Designing Insurance Benefits to Yield Better Outcomes

Patricia Salber

Posted 12/12/11 on The Doctor Weighs In

Co-pays and co-insurance were introduced into insurance benefit designs to help curb over-utilization that occurs because something is completely free (the “moral hazard” of insurance). The problem is that these cost-sharing vehicles may also reduce the use of beneficial services, such as prescription drugs.

The concept of Value Based Insurance Design (VBID) is the idea that benefits would be designed in a way that promotes the use of services that bring value to the individual(s) consuming them. A commonly used example is eliminating co-payments for diabetes drug used by beneficiaries with diabetes.

Although there have been several observational studies that suggest this approach promotes the use of certain medications and may reduce the rates of preventable events, a rigorous evaluation of the impact of VBID on health outcomes has not been available…until now.

Niteesh Choudhry, MD, PhD, Associate Professor of Medicine at Harvard Medical School, and colleagues published a study on the impact of eliminating co-pays for evidence-based preventive medicines after myocardial infarction in the December 1, 2011 issue of the New England Journal of Medicine. I was attending the advisory board of the Center for Value Based Insurance Design at the University of Michigan a few days after this study hit the press. The general concensus is that, at long last, we can say with confidence that the VBID approach has been proven to work – at least for this one clinical condition.

The design of the study was simple, yet elegant. All individuals in the study were insured by Aetna. Their benefit designs varied depending on what Group they were in (individual, employer group plan, or governmental plan sponsor). Plans that agreed to participate in the study, were randomized to a “usual care” type of benefit design or a “full coverage” benefit design.

The full-coverage benefit design covered the full cost (with no co-pay or co-insurance) of the following drugs:

  • Brand-name or generic statins
  • Beta blockers
  • Angiotensin-converting-enzyme (ACE) inhibitor or angiotensin receptor blocker (ARB)

The usual care group had co-pays determined by the plan sponsor (employer group or governmental plan sponsor).

The results showed that folks in the full coverage group were more adherent to the medications noted above. There was no impact on adherence for other medications they may have been prescribed that were not subject to the “no-cost-sharing” design. Although there was better adherence in the full coverage group, adherence was still suboptimal – 35.9% for ACE/ARBS, 45% for beta-blockers, 49% for statins and 38.9% for all three medication classes combines. The full coverage design was associated with an increase in the 4-6% range for each individual medication and 5.4% for all medication classes combined. This suggests that although waiving co-pays does significantly impact medication adherence, other factors (such as complexity of the regimen, forgetting to take the medications, etc.) also have to be addressed.

There was no difference between the usual coverage and full coverage groups in terms of the primary outcome of the study: first readmission for a fatal or nonfatal vascular event or revascularization. However, there were significant differences in the results of prespecified secondary outcomes. Rates of all major vascular events or revascularizations that occurred in each patient during the study were reduced by 11%. That’s big. Further, there were significant reductions in the rate of stroke and nonsignificant reductions in the rates of myocardial infarction or unstable angina and congestive heart failure. There was no difference in the rate of coronary revascularization.

Despite the fact that the insurers paid more for the drugs in the full-coverage group, there was no difference in spending for non-drug medical services or mean total spending ($66,008 in the full coverage group vs $71,778 in the usual coverage group).

There are a number of interesting take-aways from this study:

  1. Reducing cost-sharing is associated with better medication adherence and better clinical outcomes
  2. It does not cost insurers more to do better
  3. Value-based insurance design is better than one-size fits all cost-sharing designs
  4. Although VBID has substantial benefits, it does not lead to perfect outcomes (medication adherence in the full coverage group was still quite low)

I am fond of saying that there are no silver bullets when it comes to healthcare, rather there are thousands and thousands of golden BB’s. We need to stop believing that if we could just get one key element optimized (e.g., benefit design), we would solve all the problems in our troubled health care world. Instead we are going to have to optimize every single detail to get the outcomes we want…and that is why all of us in health care will have full employment for a long, long time.

Pat Salber MD MBA is a former large health plan Chief Medical Officer who writes at The Doctor Weighs In.

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