20 Years of VBID Policy Achievements and How to Continue Progress


A panel of policy experts, including employees of the previous 2 administrations and a former lobbyist for health plans, discusses achievements of value-based insurance design and how to take the concept to the next level.

In 2001, A. Mark Fendrick, MD, and Michael E. Chernew, PhD, current co-editors-in-chief of The American Journal of Managed Care®, brainstormed an idea they were calling benefit-based co-pay that would tie a prescription drug’s cost-sharing to its clinical value to the patient. That concept was eventually renamed value-based insurance design (VBID). Today, VBID concepts are present in the Affordable Care Act (ACA) through covered preventive services, Medicare Advantage has been running a VBID demonstration project, and the next iteration, VBID X, is being developed.

This year’s V-BID Summit, hosted by the Center for Value-Based Insurance Design at the University of Michigan, celebrated the 20th anniversary of the first VBID publication with sessions looking at the impact of VBID and what needs to come next.

Amitabh Chandra, PhD, economist and professor at Harvard Kennedy School of Government and Harvard Business School, kicked off the day with a look at cost-sharing and the impact it can have on patient outcomes and mortality.

“Now, for most economists, nothing happens to people's mortality when they face cost-sharing,” Chandra said. From the economist point of view, people cut back when they face cost-sharing and they cut back on things that were wasteful. “Cost-sharing could harm patients if patients are cutting back in a very haphazard way. It could be the case that they cut back on very valuable medicines.”

He noted that patients might not know what they should cut back on, which is understandable. A patient on 5 different drugs will likely struggle to know how to rank these drugs from most to least valuable. There even might be multiple ways to rank 5 drugs.

Ultimately, research has shown that “small changes in cost-sharing generate very large mortality effects,” Chandra said.

The first panel of the day discussed the policy achievements of VBID over the last 20 years. Moderator Clifford Goodman, PhD, senior vice president, Comparative Effectiveness Research, The Lewin Group, first asked them how they have all advanced the field of VBID. Karen Ignagni, president and CEO, EmblemHealth, first got involved with VBID through her previous role as the president and CEO of America’s Health Insurance Plans. When she joined EmblemHealth, she put VBID into practice in 3 ways:

  • Working with the City of New York and its unions to create a program that had robust preventive services, embedding coaching to help with lifestyle issues and chronic illnesses, embedding care management, and creating an “end-to-end” VBID relationship so the health plan could “follow people from the early stages to the latter stages of illness and do everything we can on the front end to keep them as health as possible.”
  • Creating the national company WellSpark that focuses on early investment in prevention and coaching to prevent things down the line.
  • Setting up 12 community health care centers in underserved neighborhoods in New York open to all residents to close gaps in care, assist with food insecurity, address transportation issues, and provide behavioral health care.

IU Health in Indianapolis was able to apply VBID concepts as part of the original demonstration, explained Jim Parker, who recently served as senior advisor for health reform to former HHS Secretary Alex Azar. As a large academic medical center, IU Health attracted individuals with complex health conditions, Parker explained, and the benefits in Medicare Advantage “didn’t always help us the way we wish they could,” he said.

For example, they were not able to effectively monitor patients with congestive heart failure remotely unless they provided those same resources to all members. Under the VBID demonstration, they were able to offer those services to just the member who would benefit the most. This occurred prior to Parker’s government role, when Patrick Conway, MD, current CEO of care solutions, Optum, was director of the Center of Medicare and Medicaid Innovation (CMMI), which was running the VBID demonstration.

Conway said that the VBID demonstration that launched “did have positive effects in terms of steering people to high value services, and away from low value services.” During demonstrations, there are always parts you get right and parts you don’t, Conway said, but you always learn.

After CMMI held the demonstration, it led to broader changes in CMS and Medicare Advantage, he said, and now private sector organizations are taking advantage of the VBID design to improve care for people at lower costs.

“I think it's one of these aspects of our health system that we've seen a long, positive trajectory, built on the work of many people on this panel, on the panels today and others, that's had a positive impact on people's lives in terms of better health quality and lower total cost of care,” Conway said.

At the time that Conway was working at CMS, people didn’t necessarily understand the concepts of high-value care or low-value care, explained Kavita Patel, MD, nonresident fellow at the Brookings Institution. Patel also worked under the Obama administration when Conway was there as director of policy for the Office of Intergovernmental Affairs and Public Engagement in the White House.

While the concepts of low-value and high-value care make sense to people clinically and to economist policy makers, it is difficult to put together broad scale policy to address them. When the ACA was passed into law, it included a section the required health plans provide coverage for a broad range of preventive services, and VBID was a part of that. However, she said that “preventive services are not, were not, should not be the full scope of VBID.”

Going forward, to continue growing VBID, more research needs to be done around high-value and low-value care and preventive services, said Ignagni.

In addition, there remains a lot of opportunity in the area of prevention. She said people don’t really realize just how far the area of prevention can cover. Prevention can even cover lifestyle changes to help people deal with their chronic disease, Ignagni said. For instance, having a coach may help someone with diabetes be more compliant to their drugs or may influence what they eat as part of their disease management.

Finally, Ignagni pointed to population health and connecting it to VBID. “People genuflect at the altar [of population health], but they don’t really necessarily embrace the comprehensiveness of it. And I think VBID fits beautifully into population.”

Parker agreed that the “natural progression” of VBID leads to decision making for treatments supported by effective benefits that focus on the personal needs of the patient. This is currently starting to take place in Medicaid around social determinants. As a result, Medicaid benefits are being broadened to include nontraditional benefits that have real impact to individuals.

“It's really forcing us to rethink how we tailor benefits, certainly in a broad scale way, with respect to preventive care that we know is effective on a population basis,” Parker said. “But even more so at the individual level that would be most effective for this individual. That's going to be really hard. But I think that's directionally where we're being taken.”

The future is where Blue Cross and Blue Shield of North Carolina (BCBSNC) is already practicing, according to Conway, who was president and CEO of the plan after his days at CMMI and before he joined Optum. BCBSNC developed a smart shopper tool that identified services in green, yellow, and red to designate high-value services vs low-value services.

“VBID is a is a critical enabler of value-based care [and] achieving the quadruple aim,” Conway said.

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