AJMC RELEASE: Value-based Insurance Design Critical Cost Savings in State Healthcare Exchanges

According to a study published in the July issue of The American Journal of Managed Care (AJMC), state leaders will have a unique opportunity to reshape the current insurance benefit landscape in the upcoming state healthcare insurance exchanges (HIEs).

AJMC RELEASE: Value-based Insurance Design Critical Cost Savings in State Healthcare Exchanges

FOR IMMEDIATE RELEASE

July 24, 2013

According to a study published in the July issue of The American Journal of Managed Care (AJMC), state leaders will have a unique opportunity to reshape the current insurance benefit landscape in the upcoming state healthcare insurance exchanges (HIEs). Controlling consumer costs will be extremely important, as projections estimate that by 2021, over 24 million new enrollees are expected to join the healthcare exchanges.

State HIEs will be offered as virtual “marketplaces” enabling individuals and small business to more conveniently purchase health insurance in one central location. Consumers will then be able to transparently compare prices of plans and benefits, choosing from 4 tiers of coverage (bronze, silver, gold, and platinum). These tiers are based on actuarial value, ranging from 60% to 90% of plan coverage.

The AJMC study suggests that while there is a growing national policy push to adopt value-based insurance design (VBID) in HIEs, there has been little attention to how exchanges could or should be involved in promoting VBID, and whether major cost savings will be achieved.

VBID is intended to control healthcare costs, incentivizing and encouraging consumers to use high-value services in place of lower-value services. This is suggested by imparting higher copays for lower-value services.

Authors Christine Buttorff, BS, BA, Sean R. Tunis, MD, MSc, and Jonathan P. Weiner, DrPH, suggest there are many ways states will operate their respective exchanges. Some states, 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. Other states, including Colorado, Utah, and Hawaii, opted to organize the exchanges solely as a clearinghouse.

Four options the authors suggest for incorporating VBID into state HIEs, include:

  • Requiring plans to structure copays according to the respective state-defined high and low-value services
  • Require HIE-participating plans to offer insurer-created value-based designs
  • Incentivize/encourage insurers to offer VBID plans
  • Offer no guidance to the plans; state exchanges could remain silent on the issue of VBID, letting insurers decide for themselves what types, if any, to offer beyond what is required in the ACA.

As state leadership debates the organization of healthcare exchanges, they will have to consider VBID’s role in structuring insurance plans. States with more active exchange boards may consider making VBID mandatory in a selective contracting process. Other states may utilize a more hands-off approach, merely offering recommendations, or allowing insurers to participate in exchanges without any guidance at all.

Modifying copays, even in small amounts, can help patients determine the relative values of drugs and services. Instead of incentivizing patients to use high-value services, some of the largest VBID savings are likely to result from requiring patients to pay more out of pocket for services that may provide little or no clinical benefit.

“While these designs remain controversial,” Ms Buttorff, et al, say in the study, “VBID in conjunction with other payment reforms, in the long run, might begin to wrench the elusive ‘bend’ out of the healthcare cost growth curve.”

Read the article here.

CONTACT: Nicole Beagin

609-716-7777 x131

nbeagin@ajmc.com