Encouraging Value-Based Insurance Designs in State Health Insurance Exchanges | Page 2
Published Online: July 22, 2013
Christine Buttorff, BS, BA; Sean R. Tunis, MD, MSc; and Jonathan P. Weiner, DrPH
More recent literature on cost sharing details how these same conclusions from the RAND experiment can be used to encourage prevention of downstream complications in chronic disease.16 Most of the recent VBID initiatives have focused on reducing cost sharing for chronic disease maintenance medications. These policies have usually focused on specific patient subgroups to increase the efficiency of the design.17 For example, Chernew et al, examined copay reductions for the management of chronic diseases in 6 classes of drugs. The employer plan reduced copays on statins, inhaled corticosteroids, angiotensin-converting enzyme inhibitors, angiotensin receptor blockers, beta-blockers, and diabetes medications. The authors found a 7% to 14% reduction in nonadherence to drugs in these classes when copays were reduced 50% for preferred and nonpreferred tiers and to zero for generic drugs.18 In a separate study, a large Blue Cross Blue Shield plan eliminated or lowered copays for drugs in 8 classes of medications and adherence rates improved by 2 to 4 percent in the first year of the program.19 Additionally, Choudhry et al found that dropping the copays on prescription drugs for clopidogrel and statins led to 4% and 2.8% increasesin adherence.20
While these copay changes to incentivize the use of certain technologies show improvement in some process indicators, they have not yet achieved cost savings.21 For example, the same Blue Cross Blue Shield study found no cost savings.19 Another recent article by Choudhry et al (2011) found no significant difference in costs between a group with no copay for cardiovascular drugs and a group with regular cost sharing. 22 The lack of significant cost savings may be due to the short follow-up times in these studies —usually 1 year. More research is needed in the area of cost savings of incentivizing the use of certain services. This will become especially important as the ACA has also required that insurers provide all the USPSTF recommendations free of charge.
In lieu of long-term follow-up, modeling suggests some long-term savings, but these analyses have often focused on raising copays for “low-value” services. For example, the 3 main treatments for prostate cancer vary greatly in their average costs with no evidence that the more expensive treatments result in better outcomes.23 A radical prostatectomy costs $7300, brachytherapy costs $19,000, and radiation therapy costs $46,000 on average. Newer forms of radiation treatment can cost close to $100,000 per case, and have not been shown to have any clinical advantages over any of these less expensive options, including watchful waiting. A simple VBID policy would be to modestly increase the cost sharing for these services to encourage more use of the cheapest and equally effective prostatectomy. The authors of the same prostate treatment study estimate $1.7 to $3 billion could be saved directing patients toward the lower-cost treatments.
What Role Should the Exchanges Play?
To date, there has been little policy work offering guidance on whether or how states should encourage VBID in their HIEs. The Robert Wood Johnson Foundation published a brief on the possible actions HIEs could take and identifies VBID as part of a state’s possible role in active purchasing.24,25 In selecting plans for participation, an HIE could give special priority to contracting plans applying VBID strategies. While Section 2713 promoted VBID, the preliminary HIE regulations promulgated by the Department of Health and Human Services in July 2011 did not offer substantial guidance for states on implementing value-based designs.26
State health exchanges are faced with a spectrum of possibilities. At one extreme, a state could establish mechanisms to identify high- and low-value services, and then mandate that all participating health plans apply different cost sharing levels to the services in these categories. The other extreme is to do nothing, and let insurers continue experimenting with VBID as they wish. Overall, the latitude state health exchanges have in adopting any of the 4 options depends on what level of power state lawmakers give their exchanges to selectively contract with plans. As of January 2013, 7 state exchanges, such as California and Rhode Island, have opted to be “active purchasers,” allowing them more power to control which plans can offer insurance through the exchanges.11 Six states, including Colorado, Utah, and Hawaii, opted to organize the exchanges solely as a clearinghouse.
After the November election, many state lawmakers who had been opposed to the ACA opted to allow the federal government to operate their state’s exchange. It is unclear at this juncture whether the federally run exchanges will be involved in promoting certain types of benefit designs or whether they will allow any willing insurer to participate for these 27 states.
Option 1: Require Plans to Structure Copays According to State-Defined Highand Low-Value Services
Under this option, the state would set up a governing body to decide what services would be covered with reduced or increased cost sharing for plans entering into the exchanges. The advantage of this approach is that it would provide consistency with regard to services considered high or low value across VBID plans. Defining the services up front would prevent the plans from structuring copays in ways that might lead to risk selection, such as setting higher costs for certain drugs.
There is some precedence for state involvement in valuebased service determination. For its state-sponsored insurance programs, including Medicaid, Oregon compiles a detailed list of services it deems of high value, and covers as many of the services as possible with the funding allotted in a given year (Table 1). The Oregon Health Plan ranks medical services “in a way that represents the comparative benefits (ie, clinical effectiveness and cost-effectiveness) of each service to the entire population to be served.”27
Oregon’s 11-member Health Services Commission has an established process for selecting covered services, starting by ranking clinical areas from highest to lowest benefit. Common treatments and procedures are assigned to the clinical categories ranging from maternity and newborn care (category 1) to “inconsequential services” (category 9).28 These categories are then combined with a series of metrics to derive an overall score: clinical effectiveness, population impact measures, the need for the service, and the net cost (Figure).
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