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 over age 50 who requires a colonoscopy because he is at high risk for colon cancer would pay less for his treatment. By contrast, someone who is in his 20s, has no family history or other risk factors for colon cancer and simply wants to be checked, should pay more.
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--or low value care--may have higher co-payments associated with them.
There are four basic approaches to VBID for improving employee health:
- 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.