Guest post by Ken Perez, vice president of healthcare policy, Omnicell.
“I get by with a little help from my friends.”– The Beatles
In simple terms, healthcare delivery reform under the Patient Protection and Affordable Care Act (ACA) is catalyzed by the Centers for Medicare and Medicaid Services (CMS) through establishment of performance standards or goals and application of behavioral economics—financial carrots and sticks—to encourage improved quality and reduced cost. The financial incentives—both positive and negative—are usually offered to healthcare provider organizations, such as accountable care organizations, which are on the hook to meet numerous quality measures and hold costs below targeted benchmarks, or commercial health insurers running Medicare Advantage plans, which pass along some of the onus to maintain quality performance onto providers.
However, these applications of behavioral economics do not directly target or impact the central player in the healthcare system—the individual member or patient. Engagement by the patient in their care is critical and explains why billions of dollars are spent each year on patient outreach and communications, as well as development and promotion of consumer-friendly apps and wearable devices. When patients are engaged, the healthcare system can more effectively and efficiently prevent, diagnose and treat health conditions.
On Sept. 1, 2015, CMS’s Center for Medicare and Medicaid Innovation (Innovation Center) announced the Medicare Advantage (MA) Value-Based Insurance Design (VBID) Model, an initiative that will test whether allowing health plans administering MA plans to offer targeted additional benefits or reduced cost sharing to enrollees who have certain chronic conditions will result in better quality and more cost-effective care.
The model’s goals are to enhance enrollee health, decrease the use of avoidable high-cost care, and reduce costs for MA plans, beneficiaries, and ultimately, the Medicare program. The model focuses on MA enrollees with the following chronic conditions: diabetes, congestive heart failure, chronic obstructive pulmonary disease (COPD), past stroke, hypertension, coronary artery disease, and mood disorders.
The MA VBID Model will take effect Jan. 1, 2017, and run for five years in seven states which were deemed representative of the overall national MA market: Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee.
Under the model, participating MA plans may select one or more plan design modifications from a menu of four approaches.
The first two approaches, reduced cost sharing for high-value services and reduced cost sharing for high-value providers, are aimed at steering beneficiaries to high-value services or providers by reducing or eliminating cost sharing (e.g., co-pays) for enrollees who use these services or providers.
The logic behind employing financial incentives to steer enrollees to select high-value providers parallels that for narrow networks offered by insurance companies in the health insurance marketplaces established by the ACA. Commenting on narrow networks in a recent issue of the Journal of the American Medical Association, Simon F. Haeder, et al. stated, “By deliberately excluding lower-performing hospitals and shrinking networks…insurance carriers can encourage competition based on the quality of care provided while simultaneously lower the cost of care. Thus, using better-informed intermediaries—insurance carriers—to make better choices in terms of the quality of healthcare provided, offers substantial opportunities for improved health outcomes and holds the potential for cost-savings…In short, consumers may be nudged into making better hospital and physician choices”
The third approach is to provide coverage for additional supplemental benefits. For example, MA plans may offer physician consultations via real-time video for diabetics, or supplemental tobacco cessation assistance for enrollees with COPD.
The fourth approach is reduced cost sharing for enrollees participating in disease management or related programs. MA plans using this approach can make meeting certain participation milestones a condition for enrollee eligibility for cost-sharing reductions. For instance, plans could reduce drug co-pays for patients with multiple chronic conditions who use multimed adherence packaging solutions. As another example, plans could reduce or eliminate drug co-pays for enrollees who successfully participate in medication therapy management, i.e., complete an annual comprehensive medication review and quarterly targeted medication reviews.
In summary, the MA VBID Model constitutes an experiment in plan design innovation. It allows several degrees of freedom in plan design and is consistent with the recent flexibility established within the MA program to offer rewards and incentives to enrollees. Thus, participating MA plans will be given the opportunity to test a variety of tools to more effectively engage the actor in the center of the healthcare stage—the individual member or patient.