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Addressing Rising Cost Sharing With Precision Co-Pay Assistance

Since its inception in 2005, the University of Michigan Center for Value-Based Insurance Design (V-BID) has led efforts to promote the development, implementation, and evaluation of innovative health benefit designs balancing cost and quality. A multidisciplinary team of faculty, including A. Mark Fendrick, MD and Michael E. Chernew, PhD, who first published and named the VBID concept, have guided this approach from early principles to widespread adoption in the private and public sectors. The Center has played a key role in the inclusion of VBID in national healthcare reform legislation, as well as in numerous state initiatives. The basic VBID premise is to align patients' out-of-pocket costs, such as copayments, with the value obtained from health services and providers.
This article was collaboratively written by A. Mark Fendrick, MD, director of the Center for Value-Based Insurance Design (V-BID), and several V-BID Center staff. 

A new video released by the Center for Value-Based Insurance Design (V-BID) outlines the need for Precision Co-Pay Assistance Programs to address the impacts of increasing consumer cost-sharing and patient assistance programs on appropriate medication utilization.

Consumer cost sharing for medical care and medications is high, and it's getting higher. The average deductible for employer-sponsored single coverage increased by more than 250% between 2006 and 2016, and is now nearly $1500.1 Cost sharing is a useful tool for payers and purchasers to encourage prudent use of healthcare dollars. However, cost sharing has historically been “one-size-fits-all,” and has failed to distinguish between high- and low-value clinical therapies, necessitating a more precise benefit design to enhance patient-centered outcomes, while reducing the harm associated with high cost sharing and finite patient assistance resources.

Cost sharing at high levels is associated with many deleterious consequences. Patients who are subject to greater cost sharing tend to reduce use of services and medications—and the greater the cost share, the greater the corresponding reduction in service use.2-4 This leads to an increased need for third-party assistance to ensure access, including through charitable foundations, co-payment cards, and manufacturer programs.

Patient assistance programs serve to address increasingly salient concerns around cost-related access to clinically indicated prescription medications. However, co-pay cards in particular may undermine reasonable incentives for clinicians and patients to respect plan formularies and speed members toward deductibles and out-of-pocket maximum amounts they might not otherwise satisfy, thereby increasing expenditures and resulting in inefficiencies in the healthcare system. Discount cards usually have a maximum value per fill, so patients who have not yet satisfied a deductible applicable to the pharmacy benefit may still be subject to very high cost sharing. Cards may also have an annual cap on support offered per patient per year.

The use of co-pay assistance for medications for which there is an effective, lower-cost alternative is deemed as financially burdensome to the healthcare system. To counteract this inefficiency, Accumulator Adjuster Programs (AAPs)—which prevent co-pay assistance funds from being applied to patients’ deductibles—are increasingly being implemented, resulting in even greater patient financial responsibility and potential disruption of recommended treatments.  

Precision co-pay assistance programs have the potential to improve prescription affordability while increasing efficiency of limited patient assistance funds. Precision co-pay assistance provides financial assistance exclusively for high-value medications, and is not provided for a drug if there is an effective, lower-cost alternative. This prevents the occurrence of unexpectedly high co-pays for the patient and eliminates the need for AAPs. Both patients and payers benefit from precision assistance programs, as they improve patient outcomes by enhancing access to care and support appropriate medication use.

To learn more about this clinically nuanced solution designed to ensure access to clinically indicated therapies, view the new V-BID Center Precision Co-Pay Assistance video and Precision Patient Assistance brief.

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1. Claxton G, Rae M, Long M, et al. Employer Health Benefits 2016. Kaiser Family Foundation, Health Research & Educational Trust, NORC at the University of Chicago; 2016:274.

2. Newhouse JP, Insurance Experiment Group. Free for All?: Lessons from the RAND Health Insurance Experiment. Cambridge, MA: Harvard University Press; 1996.

3. Goldman DP, Joyce GF, Zheng Y. Prescription drug cost sharing: associations with medication and medical utilization and spending and health. JAMA. 2007;298(1):61-69. doi:10.1001/jama.298.1.61.

4. Eaddy MT, Cook CL, O’Day K, Burch SP, Cantrell CR. How patient cost-sharing trends affect adherence and outcomes: a literature review. P T Peer-Rev J Formul Manag. 2012;37(1):45-55.

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