About WISHRM

By Melina Kambitsi, Ph.D., Vice President of Business Development and Member Services at The Alliance

Value-based insurance design (VBID) can help you provide smart incentives for employees to get the right care at the right time.

How VBID Works

VBID helps self-funded employers make decisions about what types of care to cover — or not — based on health care value.

To support high-value care, employers can use VBID to provide higher coverage — with lower out-of-pocket costs — for services that have been proven effective. One example is medications used to control a chronic condition such as asthma.

At the same time, VBID seeks to discourage low-value care that has been shown to have few benefits to patients. Examples include Vitamin D screening tests and requiring patients to have diagnostic scans before low-risk surgeries.

VBID Plan Elements

VBID benefit plans typically:

• Are clinically nuanced using evidence-based guidelines. A VBID plan typically seeks to support people getting the right care at the right time based on research about what does or doesn’t work.
• Reduce out-of-pocket costs for medications used to control chronic conditions. For example, an employer might choose to reduce or eliminate the out-of-pocket cost for medications used to control diabetes, high blood pressure, high cholesterol, asthma or heart disease.
• Help people get primary care services. Primary care visits help people get the care they need before their condition worsens. A common VBID tactic is eliminating co-pays for primary care visits. This might increase short-term costs, but over time that is expected to be offset by fewer emergency room trips and inpatient stays.

Some VBID plans also include steerage programs that provide incentives for people to use high-value care for elective surgeries in situations where patients have an opportunity to select a provider in advance, such as knee replacement. The Alliance QualityPath® program is an example of this type of steerage option.

VBID and Self-Funding

Employers who self-fund their health plans gain access to data that is invaluable in designing effective VBID approaches. That data can be paired with health information gathered through an employer’s well-being program, such as biometric testing that reveals health risks.

Self-funding also has built-in plan design flexibility, which enables employers to use their data to create a health plan that matches the needs of their workforce.

So if data shows that a high number of employees are moving from being overweight to obese, a plan might want to support nutrition counseling. VBID tactics can also address other conditions linked to weight gain, such as high blood pressure, at the same time.

Smarter HDHPs

In recent years, many employers have started offering high-deductible health plans (HDHPs) to help control the trend of health benefit costs.

Because HDHPs require patients to pay more out-of-pocket for care, they can also discourage patients from getting necessary care. Over time, that can push up costs if a patient’s condition escalates and the patient requires far more serious — and expensive — care as a result.

VBID can be a smarter, fairer way to decrease costs. But if a HDHP is paired with a health savings account (HSA), Internal Revenue Service (IRS) rules can be a barrier. IRS rules currently bar employers from covering services before enrollees in an HDHP with an HSA have met their deductible. Employer groups continue to lobby to change this rule.

More Effective Care

If you’re considering a VBID approach, it’s smart to keep your focus on getting more effective care for your employees. The Center for Value-Based Insurance Design has free resources to help you get started.

Self-funding can be a great way to get the data you need to use VBID and other tactics to decrease costs while encouraging the use of high-value health care.