Many employers are considering value-based drug insurance design (VBID) as a means to improve employee health and realize a better return on investment in health care benefits. While interest in value-based design is keen, it’s unclear how many employers have taken action. Uptake appears to be slow, but steady. Most early adopters have been large, self-insured private and public sector employers. Now, the approach is being introduced in the fully-insured market. Blue Shield of California recently gained approval from the state Department of Managed Health Care to offer a value-based pharmacy benefit design to fully-insured employers.
The most commonly implemented value-based drug benefit designs focus on reducing copayments for high-value chronic disease therapies. Copayment reduction programs include drugs that treat diabetes, hypertension, high cholesterol and asthma. Diabetes is targeted most frequently. Some employers combine copayment relief with drug therapy management programs to enhance compliance.
Because value-based design is still in its infancy, outcomes data are limited. Most reports focus on improvements in adherence measured by changes in medication possession ratio (MPR). Only three peer-reviewed studies have been published showing the positive impact of copayment reductions on adherence.1 Two of the studies – focused on diabetes therapy – report reduced medical costs.2, 3, 4 More rigorous studies are needed to demonstrate positive financial outcomes.
“Cost savings from value-based design are not a guarantee, yet the potential for positive clinical impact remains compelling,” says Kathryn Fitch, RN, MEd, principal and healthcare management consultant with Milliman. “As plan sponsors analyze the potential cost of reducing copayments for high-value services, they should consider offsetting the expense by adjusting copayments upward for other benefits. Value-based design is not just about reducing copays. It implies increasing copayments or even eliminating coverage for low-value benefits and those without an evidence base.”
Starting with a common three-tier drug benefit design of $10/$25/$40, Fitch and several Milliman colleagues modeled per member per month (PMPM) costs of reducing copayments for diabetes drugs under three value-based design structures. The model captures the impact of lower member cost sharing on existing utilization and on additional utilization induced by the lower cost share. Table 37 lists employer costs to implement diabetes drug copayment relief associated with VBID compared to other interventions including comprehensive diabetes disease management, wellness and chiropractic care.
Actuarial modeling and outcomes measurement alike provide information for employers and other payers to make information-driven decisions about the economic and clinical benefits of VBID.
References:
1. Fitch, K., Iwasaki K., Pyenson B. Value-Based Insurance Designs for Diabetes Drug Therapy: Actuarial and Implementation Considerations. Milliman Client Report. December 2008; 12.
2. Mahoney, J. Reducing Patient Drug Acquisition Costs Can Lower Diabetes Health Claims. Am J Manage Care. 2005; 2sup 5:S170-176.
3. Chernew, M.E., Shah, M.R., Weigh, A., et al. Impact of Decreasing Copayments on Medication Adherence Within a Disease Management Environment. Health Affairs. 2008; 27:103-112.
4. Cranor, C.W., Bunting, B.A. and Christensen, D.B. The Asheville Project: Long-term Clinical and Economic Outcomes of a Community Diabetes Care Program. J Am Pharm Assoc. 2003; 43:173-184.
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