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Value-Based Benefit Design: Reducing Copayment for High-Value Services Maximizes Return on Investment

Therapies with proven benefit should have low or no cost-sharing
August 2012, Vol 5, No 5, Special Issue ADA 2012 Highlights

Value-based insurance design (VBID) that reduces patient copayments to encourage the use of high-value therapies is cost-effective, because the cost of the additional use of high-value drugs encouraged by such a design may be offset by a reduction in the use of nondrug health ser­vices, said Allison B. Rosen, MD, MPH, ScD, Associate Professor, Department of Quantitative Health Sciences, University of Massachusetts Medical School, Worcester, at the 2012 ADA annual meeting.

Provide Incentives to Encourage Use of High-Value Therapies
The silo-based approach to cost versus quality trade-offs defies common sense, said Dr Rosen. Increasing out-of-pocket costs to consumers creates incentives for them to curb healthcare use, and at the same time the pay-for-performance approach creates incentives for providers to improve quality of care. These incentives can be conflicting in cases in which consumers are asked to pay an increasing share of the cost of a therapy with proven benefits, such as beta-blockers for some patients with heart disease.

If patients were discerning users of healthcare, they would curb the use only of low-value therapies. Unfortunately, Dr Rosen argues, cost-sharing reduces excess use as well as essential medication use alike. As such, increased cost-sharing may lead to adverse health outcomes.

“For some chronic diseases, copay-related underuse actually results in higher cost of care,” said Dr Rosen. “Value-based insurance design has been proposed to realign incentives for value,” she added.

When applying a value-based benefit design strategy, drugs associated with greater benefit would have a lower copay rather than a copay that is based on acquisition cost.

Value is the amount of health gained per dollar spent on healthcare services, Dr Rosen suggested. VBID reduces the copay for specific services or specific patients, “or some combination of the 2,” she said.

In the case of beta-blockers, for example, the clinical benefit is highest for patients with diabetes who have had 4-vessel coronary artery bypass graft surgery.

Socioeconomic Status Affects VBID
One of the earliest controlled studies of VBID was conducted at a large nonprofit employer with more than 60,000 employees and dependents. In that program, patients with diabetes had copays reduced for angiotensin-converting enzyme (ACE) inhibitors or angiotensin receptor blockers (ARBs), other antihypertensive agents, glucose-control agents, statins, and other lipid-lowering agents.

The largest reduction in copay was for the use of tier 1 (ie, generic) drugs, when possible, for which the entire copay was waived. Copays were reduced by 50% for tier 2 (preferred brand-name) drugs, and by 25% for tier 3 (nonpreferred brand-name) drugs.

The institution of VBID increased the uptake of medications in all classes compared with the control group. The uptake of metformin increased by >4%, ACE inhibitors and ARBs by >8%, and statins by approximately 9%.

During 18 months, pharmacy spend­ing increased by $28 per member per quarter in the intervention group compared with the controls, but nonpharmacy spending decreased by $14 per member per quarter in the intervention group versus the controls. Overall, the intervention was only slightly more costly over the 18-month period, said Dr Rosen.

There was a differential impact of the VBID by income, Dr Rosen pointed out. The uptake of glycemic agents and antihypertensive drugs in the intervention group was greater in those patients with a socioeconomic status lower than the median compared with those with a socioeconomic status above the median, she said.

Those in the intervention group with incomes below the mean had significantly greater uptake of metformin, ACE inhibitors or ARBs, and selective serotonin reuptake inhibitors compared with patients in the intervention group with incomes above the mean.

Value-based interventions “may be a useful adjunct to efforts aimed at increasing patient initiation of and adherence to high-value medications and possibly an avenue for addressing disparities,” Dr Rosen noted.

The data show that the incremental costs of increased use of high-value services can be subsidized by medical cost offsets and higher cost-sharing for services of lower value. In addition, the financial impact of stand-alone VBIDs—those that focus on removing barriers to evidence-based care services for chronic conditions—are cost-neutral.

Last modified: August 30, 2021