Finally, Value Based Insurance Design Enters the Realm of Possibility

By Howard Beckman, MD, FACP, FAACH, Chief Medical Officer – As the analytic team at EagleDream Health evaluates medical expenditures, it becomes very clear that money is often spent on low value services at the expense of high value services. The patient/consumer/customer is asked to employ “Shared Decision-Making”, using inadequate data, to determine when to have services performed while holding off on others. Insurers still offer too little assistance to their members. For example, the co-pays or co-insurance rates are the same across the services provided regardless of the value they offer. The cost of the fifth ultrasound in a pregnancy is the same as the first or second. The cost of a biopsy for reflux esophagitis is the same whether there is risk of Barret’s esophagus or not.

So what are the solutions available to insurers and their members? Value based insurance design is an emerging answer1. After evaluating the service data for a population, one can identify areas of overuse and underuse for specific populations. For those services deemed underused, based on the input from the practice community, co-pays and extra costs can be reduced or eliminated. Why should there be a co-pay on anti-hypertensive generic medications when those medication results in clear evidence of a decreased incidence and costs of strokes, heart failure and heart attacks? Why should there be additional costs to diabetics for diabetic education or to employees for a less expensive equally effective spine care program? The goal is to eliminate barriers to high value care, not discourage use.

On the other hand, there are services that are generally not associated with benefits. Examples, for which evidence exists, include arthroscopy and debridement for osteoarthritis, spinal fusion for spinal stenosis, yearly electrocardiograms for evaluating stable coronary disease and screening colonoscopies more than every ten years for colon cancer. In those situations, higher co-pays and practitioner disincentives could be applied.

But for many services, the answer lies somewhere in between. Some services are appropriate but often indication creep occurs and more services are performed than desired. And often, the overuse is not distributed equally to all practitioners. To avoid pre-certification in those cases, which treats every practitioner as guilty of overuse, EagleDream, for many years, has determined variations in the frequency with which practitioners perform services; especially services viewed as overused. Using Practice Pattern Variation as a tool, insurers and increasingly ACOs and health systems tied to cost conscious contracts can see who is at risk of over performing services and explore their indications and motivations for providing these services. At the same time, if there is concern about underuse those practitioners can be questioned as well. The result is a community discussion about transparent utilization data. In our hands, focusing on a respectful discussion based on evidence and community expert opinion regularly results in practitioner behavior change, and by reducing unnecessary care, improving patient safety.

Going forward, using variation data, variable co-pays and co-insurance costs can be created for each provider, site of service or even health system. As clinical and patient reported outcomes are incorporated into cost analytics, higher and lower value services will be even more clearly defined. All of these solutions will rely on accurate, transparent data. EagleDream Health is eager to work with parties interested in establishing appropriate levels of care and developing the incentives to improve the appropriateness quotient.

1. Chernew ME, Fendrick AM. Improving benefit design to promote effective, efficient and affordable care. JAMA. 2016;316(16):1651-1652.

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