Value-Based Insurance Design: Infusing Clinical Nuance Into Healthcare Transformation

With the passage of the Patient Protection and Affordable Care Act—or simply the Affordable Care Act (ACA)—came opportunity, including the opening of the federal and state health insurance exchanges, which offer health plan options for millions of Americans. But there have also been challenges, as states continue to debate expansion of their coverage options, including Medicaid and Medicare. While the “law of the land” has provided a much-needed framework for policy changes in the United States, there is still much work to be done to shift healthcare from a volume-based system to a value-based system. To enact this shift, multistakeholder and bipartisan political experts recognize that value-based insurance design (V-BID) is essential to a high-performing healthcare delivery system.¹

Since its inception in 2005, the University of Michigan Center for Value-Based Insurance Design (V-BID Center, www .vbidcenter.org) has led efforts to promote the development, implementation, and evaluation of innovative health benefit designs that balance cost and quality. Led by faculty that includes The American Journal of Managed Care’s co-editors A. Mark Fendrick, MD, and Michael Chernew, PhD, the V-BID Center aligns patients’ out-of-pocket costs with the value of health services to deliver high-quality, cost-effective care while encouraging a shift from volume- to value-based insurance benefits and payment models, using the V-BID—defined tenet of clinical nuance. Clinical nuance recognizes that (1) medical services and providers differ in the amount of health produced, and (2) the clinical benefit derived from a specific service depends on the consumer using it, who provides it, and where it is delivered.

These concepts and more were highlighted at the V-BID Center’s 2013 Summit, “Volume to Value: Infusing Clinical Nuance Into Healthcare Transformation” held on October 8 and 9. The V-BID Center invited policy makers, state health commissioners, plan directors, and health system leaders to engage in a highly interactive format to address supply—and–demand-side innovations in numerous payer settings including state health insurance exchanges, Medicaid and Medicare plans, accountable care organizations (ACOs), and commercial insurance plans.

Dr Fendrick, director, V-BID Center; John Ayanian, MD, MPP, director, University of Michigan Institute for Healthcare Policy and Innovation; and Martin Philbert, PhD, Dean, University of Michigan School of Public Health, welcomed and encouraged attendees to apply the day’s discussion to a larger framework of healthcare system redesign. The trio asked that participants frankly share successes and challenges experienced across multisystem reform efforts so that all in attendance might benefit from this “all teach, all learn” opportunity.

Narratives From State Health Leaders

As state-administered health plans respond to health reform requirements, many state health plan leaders have implemented initiatives that draw on the V-BID tenet of clinical nuance as a way to control budget expenditures and improve care delivery across public and private payer systems. The keynote panel, “Narratives from State Health Leaders,” moderated by Christopher Koller, president, The Milbank Memorial Fund, featured Bill Hazel, MD, secretary, Virginia Department of Health and Human Resources; Anthony Keck, director, South Carolina Department of Health and Human Services; and John Selig, director, Arkansas Department of Health and Human Services, who offered perspective and examples of translating the “volume into value” concept into action in their respective states.

Dr Hazel remarked that Virginia utilizes benchmark programs such as the American Board of Internal Medicine’s “Choosing Wisely” (http://choosingwisely.org/) initiative, which encourages discussion and promotes incentives for both providers and patients to take a closer look at tests and procedures which may be unnecessary. To improve care delivery, he added that Virginia plans to address issues such as end-of-life quality, premature birth rates, consumer engagement, care coordination, and workforce trends such as how to improve the medical education framework to increase the development of necessary providers in primary care and general medicine. Meanwhile, Mr Keck said that although there is “no silver bullet” to solve the healthcare crisis, South Carolina is refocusing efforts on those who are most in need—Medicaid enrollees, in particular. In addition to incentivizing providers to innovate patient care and promote patient engagement, South Carolina is focusing on prioritizing and customizing care delivery to populations in need in order to strategically address care disparities and outcomes. Finally, Mr Selig shared that his state is driven by the motive to “never waste a good crisis.” Arkansas state leaders collaborated extensively with providers and legislators and concluded that they could either stick with the status quo—which only temporarily controlled costs without addressing gaps in care or health disparities—or, they could look to more innovative and collaborative forms of healthcare delivery, such as those found in the patient-centered medical home and ACOs that address comprehensive patient health. Overall, Mr Koller summarized, these 3 state leaders exemplified the nonpartisan innovation and collaboration necessary to address healthcare issues at the state level.

Innovations in State Employee Health Plans

State employee health plans comprise a large and complicated percentage of state budgets. As states face infrastructure updates and looming deficits, state benefit plan administrators face a critical need to transform these plans so that enrollees can achieve better health while significantly reducing expenditures. Joan Kapowich, administrator, Oregon Educators and Public Employees’ Benefit Boards (PEBBs), and Kevin Lembo, state comptroller, Connecticut, offered remarks on how their states have attempted to address these concerns. Ms Kapowich noted that the PEBB program and the Oregon Educators Benefit Board (OEBB) offer evidence-based care to 275,000 lives, with a patient-centered focus that promotes health, accountability, sustainability, and better outcomes. Both PEBB and OEBB serve as early leaders in value-based benefit design, providing free health screenings, tobacco cessation programs, weight management programs, and chronic care medications/office visits for conditions like asthma, diabetes, and heart conditions. Value-based benefits, Ms Kapowich shared, are linked to patient decision-making support modules that encourage provider communication and disincentivize overutilized care or low-value services. By making health management and wellness a joint effort between providers and patients, these benefit boards have linked personal responsibility and communication to better health and wellness.

Meanwhile, in Connecticut, Mr Lembo offered a review and dashboard data assessment of a V-BID plan the state offered employees beginning in 2012. The Connecticut Health Enhancement Program (HEP) incorporates V-BID concepts that target preventive care and chronic disease management through voluntary enrollment programs, required age-appropriate preventive screenings, lower copayments for medication/care for chronic diseases, and chronic disease management education programs. Other benefits include reduced monthly premium shares and the waiving of annual deductibles. Prior to 2012, Connecticut’s state employee health plan did not distinguish between high-value services and low-value services in determining cost-sharing for beneficiaries. Currently, specified guideline-based clinical services are required of HEP enrollees with diabetes, high cholesterol, high blood pressure, heart disease, asthma, and chronic obstructive pulmonary disorder. There are provisions to exempt enrollees with unusual or special circumstances from requirements as appropriate. Beneficiaries may be unenrolled from HEP if they do not adhere to the requirements, but can re-enroll by completing outlined compliance requirements of prevention screenings and care management. HEP strives to improve patient compliance via regular reminders and other forms of consumer outreach. Compliance with requirements is verified through claims data when possible, and written personal attestation when claims-based verification is not possible. A year into the program’s implementation, compliance is steady and costs are neutral. Through a variety of consumer and provider initiatives, both states are working to supply value-added plans that provide high-quality care and services at an affordable cost to members while incentivizing payers and providers to coordinate delivery of those plans.

Adding Clinical Nuance to Medicaid

The Centers for Medicare & Medicaid Services’ “2012 Actuarial Report on the Financial Outlook for Medicaid” reported that over the next decade, Medicaid expenditure rates are expected to increase at an average annual rate of 6.4%, reaching $795 billion by 2021.2 Additionally, the average enrollment of beneficiaries is expected to increase at an average annual rate of 3.4%, meaning there will be an estimated 77.9 million Medicaid enrollees by 2021.¹ As such, the third Summit panel offered insights on how states must address the conundrum of rising enrollee eligibility and increased service delivery needs juxtaposed against decreasing provider networks to address unsustainable costs in public safety-net programs. Seema Verma, founder of the health policy consultancy firm SVC, Inc; Stephen Fitton, director, Michigan Medicaid; and Nick Macchione, director, County of San Diego Health and Human Services Agency, offered examples of how state- and county-based Medicaid programs are responding to these significant challenges. Opening the discussion, Ms Verma discussed the Healthy Indiana Plan, a Medicaid plan that covers uninsured, nondisabled adults aged 19 to 64 years who are below 200% of the federal poverty level (FPL), and who have no access to employer-sponsored insurance and/or remain uninsured for 6 or more months. In accordance with ACA requirements, Healthy Indiana participants have no-cost access to $500 of preventive services and an $1100 deductible. In conjunction with Indiana state contributions, participants must contribute 2% to 5% of their gross income to a “POWER” health savings account to cover the $1100 deductible. Unspent POWER funds can be rolled over in order to reduce contributions used to cover preventive services if the $500 contribution has been reached. Healthy Indiana provides coverage to targeted populations in need and stresses personal responsibility and patient engagement while allowing participants the flexibility to apply their contribution where it is most needed. Relatedly, Stephen Fitton, director, Michigan Medicaid, discussed the recent vote to expand the state’s Medicaid program. The new plan—Healthy Michigan—incorporates V-BID language into the plan design and allows the state to enroll eligible nondisabled adults aged 19 to 64 years with incomes between 100% and 133% of the FPL into a contracted health plan that provides a health savings account, into which money from any source can be deposited to pay for incurred health expenses, including, but not limited to, copays. Enrollees with annual incomes between 100% and 133% of the FPL will contribute no more than 5% of their annual income for cost-sharing requirements, waive contributions for the first 6 months of enrollment, and required contributions used to pay for incurred health expenses shall be limited to 2% of annual income. Additionally, the inclusion of V-BID principles in the Healthy Michigan plan will help provide coverage to an additional 470,000 residents over the next several years.

Addressing Medicaid programs at the county level, Mr Macchione said that San Diego has seen “lots of opportunity” with Medicaid reform with an “all-policies approach.” Using “horizontal integration” and “silo-busting” tactics, Mr Macchione’s administration manages the most expensive and complicated beneficiaries in San Diego County who are dually eligible for Medicare and California’s Medicaid program—Medi-Cal—to address multiple chronic conditions and poor care coordination in order to improve continuity of care across acute care, long-term care, behavioral health, and home- and community-based services. By providing a framework of transition care coaches, nurses, personalized technology, and caregiver engagement, Mr Macchione believes we can “treat the cause” of healthcare system problems, not just the illness. He notes that San Diego’s goal is to create an accountable care community that rebalances services in the home and community rather than in institutional settings.

Health Plan Innovation: Lessons Learned

Health insurance plan innovation is not a concept invented by the ACA, but 3 Summit panelists—Paul Fronstin, director, Health Research and Education Program, EBRI; Lonny Reisman, MD, chief medical officer, Aetna; and Dennis Scanlon, PhD, professor of Health Policy and Administration, Penn State University—agree that the law provides all the more incentive for states to look at what they are doing to improve value in plan design. Dr Reisman stated that the “one size fits all” approach in healthcare service pricing and care delivery is not only obsolete, but ineffective. Providers must look to more individualized ways to engage with patients in order to drive medication adherence and improve treatment outcomes and consumer education and engagement. He noted that Aetna has invested in a variety of technology services that drive medication adherence and regimens by trying to find the patients that fall through the cracks of the system. Dr Reisman also spoke about the need for plan designers to be at the forefront of health improvement innovation initiatives, to drive innovation in system wide benefit plan design. Following this discussion, Dr Scanlon provided an interesting scenario of how ignoring or devaluing consumer consent can lead to problematic plan implementation. Describing the controversy that surrounded the Penn State Wellness Plan—which originally levied a $100 monthly non compliance fee on employees who declined to fill out an online health questionnaire, citing the survey as a privacy violation (the fee has since been suspended)—Dr Scanlon queried how similar ACA initiatives that tie wellness compliance to disincentives will affect consumer engagement. Overall, he noted, the rationale and logic used in communication is important to designing incentives that actually work to inspire adherence.

The V-BID Center offered its 2013 Summit, “Volume to Value: Infusing Clinical Nuance into Health Care Transformation,” in direct response to national- and state-based reform initiatives (largely as a result of the ACA) to address rapidly expanding healthcare payment and quality reform and expansion efforts. As reform initiatives unfold, the V-BID Center is committed to providing unbiased assistance to those involved in national- and state-based reform efforts. It is our expectation, through collaborative dialogues and frank discussions, that Summit participants have taken away valuable implementation examples to provide effective, responsive care that can be utilized immediately. Contextualizing the role of V-BID across supply-and-demand—side initiatives enables stakeholders to employ V-BID as one of many tools to improve healthcare quality and lower costs as these largescale infrastructure changes evolve.

To access video and slides of the day’s discussion, please go to: http://www.sph.umich.edu/V-BIDcenter/events/2013summit_ materials/2013_index.html.Author Affiliations: Kaden Milkovich is the manager at the Center for Value-Based Insurance Design. Katie Sullivan is the assistant editor for The American Journal of Managed Care.1. Strengthening affordability and quality in America’s health care system: five consensus recommendations from the Partnership for Sustainable Health Care. Robert Wood Johnson Foundation website. http://www.rwjf.org/en/ research-publications/find-rwjf-research/2013/04/strengthening-affordability- and-quality-in-america-s-health-care.html. Published April 2013. Accessed February 15, 2014.

2. Centers for Medicare & Medicaid Services. 2012 actuarial report on the financial outlook for Medicaid. http://medicaid.gov/Medicaid-CHIP-Program-Information/ By-Topics/Financing-and-Reimbursement/Downloads/medicaid-actuarial- report-2012.pdf. Accessed November 26, 2013.

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