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Value-Based Insurance Design: Perspectives, Extending the Evidence, and Implications for the Future
John J. Mahoney, MD, MPH; Karlene Lucas, MBA; Teresa B. Gibson, PhD; Emily D. Ehrlich, MPH; Justin Gatwood, MPH; Brian J. Moore, PhD; and Kim A. Heithoff, ScD

Value-Based Insurance Design: Perspectives, Extending the Evidence, and Implications for the Future

John J. Mahoney, MD, MPH; Karlene Lucas, MBA; Teresa B. Gibson, PhD; Emily D. Ehrlich, MPH; Justin Gatwood, MPH; Brian J. Moore, PhD; and Kim A. Heithoff, ScD
Quarterly trends in employer (net) payments showed no differences in total (medical plus drug) spending as the VBID group matured (Figure 6; Table 2). This was true for all-cause (net) payments and asthma-related (net) payments (Table 2). In the first and third years after implementation of VBID, asthma-related prescription drug spending was higher in the VBID and DM group. In spite of the increase in drug spending for the VBID and DM group, total medical and prescription drug spending for all causes, as well as asthma-related total medical and drug spending, was no higher in the VBID and DM group (Figure 6).

Out-of-Pocket Payments

Trends in out-of-pocket payments showed that the VBID program was operating as planned, and patients enrolled in this program paid a much lower amount for asthma medications in each year. In the first year, quarterly out-of-pocket payments were $22 lower than baseline in the VBID and DM group compared with the contemporaneous trend in the DM-only group, were $25 lower than baseline in the second year, and were $19 lower than baseline by the third year. Trends in asthma-related medical outof- pocket payments were no different from the comparison group in each of the 3 years; this was an expected result because the medical benefit plan characteristics were the same in the groups with and without VBID.


Our findings from the present study do not differ substantially from previously reported studies (Table 3).21,36,42 Chernew and colleagues did not find a significant increase in inhaled corticosteroid use (controller medication) in the first year after VBID implementation.21 Gibson et al found a small increase in adherence to asthma medications in the third year after VBID implementation.36 Kelly et al reported an increase in adherence to asthma medication, but did not use a comparison group to track contemporaneous trends, so it is harder to draw conclusions from this example.42 In addition to the published research cited above, the VBID registry, which gathers information about all types of VBID programs at any stage of development, reports 3 case studies that experienced improvements in asthma medication adherence.43

One limitation of the present study is that it is difficult to classify patients into asthma severity levels and analyze and interpret the findings without clinical data such as peak flow readings. In addition, we measured average adherence, although adherence patterns may vary based on presence or absence of symptoms. Treatment protocols can be different for patients with more severe, persistent asthma than for those with mild or intermittent symptoms. Regular use of controller medication is indicated in the case of severe or persistent asthma, and increasing reliever use specifically for this group of patients indicates uncontrolled asthma.

Implications for the Future: The Long-Term Value of VBID

It has been more than 10 years since the first company-sponsored VBID was implemented by Pitney Bowes in 2002. As more employers develop VBID programs, there will continue to be opportunities to evaluate and enhance their longterm value. Based on our review and expansion of the evidence, there is reason to support a broader diffusion of VBID. As we enter into national healthcare reform, we propose a few key learnings to consider as employers and policy makers embed these strategies into benefit design.

The Design of the Incentive Makes a Difference

The intent of value-based insurance is to adjust out-of-pocket costs based on an assessment of the clinical benefit to a specific patient population. Although a blunt reduction or elimination of copayments has been shown to have an impact on medication adherence and utilization, varying levels of coinsurance also have important implications. More transparent pricing helps consumers and providers weigh the clinical benefit of a medication or treatment along with the price. In our research, we explored the impact of a program that presented the consumer with direct exposure to the cost of the service, which deviated from the more typical VBID approach of setting a lowered, flat copayment for a specific drug or drug class. Across all key results presented in this paper—2 from published studies and our results from the studies in diabetes and asthma—we found that lowering the rate of coinsurance for certain high-value services produced savings or was cost neutral. This suggests that transparency influences provider and patient behavior and may offer an intrinsic motivation for improved health that extends beyond a more extrinsic motivation for short-term cost savings. Copayment elimination or flat copayment reduction may have its place; however, transparency initiatives such as those described in this paper can be integrated in the market with value-based coinsurance design.

Combining Value-Based Programs With Disease Management Enhances Results

The potential impact of VBID can be enhanced if these programs are integrated into broader strategies to improve health outcomes. DM is a systematic, clinical approach to the care of patients with chronic illness. The implementations we reviewed all occurred alongside traditional DM programs, and the findings endorse incorporating VBID into a multipronged approach. Our review and extension of the diabetes VBID suggest that when the clinical focus of DM is aligned with a financial incentive, it creates an environment in which the existing infrastructure for DM can be used as leverage for participation in the VBID (and vice versa). For the diabetes VBID, the combined approach resulted in long-term, sustained improvements in medication adherence and utilization and cost savings. Integrating these strategies allows care delivery to be organized around the patient’s medical conditions and longterm goals. Enhanced effects may also extend to aligning VBID programs with other examples of care delivery and payment reform initiatives, including the patient-centered medical home, provider networks, bundled payments, and shared savings.

Broader Applications of VBID Deserve Additional Inquiry

There is a growing body of literature indicating that VBID is effective for cardiometabolic conditions (eg, diabetes and hypertension). As the impact of VBID is established, VBID is being applied to additional conditions such as asthma (as reviewed within) and chiropractic care for back and neck pain—an area that typically has not been considered in the context of value-based design strategies.44 Our analysis suggests that it may not always make sense to modify the payment structure in the same way across all conditions or to replicate the VBID for one condition exactly as it was designed for another. In the case of asthma, the “level of precision and clinical targeting” for asthma medications is not as clearly defined as it is for diabetes medications.3 For example, inhaled corticosteroids are prescribed and highly effective for treating patients with asthma, but they are also prescribed and less effective for treating patients with other conditions.44 As companies adopt VBID strategies, it will be important to establish the clinical indicators that define value and how to target them appropriately.

Time Is Critical

VBID takes time to realize an effect. Analysis of programs must be sufficiently long to allow for adequate uptake. In our diabetes studies, we found that some behavior and cost changes were seen in the first year of the program; however, the main effects on adherence, utilization, and spending increased over a 3-year time period. Intended effects also may be seen at different treatment points and change over time. For instance, in the asthma study, we found that some significant adherence and utilization trends were observed in the third year of the program.

Author affiliations: Analytic Consulting and Research Services, Truven Health Analytics, Ann Arbor, MI (EDE); Health Outcomes, Truven Health Analytics, Ann Arbor, MI (JG, TBG, BJM); US Outcomes Research, Merck Sharp and Dohme Corp., North Wales, PA (KAH); Florida Health Care Coalition, Orlando, FL (KL, JJM).
Author disclosure: Dr Gibson, Dr Moore, Ms Ehrlich, and Mr Gatwood report employment with Truven Health Analytics. Dr Heithoff reports employment and stock ownership with Merck. Dr Mahoney reports receipt of honoraria and lecture fees with Merck. Ms Lucas reports no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this supplement.
Acknowledgement: The authors would like to thank A Mark Fendrick, MD for his comments and suggestions.
Authorship information: Concept and design (TBG, KAH, KL, JJM); acquisition of data (TBG, KL, JJM); analysis and interpretation of data (EDE, JG, TBG, KAH, JJM, BJM); drafting of the manuscript (EDE, JG, TBG, JJM, BJM); critical revision of the manuscript for important intellectual content (EDE, JG, TBG, JJM, BJM); statistical analysis (KAH, JJM, BJM); provision of study materials or patients (JJM); obtaining funding (TBG, KAH, KL, JJM); administrative, technical, or logistic support (TBG, JJM); supervision (TBG, KL, JJM).

Signed disclosures are on file at the office of The American Journal of Managed Care, Plainsboro, New Jersey.
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