Do Value-Based Insurance Designs Work?

By | September 11, 2018

As discussed on The Positive Contrarian before, there is a tremendous focus on innovating our insurance payment models to deliver value, improved quality and service at a lower cost. The success of value-based insurance design (VBID) is dependent on two factors. The first dynamic is the unknown impact of the consumers’ responses to out-of-pocket spending, or “elasticity of demand.” The second is the relationship between the purchased service and outcomes. For value creation, market drivers and scientific enhancements must occur in tandem and be measured. If the elasticity of demand happens, there is an increase in the utilization of the less expensive service. Associating these services with desired outcomes is crucial to moving forward.

As innovation progresses, to define problems that require solving, verification and validation must occur. Value-based insurance design is occurring in medication adherence, and we are beginning to view the results of its impact.

A recent study by Agarwal et al., published in Health Affairs, called “Value-Based Insurance Design Improves Medication Adherence Without an Increase in Total Healthcare Spending,” examined the literature and found improved medication adherence is one component of the overall path to success. Though there was little evidence in the studies reviewed to show enhanced outcomes (due to the length of the study design), there was no effect on total health care spending. This fact is significant in that one can assume that for the total cost of care to remain stagnant, health did improve.

As in any new situation, our growth of understanding is a journey, regardless of the question asked. Generation and testing of a hypothesis must occur. This process takes time and has multiple intermediary steps. We must apply assumptions to our logic and then validate it. One first visualizes associations between certain conditions, and consequently the focus on proving causation occurs.

We continue to move forward to enhancing the value to those we serve with a focus on being rigorous in our pursuit, leaving no stone un turned. If not, we run the risk of implementing models that appear coherent, but do not show a benefit. On the other side, managing against making decisions of success or failure too quickly can also occur. A common question often asked by admitted patients is “When am I going home?” My answer is “Not a day too soon, nor a day too late.” Although this can sound trite I want to optimize the care delivered while simultaneously focusing on the goal of discharge. This mental construct will advance our ability to continue our value-based journey.