Value-Based Insurance Not Such an Easy Sell

August 2014 Vol 7, Special Issue ASCO 2014 Payers' Perspectives in Oncology
Caroline Helwick

The need to design insurance coverage that promotes value in cancer care is no longer a matter of debate, but how to accomplish it remains a huge challenge, according to Lee N. Newcomer, MD, UnitedHealthcare Senior Vice President of Oncology, Women’s Health and Genetics, who discussed value in cancer care from the payer’s perspective at ASCO 2014.

Dr Newcomer spoke at a session, “Can We Find Common Ground? Stakeholder Perspectives on Value in Cancer Care.” He began by reminding attendees “why we are having this discussion.” The average US household income is currently approximately $50,000, and 50% of this goes to pay for insurance premiums and out-of-pocket expenses. Even worse, given the current trend, by 2028, the average US household will spend 100% of its income on healthcare expenses.

“This is a trend that cannot be sustained. We have to start having discussions about value, and we are going to have to say that there are certain things that should not be covered. The issue is how to do this in a way that will be rational and fair,” he said.

Value-Based Design Challenges
Insurance benefits are not based on value; most are designed around structures, he said. The idea behind copayment or coinsurance “is for the patient to pause and ask, ‘is this worth the money?’ Copays were never intended to be large enough to keep people from getting important, high-value care, but to keep them from selecting lower-value care if they have to pay the first $50 or a percentage,” Dr Newcomer said.

“Unfortunately, this is not discriminatory based on the procedure,” he continued. “It’s simply discriminatory based on price.”

To be successful, a value-based insurance program needs a nonbiased external reference that will create a fair differential between high-value and low-value services. A high-value service may offer complete coverage, with no requirement for patient participation, whereas a low-value service would mandate participation—33%, 50%, or even 100% participation.

“It will be difficult for consumers to understand this for every service they will receive,” Dr Newcomer said. These thresholds must be set externally, because payers “will always be perceived as making these decisions on a financial basis only,” he suggested. “It doesn’t matter how high-integrity the process is, the bias is real in the consumer mind.” Dr Newcomer noted that ASCO has started “wrestling with this issue” through the Choosing Wisely campaign. “Having ASCO set references would be a key to getting these in place,” he said.

Consumer education will also be critical to the success of value-based design, because the insured population is already unclear about their benefits. “In a value-based program, we are asking consumers to take on an increasingly large amount of information that may be even harder to digest,” Dr Newcomer said. “For a consumer to sort out a 2-month versus 4-month survival benefit, or grade 5 versus grade 4 toxicities could be overwhelming.”

“Trying to make this concept easily accessible to consumers, and helping them find out the value of a given treatment, is a daunting task and has been a major barrier to getting value-based insurance in place,” he noted.

Issues for Payers
Equally overwhelming for systems programmers within a payer system will be sorting out the different diagnoses and treatment regimens and assigning different coinsurance amounts to these. The number of permutations could overwhelm any computer system, Dr Newcomer added.

Furthermore, who decides, and how will it be determined what the patient participation will be for each of these scenarios? “Where do we draw the line? Where we say one thing should be free and another should have 30% participation?” he posed. “No matter where we draw the line, someone will be unhappy.”

On the positive side, once these thresholds are determined it will be easier for payers to set prices. The more generous the benefit, the higher the overall price of the premium, and this should help consumers begin to understand the concept of value, Dr Newcomer predicted.

“The thing that’s the hardest is simply not paying for anything at all,” he continued. For example, in its Choosing Wisely campaign, the American Society of Clinical Oncology has already recommended that patients with metastatic breast cancer receive only single-agent chemotherapy (except under certain circumstances), but insurance carriers restricting payment to single agents would elicit strong public reaction.

“The immediate perception of value-based insurance is that it’s simply being done to save money,” he posed. “Putting these programs in place will have to be a gradual process accompanied by education.”

In closing, Dr Newcomer emphasized that decisions about high- versus low-value services must be made in the setting of limited resources. “Payers need reliable information on value, and so do patients,” he said, “so they can apply their preferences and make smart decisions.”

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Last modified: August 21, 2014
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