Value-based insurance design

Value-based insurance design (VBID) creates financial incentives or removes financial disincentives to affect consumer choices and incentivize the provision of cost efficient health care services. Value-based insurance designs can also lower or eliminate copayments for high value services and medications or increase cost sharing for services considered to be of uncertain value. Value-based insurance plans often cover preventive care services, wellness visits, and treatments such as medications to control blood pressure or diabetes at low to no cost (NCSL-VBID).

Expected Beneficial Outcomes (Rated)

  • Increased medication adherence

  • Reduced patient costs

Other Potential Beneficial Outcomes

  • Reduced health care costs

  • Improved health outcomes

Evidence of Effectiveness

There is strong evidence that value-based insurance design (VBID) increases patients’ adherence to medication and reduces their out-of-pocket expenses (Lee 2013, Tang 2014*, Maciejewski 2014*). Additional evidence is needed to confirm effects of VBID on clinical outcomes and health care utilization and spending (Tang 2014*).

Value-based insurance plans that provide generous benefits, target high-risk patients, offer wellness programs, provide financial incentives only for medication ordered by mail, and do not offer disease management programs have a significantly greater impact on medication adherence (4-5 percentage points) than plans without these features (Choudhry 2014*). VBIDs that target costs of low value as well as high value care are more likely to moderate cost growth and improve overall value than plans that only encourage the use of high value care; however, categorizing any health care services or medications as low value is politically challenging (Neumann 2010*). A Connecticut-based study indicates greater use of standard preventive measures such as colonoscopies, pap smears, and lipid tests for all plan enrollees and increased service utilization for individuals with chronic conditions such as diabetes, heart disease, and asthma following VBID implementation (UM CVBID-CT brief 2015). 

By reducing copayments and improving medication adherence, VBID appears to reduce racial and ethnic disparities, and improve cardiovascular disease outcomes for minority patients (Choudhry 2014a*). VBID is also a suggested strategy to reduce disparities in health care outcomes among individuals with lower and higher incomes (UM CVBID-VBID brief 2014); however additional evidence is needed to confirm these effects (Tang 2014*).

Overall, VBID appears to be cost neutral in the first three years after implementation, as increases in prescription drug spending balance reductions in non-drug medical spending (Tang 2014*). VBID is a suggested strategy to reduce health care spending in the long-term, however, studies are needed to confirm effects over time (Lee 2013, NCSL-VBID). 

Impact on Disparities

Likely to decrease disparities

Implementation Examples

The Affordable Care Act (ACA) Section 2713 mandates coverage of certain preventive care services through group health plans and individual health insurance coverage, establishes guidelines for using value-based insurance design, and restricts the use of cost-sharing or copayments for specified high value services and medications (US CMS-ACA Implementation). As of 2014, 40% of commercial in-network payments were considered value-oriented (CPR-2014 Scorecard).

Many local governments and public entities have implemented aspects of VBID in their public employee health plans, for example, the state of Oregon, Colorado Springs School District 11, and Chippewa County, Wisconsin. Many large companies and corporations have also implemented VBIDs, such as CVS Caremark, Pitney Bowes, Caterpillar, and Marriott International (NCSL-VBID).

Implementation Resources

UM-CVBID - University of Michigan (UM), Center for Value-Based Insurance Design (CVBID). Publications.

Citations - Evidence

* Journal subscription may be required for access.

Lee 2013 - Lee JL, Maciejewski ML, Raju SS, Shrank WH, Choudhry NK. Value-based insurance design: Quality improvement but no cost savings. Health Affairs. 2013;32(7):1251-7.

Tang 2014* - Tang KL, Barnieh L, Mann B, et al. A systematic review of value-based insurance design in chronic diseases. The American Journal of Managed Care. 2014;20(6):e229-41.

Maciejewski 2014* - Maciejewski ML, Wansink D, Lindquist JH, Parker JC, Farley JF. Value-based insurance design program in North Carolina increased medication adherence but was not cost neutral. Health Affairs. 2014;33(2):300-308.

Choudhry 2014* - Choudhry NK, Fischer MA, Smith BF, et al. Five features of value-based insurance design plans were associated with higher rates of medication adherence. Health Affairs. 2014;33(3):493-501.

Neumann 2010* - Neumann PJ, Auerbach HR, Cohen JT, Greenberg D. Low-value services in value-based insurance design. The American Journal of Managed Care. 2010;16(4):280-286.

UM CVBID-CT brief 2015 - University of Michigan (UM), Center for Value-Based Insurance Design (CVBID). 2015 Connecticut's Health Enhancement Plan for state employees: Improving health outcomes and consumer engagement. 2015.

Choudhry 2014a* - Choudhry NK, Bykov K, Shrank WH, et al. Eliminating medication copayments reduces disparities in cardiovascular care. Health Affairs. 2014;33(5):863-870.

UM CVBID-VBID brief 2014 - University of Michigan (UM), Center for Value-Based Insurance Design (CVBID). V-BID in action: The role of cost-sharing in health disparities. 2014.

NCSL-VBID - National Conference of State Legislatures (NCSL). Value-based insurance design.

Citations - Implementation Examples

* Journal subscription may be required for access.

US CMS-ACA Implementation - Centers for Medicare & Medicaid Services (CMS), The Center for Consumer Information & Insurance Oversight. Affordable Care Act implementation FAQs - Set 12.

CPR-2014 Scorecard - Catalyst for Payment Reform (CPR). National scorecard on payment reform 2.0. 2014.

NCSL-VBID - National Conference of State Legislatures (NCSL). Value-based insurance design.

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