encourages the use of medically necessary therapies and services and reduces barriers to access for these services.

There are four basic approaches to V-BID:

• Design by service, in which copayments or coinsurance are waived or reduced for select drugs or services, such as statins or cholesterol tests, no matter which patients are using them.
• Design by condition, in which copayments or coinsurance are waived or reduced for medications or services, based on the specific clinical conditions with which patients have been diagnosed.
• Design by condition severity, in which copayments or coinsurance are waived or reduced for high-risk members who would be eligible for enrollment in a disease management program.
• Design by disease management participation, in which high-risk members who actively participate in a disease management program are provided reduced or waived copayments or coinsurance.

Learn more about V-BID by checking out the National Pharmaceutical Councils’s related research and resources. Also, be sure to follow the Twitter conversation (using #VBIDSummit) on Wednesday, October 7, when the University of Michigan’s Center for V-BID hosts its invitation-only event, “A Decade of Transforming the Health Care Cost Discussion from ‘How Much’ to ‘How Well.’”