Value-Based Insurance Design

Costs can encourage or discourage patient use of clinically beneficial care. Using value-based insurance design, payers can incentivize high-value care and lower the cost barriers between patients and health care interventions that can improve outcomes and promote value.

What is value-based insurance design?

Value-based insurance design (VBID), sometimes referred to as value-based benefit design, is rooted in a simple concept: the more clinically beneficial a therapy is for a patient, the lower the patient’s cost share should be. Conversely, treatments that are not proven to be effective for certain patients, or low value care, may have higher co-payments associated with them. 

Why is VBID needed?

Low-value and unnecessary care is a $340 billion problem that exists across all sectors of the U.S. health care system. By reducing the use of low-value care, including efforts to encourage access to care that significantly contributes to patient health, the overall value of care can rise. 

VBID in Action

How does VBID work in the real-world? Here’s an example. Using VBID principles, a health plan could cover health care screenings differently, depending on the patient. 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 and simply wants to be checked, would pay more. 

VBID and Specialty Medicines

Applying VBID to health plans has the potential to address potential unintended consequences of reining in costs. For example, prior NPC research examined the role of VBID in addressing access to specialty medications.

Specialty medications, which consist of complex molecules and are frequently used in the treatment of complex conditions like rheumatoid arthritis, multiple sclerosis and cancer, often carry high costs. 

An analysis developed in partnership with NPC and the Center for Value-Based Insurance Design at the University of Michigan found that, for many patients and clinical indications, high spending on specialty medications is money well spent. Authors found that indiscriminate, high cost-sharing for specialty medications can be harmful to patients and employers and that payers and purchasers can leverage a variety of approaches to help assure that patients have access to the right medications.