Value-Based Insurance Design
Under the concept of value-based insurance design (VBID, sometimes referred to as value-based benefit design), the more clinically beneficial a therapy is for a patient, the lower the patient’s cost share. Thus, VBID encourages the use of medically necessary therapies and services and reduces barriers to access for these services. As an example, a person who requires a colonoscopy because he is at high-risk for colon cancer would pay less for his treatment than someone who has little or no-risk factors for colon cancer.
According to Dr. Mark Fendrick, Co-Director of the Center for Value-Based Insurance Design at the University of Michigan, VBID encompasses several key principles:
- value equals the clinical benefit achieved for the money spent;
- health care services differ in the health benefits they produce; and
- the value of health care services depends upon the individual who receives them.
One of the essential premises of VBID is the more clinically beneficial a therapy is for a patient, the lower the patient’s cost share, therefore reducing barriers to access for these services. Conversely, treatments that are not proven to be effective for certain patients may have higher co-payments associated with them.
Companies like Caterpillar, Inc., Hannaford Brothers Company, and UnitedHealthcare, among others, have improved employee health via one of the four basic approaches to VBID:
- Design by service, in which copayments or coinsurance are waived or reduced for select drugs or services, such as statins or cholesterol tests, no matter which patients are using them.
- Design by condition, in which copayments or coinsurance are waived or reduced for medications or services, based on the specific clinical conditions with which patients have been diagnosed.
- Design by condition severity, in which copayments or coinsurance are waived or reduced for high-risk members who would be eligible for enrollment in a disease management program.
- Design by disease management participation, in which high-risk members who actively participate in a disease management program are provided reduced or waived copayments or coinsurance.