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Kimberly Westrich Discusses Fallacies in Value-Based Benefit Design


Kimberly Westrich, MA, vice president of health services research at the National Pharmaceutical Council, speaks on common misconceptions when designing value-based benefits.

The idea that cost equals value and that the health care system has moved completely away from fee-for-service (FFS) models are 2 common misconceptions among organizations designing value-based benefits, said Kimberly Westrich, MA, vice president of health services research at the National Pharmaceutical Council.

Westrich recently participated in a panel discussion at the National Alliance 2021 Annual Forum titled “Building Better Benefits: Rethinking Value-based Benefit Design.”


Can you discuss common misconceptions when it comes to designing value-based benefits?

There are a lot of common misconceptions when it comes to designing value-based benefits, but I think I'll focus on 2 common misconceptions. The first common misconception is that cost equals value. And the second common misconception is that everyone in the health care system has moved away from that cost-based FFS world towards that value-based world. So let's look at those individually.

The first one: cost equaling value. If you're managing cost, that's not the same as optimizing value. Value has 2 components; cost is one of them, but benefit is the other. So if you're an employer, for example, and your pharmacy benefit manager [PBM] is focused on lowering your pharmacy spend or trend, that could be focused on cost management, but that might not be aligned with the high-value care that you want for your employees and for your productivity.

In many cases, medicines have the highest or the biggest return for your health care dollar. They keep patients healthy, out of the hospital or the emergency room. So, doing cost management without focusing on value can actually be penny wise and pound foolish, and it's not necessarily incentivizing high-value care and discouraging low-value care. So that's our common misconception number one, cost is not equal to value.

The second one is related, and that is this assumption that everyone has moved into the value-based world. The reality is our health system still has a lot of incentives in it that are grounded in that FFS world. For example, if you're an employer, your employee benefit consultant [EBC] might still be living in that FFS world and might be making benefit design recommendations to you based on those incentives, for example, recommending the benefit that's going to give you the biggest rebate check or the benefit that might give the consultant the biggest commission.

If you as an employer are focused on value and your advisors are focused on FFS, then you're out of alignment, and you're not going to be incentivizing that high-value care that you're looking for.

On our website, we actually have a couple of interactive tools that allow an employer to evaluate the extent to which they're in alignment with their EBCs and their PBMs. And I would encourage you to go check those out. So that's the second common misconception. It's important to understand not everyone has transitioned into the value-based world and it's important to communicate where you are and make sure you're in alignment.

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