Value-Based Insurance Design Defined as Copayment Reduction:

Where Have All the Studies Gone? Part 1

“The great enemy of the truth is very often not the lie—deliberate, contrived, and dishonest—but the myth: persistent, persuasive, and unrealistic. Too often we hold fast to the clichés of our forebears. We subject all facts to a prefabricated set of interpretations. We enjoy the comfort of opinion without the discomfort of thought.”

President John F. Kennedy, speaking at Yale University on June 11, 1962

In a February posting on the wisdom of proposals to invest Medicare funds in value-based insurance designs (VBID) without testing them first, I promised to provide an updated look at the current quality of evidence regarding VBID. Since then, there have been three interesting new developments on the VBID front, all in April 2013:

(1) A report from the Partnership for Sustainable Health Care (PSHC) recommended that cost-sharing structures should include “differentiation to encourage the use of high-value services and providers” as a way to achieve “savings from improved adherence to preventive measures and evidence-based care, lower utilization of unnecessary services, and the use of more efficient, higher-quality providers.”[1] PSHC’s assessment echoed a previous description of VBID by the National Coalition on Health Care as a “game changer.”[2]

(2) The Chairman of the Medicare Payment Advisory Commission (MEDPAC) testified before the U.S. House Subcommittee on Health, Committee on Energy and Commerce, recommending that VBID be used in Medicare.[3]

(3) The Center for Value-Based Insurance Design (CVBID) at the University of Michigan issued an interesting policy brief on the use of VBID in health plans that are “grandfathered” (allowed to continue in their present form so long as they do not make major benefit design cuts) under the terms of the Affordable Care Act, or PPACA.[4]

These recent developments make it all the more important to ask now: what is driving all this attention?

What Is VBID, Exactly? Depends on When You Asked

Before addressing the current state of research regarding VBID, it is helpful to clarify the subtle but important shift in the meaning of the term “value-based” that has taken place over the past several years. For example, the PSHC report refers to “value-based payment approaches” using “a range of models that include incentives for patient safety, bundled payments, accountable care organizations, and global payments.”[1] Also defined as VBID are financial incentives for patients “to obtain care from providers with a demonstrated ability to deliver quality, efficient health care,” as well as incentives to quit smoking, lose weight, or join diabetes prevention programs.[1]

These definitional shifts have considerably expanded the original concept of VBID (called “benefit-based copay” for prescription drugs in 2001), which was “a system of cost sharing that tailors copayments at the point of service to the evidence-based value of specific services for targeted groups of patients.”[5] In other words, a definition of “value-based” that initially referred to a novel concept—reduced copayments for “high-value” medications—has now been expanded to include bundled payment methods, provider network management, and wellness promotion. The change is notable, since all of these “VBID” features have been basic (albeit somewhat inconsistently used) mainstays of managed care for the past several decades.

This conceptual expansion is perhaps not surprising. More than a decade after first being proposed, copayment reductions targeted to "high-value" drugs have generally had a low adoption rate by commercial insurers and employers, hovering at around the 20% range for some years now.[6] Only 24% of employers in 2012 reported using “reduced copay for specific drug classes/health conditions” in the Pharmacy Benefit Management Institute’s annual prescription drug benefit cost and plan design report,[7] and only 11% of respondents to the Towers-Watson annual Employer Survey on Purchasing Value in Health Care said that they were using “value-based benefit designs (e.g., different levels of coverage based on value or cost of services)” in 2013.[8]

Quality of the Evidence for Copayment Reductions

But what of the quality of evidence regarding copayment reductions, the original linchpin of the “benefit-based copay”? This point is becoming increasingly important for plan sponsors now because, as the CVBID piece on the PPACA correctly observed, plans can lower copayments without losing “grandfather” status, but they cannot substantially increase them. Within a grandfathered plan, there is little opportunity to offset cost-sharing decreases in one therapy class with increases in another.

Unfortunately—in a pattern of reporting (and nonreporting) of research results that raises important questions about publication bias in health policy research—the history of utilization and cost outcomes for copayment reductions is much more notable for what was not said than for what was. I’ll post more on that topic later this week, on the fifty-first anniversary of President Kennedy’s 1962 commencement address at Yale. We’ll see if VBID studies have “gone to flowers, every one.” And meanwhile, for those of you who have no idea what the song lyric references in this title or text mean, help is available here, in an article about a smash hit that was also released in 1962.

[1] Partnership for Sustainable Health Care. Strengthening affordability and quality in America’s health care system. April 2013.

[2] Center for Value-Based Insurance Design. Press release. For immediate release: key stakeholders support V-BID. April 17, 2013.
[3] Medicare Payment Advisory Commission. Reforming Medicare’s benefit design. Statement of Glenn M. Hackbarth, JD, before the Subcommittee on Health, Committee on Energy and Commerce, U.S. House of Representatives. April 11, 2013.
[4] Center for Value-Based Insurance Design. V-BID and grandfathered health plans: promoting high-value services and controlling costs.
[5] Fendrick AM, Smith DG, Chernew ME, Shah SN. A benefit-based copay
for prescription drugs: patient contribution based on total benefits, not drug
acquisition cost. Am J Manag Care. 2001;7(9):861-67.
[6] Fairman KA, Curtiss FR. What do we really know about VBID? Quality of the evidence and ethical considerations for plan sponsors. J Manag Care Pharm. 2011;17(2):156-174.
[7] Pharmacy Benefit Management Institute. 2012-2013 prescription drug benefit cost and plan design report. 2012.
[8] Towers Watson. Reshaping health care: performers leading the way. 18^th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care. 2013.