Value in health care is top of mind for industry leaders, patients, caregivers and providers, especially amid rising costs and inflation, ongoing health disparities among underserved populations, evolving regulatory expectations and other challenges. While most understand the social and economic need to reduce financial barriers and access gaps to high-quality health care, few recognize the enormous opportunity in leveraging value-based insurance design (VBID) to address these long-standing issues. From better management of chronic conditions, to improved profitability, shared accountability and more, VBID initiatives have the power to transform care delivery and outcomes.
Value-based insurance design
VBID is founded on the principle of lowering or removing financial and social barriers to essential high-value health care services. VBID plans aim to increase patient utilization of these high-value services through plan designs that reduce financial barriers to care and provide other incentives. Examples of impactful services include free or reduced cost sharing for specific preventive health services and pharmaceuticals, as well as access to other incentives, such as transportation vouchers, that can help improve health outcomes and reduce disparities.
These incentives enable more high-value, preventive care for patients who face significant health challenges around chronic conditions such as heart disease and diabetes, which have a disproportionate impact on underserved populations and cost the US economy untold billions each year. Providing true “last-mile” benefits to these consumers by reducing or eliminating first-dollar, out-of-pocket costs for high-value services empowers them to be more proactive about their health through earlier engagement and more robust participation — both essential for chronic disease prevention and management.
Many health plans are already leveraging VBID principles as part of their benefit designs for members. To continue to grow product offerings for members and amplify their presence in the market, health plans will need to determine whether VBID models align with the organizational strategy and competitive landscape for targeted patient populations (e.g., those with diabetes, asthma, heart conditions) and transition to a VBID-based product accordingly. Plans that already have VBID will need to continue to assess and evolve their VBID programs based on lessons learned from initial plan designs (e.g., benefit structures, pricing) to achieve both optimal patient outcomes and improved profitability.
VBID and social inequities
Studies have shown that social inequities around housing, education, food and many other areas have a significant impact on the pervasive health and health care disparities seen in the US.¹ According to one estimate from 2018, these disparities cost the US economy more than $100 billion each year in the form of excess medical costs, lost productivity and premature deaths.² However, in light of more recent drivers, including the global pandemic and soaring inflation, the financial toll around these disparities has likely risen significantly since 2018. Some forward-thinking health plans with a focus on health equity have already made changes across their commercial, Medicare and Medicaid lines of business to broaden access to care (e.g., through reduced out-of-pocket patient costs). Many of these plans also incentivize improved outcomes (e.g., reduced hospitalization rate) for underserved beneficiaries and those with social risk factors.
The Centers for Medicare & Medicaid Services (CMS) has started to propose rules that will impact health equity and value-based care for payers across data collection and reporting, star ratings and compliance.³ CMS has also launched the VBID Health Equity Incubation Program to increase Medicare Advantage Organization (MAO) adoption of VBID model components and scale leading practices around health equity, thereby improving member satisfaction and star ratings.⁴ Additionally, the National Committee for Quality Assurance has established a health equity accreditation, with at least 10 state agencies requiring its adoption as of 2022. While these measures are a positive step toward advancing health equity for underserved patients who are insured, the Department of Health & Human Services estimated that over 25 million people in the US remained uninsured as of the first quarter of 2022.⁵ To address this gap and drive better outcomes and cost savings across the health ecosystem, payers should consider exploring solutions that provide better plan affordability and patient access for these uninsured groups, whether through Medicaid or other means.
Benefits of VBID for stakeholders across the health care ecosystem
Leveraging VBID principles can help drive overall industry transformation by enabling a meaningful pivot toward value in health care, which has been an elusive proposition over the last decade. And while the impact of VBID on patients is top of mind, payers and providers also derive remarkable benefits from this value-based approach (see Figures 1 and 2).