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Value-Based Benefit Design Literature Review


PLEASE NOTE THAT THIS REFERENCE DATABASE IS OUTDATED AND DOES NOT REFLECT INFORMATION GATHERED ON VALUE BASED PURCHASING IN 2015.

There is an increasing amount of literature being written about VBBD theory and employer implementation. This section reviews relevant research according to the following areas: 

  1. evidence supporting the need for a new paradigm in health care; 

  2. the impact of cost sharing strategies on health outcomes; 

  3. application of VBBD in employer settings; 

  4. and, expansion of VBBD strategies.

Evidence of the Need for Paradigm Shift in Health Care

While many studies have documented the high prevalence of chronic disease and its health and financial consequences for individuals, employers and government, it has also afforded the opportunity for creative thinking to address the problems. Dr. Mark Fendrick and Michael Chernew introduced value-based insurance design as a solution and outline their ideas in many articles—some of which are featured in this literature review.

Despite the interest in and experimentation with benefit design models and tools that enhance personal responsibility and adherence to treatment regimens, many employers’ experiences are not being fully documented and submitted to peer-review journals. Simply put, their interest in pursuing value-based approaches is rooted in the need and desire to increase the value of their health care investment, curb costs and increase worker satisfaction and productivity—not to construct scientifically-based studies to measure clinical and financial outcomes of their health care benefits.

Many of the companies and local governments that have undertaken value-based approaches have graduated to higher levels of sophistication with respect to data collection and analytics. They have fine-tuned their data tracking systems and predictive modeling to fully capture and anticipate their health-related costs. As a result, their initial data may not yield much insight to contribute toward a peer-reviewed study. For example, an employer who historically has not tracked employee leave may not be able to distinguish between vacation and sick days. Or the cost of work-related accidents and/or employee leave may not be accurately calculated to reflect the lost productivity or the additional cost of hiring replacement workers to take their place.

Therefore, if employers are looking for a formula by which to predict their rate of financial return, they will not find the silver bullet in the literature. Early adopters such as Pitney Bowes were only able to calculate a return on their investments several years into the implementation and evolution of their programs and design.

Dr. Mark Fendrick recognizes the vacuum that exists in the peer-reviewed research right now. He feels strongly that once value-based plans can clearly demonstrate superior return on investment—calculating the financial relationship between VBBD and improved health status and the productivity gains that come from healthier workers—employers will move away the ‘one-size-fits-all’ plans.[1]

For more information, see references (1)-(7).

Impact of Cost-Shifting Strategies on Health Outcomes

However, if employers and other health care stakeholders intend to understand the circumstances that have led to the exploration and evolution of value-based solutions, there is plenty of evidence demonstrating “the perfect storm” relationship between the high prevalence of obesity and chronic diseases, the ever-increasing cost of health care and the need to respond to these costs in order to effectively compete in the global market. In response to that environment, many employers have turned to consumer-directed health care plans, which combine high deductible plans with health reimbursement arrangements (HRA) with the intention of making consumers savvy users of health care. This strategy is predicated upon the belief that the increasing health care costs are based solely on people overusing the health care system with unnecessary tests, procedures and treatment. If they become more knowledgeable about the health care costs associated with their care, they will consume fewer health care services and products. The impact of cost shifting strategies is well documented, underscoring that while they may initially keep down health care costs, these savings quickly evaporate due to more catastrophic health events costing considerably more. Critics contend that these plans may attract healthier enrollees who use fewer health care services or may discourage enrollees from obtaining necessary care. For employers with low employee turnover and an aging workforce, such plans may keep down short-term costs but they may become high cost drivers in the near future.

For more information, see references (8)-(15).

Application of Value-Based Benefit Design in Employer Settings

Many of the early VBBD adopters, through careful data assessment and design adjustments, have now been using VBBD tools long enough to demonstrate positive change in clinical and financial outcomes. They have worked hard to change their benefit designs, workplace culture and infrastructure to bring meaningful change to their workforce. These innovators have documented their journey and results as a way to share their experience and engage others in value-based approaches. This guide is filled with case studies—some published in peer-review journals and others based on interviews with the innovators themselves. All provide valuable insights and experience for those interested in following in their footsteps and expanding the VBBD frontier.

For more information, see references (16)-(37).

Value-Based Benefit Design Expansion

Reflecting the growing market of specialty or biological drugs used to treat many autoimmune and neurological diseases as well as many forms of cancer, there has been a great deal of interest in extending value-based approaches to address these more complex chronic diseases that are treated with biologics. While this is relatively a new concept within the VBBD, it is an area that is ripe for study.

For more information, see references (38)-(40).

In addition to the literature, there are comprehensive on-line tools and sources that are constantly updated to provide readers with the latest information related to VBBD. Aside from the National Business Coalition’s website, which features many value-based purchasing and benefit design tools, the University of Michigan Center for Value-Based Insurance Design and the Center for Health Value Innovation are rich clearinghouses of VBBD information in user-friendly formats designed to help employers navigate this new environment. (For more information, see Getting Started section.)

 

[1] Butcher L, “Value-Based Insurance Design,” Biotechnology Healthcare. October/November 2009;41. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2799098/.


 Copyright © 2011
 National Business Coalition on Health.
 All Rights Reserved. Disclaimer.


 
In the context of employer-based health benefits, cost sharing refers to the benefit design arrangement between an employer and his or her employees that may result in higher premium contributions or an employee's premium share of contribution, variations in deductibles, and copays or coinsurance.
A sophisticated tool which helps payers anticipate future costs rather than relying solely on cost history. Predictive modeling takes into account clinical factors and population demographics such as age, gender, and income level.
Value-based insurance design bases an individual's out-of-pocket costs according to the value of a medical service or product for a specific patient population. Although cost-sharing still occurs in this design, it is used to encourage use of the clinical intervention, mitigating adverse health consequences that may lead to even higher cost interventions. The value of the clinical intervention will vary across patient groups and their demographic differences and therefore be subject to different cost-sharing levels.
Value-based insurance design bases an individual's out-of-pocket costs according to the value of a medical service or product for a specific patient population. Although cost-sharing still occurs in this design, it is used to encourage use of the clinical intervention, mitigating adverse health consequences that may lead to even higher cost interventions. The value of the clinical intervention will vary across patient groups and their demographic differences and therefore be subject to different cost-sharing levels.
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