Value-based insurance design (VBID) aligns patient cost sharing with the value of clinical services, so that patients pay less for high-value services and more for unnecessary, low-value services. While there has been increased interest in VBID, with CMS expanding the VBID demonstration in Medicare Advantage to all 50 states, the situation on the state exchanges is different: The plan has to be cost neutral, so in order to remove cost sharing for high-value services, cost sharing has to increase for other, low-value services.
Value-based insurance design (VBID) aligns patient cost sharing with the value of clinical services, so that patients pay less for high-value services and more for unnecessary, low-value services. While there has been increased interest in VBID, with CMS expanding the VBID demonstration in Medicare Advantage (MA) to all 50 states, the lack of standardization has slowed widespread implementation.
At the University of Michigan V-BID Center’s V-BID Summit, panelists who were involved with designing a market-qualified health plan that implemented VBID proposals discussed the process of coming up with the plan, which they called VBID X.
“VBID X was really about applying the principles of value-based insurance design to the exchange marketplace,” said Greg Gierer, the senior vice president for policy at America’s Health Insurance Plans (AHIP). “AHIP has been an early and enthusiastic supporter of VBID”; however, while VBID has been implemented in Medicare, the exchange market is different and more unique than other markets, he added.
Health plans in Massachusetts were interested in finding a better way to deliver benefits, explained Michael E. Chernew, PhD, Leonard D. Schaeffer professor of Health Care Policy and the director of the Healthcare Markets and Regulation Lab in the Department of Health Care Policy at Harvard Medical School. Chernew is involved with the Massachusetts Health Connector, the state’s health insurance marketplace. Research had shown that there is a lot of cost sharing with the plans bought on the Connector, and patients are paying a lot out of pocket, which can be a problem for patients with chronic conditions.
“The key thing is that, on an exchange, you have an actuarial value target,” said Chernew, who is also the co-editor-in-chief of The American Journal of Managed Care®. “You cannot just say, ‘alright, let’s just put more money into the system.’ Because you have to hit an actuarial value target. So anytime you make something more generous, you have to make something less generous.”
Offsetting costs makes VBID X different from the MA demonstration, which does not require that added services be offset. In this model, plans have to justify which services they are including and which ones they will increase costs for.
“We can’t make everything free,” Chernew said. “Some things have to be not free in order to make other things free.”
As part of the project, the VBID X team identified a list of high-value and low-value services for which cost sharing can be altered. The list of high-value services included glycated hemoglobin testing, pulmonary rehabilitation, blood pressure monitors, and certain generic and brand drug classes, such as inhaled corticosteroids and pre-exposure prophylaxis for HIV. The list of low-value services included spinal fusions, vertebroplasty and kyphoplasty, vitamin D testing, and proton beam therapy for prostate cancer.
Gierer is bullish on the future of VBID and believes there is a bright future for it with broader adoption likely in 5 years. However, he added that VBID is not inevitable. Chernew admitted that this work represented just a first small step.
“We don’t have to be great, we just have to beat the status quo,” Chernew said, “and the status quo is bad.”