A Paradigm Shift for Benefit Design
May 08, 2018
In February of this year, Legislators introduced the Chronic Disease Management Act of 2018. If passed, the act would amend IRS requirements for all individuals with high-deductible health plans (HDHPs) to cover chronic disease prevention and treatment pre-deductible. Why is this important?
Many employers and other health care purchasers have offered HDHPs in an attempt to reduce health care costs, with the idea that consumers will shop for more affordable services. Patients with HDHPs are required to cover the entire cost of health care services they receive for the year until they reach a certain amount (known as the deductible)— for 2018, individuals must incur more than $1,350 in medical expenses for self-coverage and more than $2,700 for family coverage before their insurance benefits kick in.
High-deductibles unfortunately translate to patients refraining from seeking care. After an employer switched to a full-replacement HDHP, the company saw that consumers reduced service quantities by 17.9% from 2012 to 2013. This is particularly troubling for patients managing chronic diseases, like diabetes, hypertension, and congestive heart failure. Patients that need regular testing and screening to ensure that their condition is under control may choose to skip an assessment in order to avoid paying for services out-of-pocket. And, if a patient’s condition is not properly managed, it could result in an unexpected, costly visit to the ER.
What if a patient with diabetes didn’t incur any cost for those vital screening and tests? While there could be other barriers, such as time or transportation, the patient would no longer face financial obstacles to the care most likely to positively impact their health. The name behind this concept is value-based insurance design (V-BID).
Originally used to encourage patients to fill generic prescriptions over brand, V-BID is built on the principle of lowering or removing financial barriers to essential, high-value clinical services based on the tenets of “clinical nuance.” This recognizes that medical services differ in the amount of health they produce. In addition, the clinical benefit derived from a specific service depends on the consumer’s using it, as well as when and where they receive the care. V-BID programs thus far have largely focused waiving or lowering out-of-pocket costs for preventive services, like screenings, immunizations and counseling. The most well-known example of this is Section 2713 of the Affordable Care Act, which requires health plans to cover recommended preventive services without cost-sharing (e.g., screening for depression, flu shots, all FDA-approved contraceptives).
Payers are implementing V-BID programs for particular chronic conditions, in the same vein as the bill Congress introduced. In January 2017, the Innovation Center through the Centers for Medicare and Medicaid Services launched the Medicare Advantage (MA) V-BID Model. Under this pilot program, MA plans can offer supplemental benefits or reduced cost-sharing for MA enrollees with specific conditions, including diabetes, congestive heart failure, chronic obstructive pulmonary disease, past stroke, hypertension, coronary artery disease, and mood disorders, considering patients with multiple conditions as well. The design model will test whether reduced cost-sharing for high-value services and providers can improve health outcomes and lower expenditures for MA enrollees.
By ensuring that chronic disease patients receive necessary preventive services to manage their conditions, the bill could prevent major health events down the line—and costs. Regardless of the cost trajectory, patients should receive the care they need without financial barriers. The MA pilot and the Congressional bill are opportunities to emulate.