Rosen- VBID Acad Health Panel 6-9-08 FINAL

8/6/2019 Rosen- VBID Acad Health Panel 6-9-08 FINAL

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P4P4P: Pay for Performance for PatientsCan Value-Based Insurance Design Work in Practice?

Allison B. Rosen, MD, ScD

University of Michigan Schools of Medicine and Public HealthHealth Services Research & Development, Ann Arbor VA Medical Center

Academy HealthJune 9, 2008



Health Care Cost Crisis

“The nation’s long-term fiscal balance will bedetermined primarily by the future rate of healthcare cost growth.”

-- Peter Orszag, Director, Congressional Budget Office

Testimony before Senate Budget Committee, June 21, 2007.



Health Care Cost CrisisRemedies Must Balance Cost / Quality Tradeoff

Financial incentives to moderate utilization will

undoubtedly be part of the solution

Yet, if not carefully aligned, they may worsen alreadypervasive problems in quality of care



Benefit Design Trends: Cost SharingConsumer Driven Health Plans in 2008

Historically, several mechanisms have been used to containcosts (most without evidence of effectiveness)

Currently, consumer driven health plans appear to be thecenterpiece of competitive market based reform proposals

These plans charge consumers high out-of-pocket fees− Will likely reduce employer costs & cost growth in the short run− May lead to worse clinical outcomes



Consumers Do Not Respond to Cost Sharing asEconomists Would Like

For excellent review, see Goldman et al., JAMA 2007;298:61.

When copays are applied uniformly across services of varying

health benefit, CDHP relies on informed consumers makingwise choices – presumably to maximize health benefits

Yet, a growing body of evidence demonstrates that cost-sharingreduces both excess and essential medication use alike.





429

63

0

100

200

300

400

500

Primary Prevention Secondary Prevention

Example: Number Needed to Treat to Prevent a CardiacEvent with Statins, by Prevention Category

NNTto preventCVevent

Ellis JJ. J Gen Intern Med 2004;19:639-646.



Statin Discontinuation Rates Stratifiedby Mean Prescription Copayment

Ellis JJ. J Gen Intern Med 2004;19:639-646.

$0 to <$10

$10 to <$20

>$20

Copay amount was the mostimportant predictor of drug

discontinuation rate

No difference between

primary and secondaryprevention groups



Consumers Do Not Respond to Cost Sharing asEconomists Would Like

Evidence demonstrates that increased cost sharingleads to adverse health outcomes

− Effects concentrated in the chronically ill and poor

For some chronic diseases, copay-related underuseactually results in higher costs of care

Siu et al, 1986. Rice et al, 2004. Gibson et al, 2005. Goldman et al, 2007.



Getting Services to People Who Need Them:Should the Patient Decide?

If increased cost sharing decreases the use of essentialmedications & leads to worse outcomes, is it appropriate

to place the burden of weighing the benefits and costs of medical interventions on the patient?

If not, the system should provide some guidance andincentives to promote better decisions



Getting Services to People Who Need Them:Value-Based Insurance Design

Value-based insurance design has been proposed torealign incentives for value

Cost sharing is based on likelihood of benefit, not(solely) the acquisition cost

− The greater the benefit, the lower the co-pay

Such a system would provide financial incentives totargeted patients most likely to benefit from specifictherapies

Fendrick AM. Am J Managed Care, 2001.Rosen AB. Med Care, 2006. Chernew M. Health Affairs, 2007.



Value Based Insurance Design (VBID)Ongoing Programs

Several ongoing experiments with VBID− These efforts are largely coming out of the private sector

Targeting is key two basic approaches

1. Target services that are high value (e.g., beta blockers)

2. Target patients with select clinical diagnoses (e.g., diabetes)





Overview of VBID Program for Large Services Industry Employer

One of first controlled VBID studies

Services industry employer with 90,000+ U.S. employees

Reduced copays for 5 chronic medication classes withina disease management context

− ACE/ARBS − Statins

− Beta blockers − Steroids

− Glucose control

Copays waived for generics, halved for brands− Tiers 1/2/3: $5/$25/$45 $0/$12.50/$22.50



Large Services Industry Employer VBID Implementation and Evaluation

Implemented by integrated care management firm,Activehealth Management, in conjunction with pharmacybenefits management firm

Design: Pre-post study with comparable control group

Outcomes measured:− Medication adherence− Pharmaceutical expenditures− All other (non-pharmaceutical) expenditures



0%

2%

4%

6%

8%

10%

12%

14%

Decrease inNon-Adherenc

Ace/ ARBS BetaBlockers

Diabetes Statins Steroids

Impact of VBI

Source: Chernew et al. Health Affairs, 2007.



Large Services Industry Employer Impact of VBID on Costs

Members OOP costs for target drugs− dropped 27% for brand names− dropped 65% for generics−

No significant changes in controlsEmployer prescription drug expenditures rose significantly

Reduction in non-prescription expenditures by roughly thesame amount

On net, overall health care costs did not changesignificantly





University of Michigan (UM)Overview

2500+ UM employees & dependents with diabetes

Numerous quality improvement initiatives in place butunderutilization of evidence-based therapies persists

VBID program designed specifically to allow for rigorous

evaluation



University of Michigan (UM)Institutional Environment for VBID Implementation

UM contracts with single pharmacy benefits manager (PBM)regardless of health plan selection

UM owns a managed care organization serving ~200,000covered lives in S.E. Michigan

Over 80% of UM workforce selects UM MCO as health plan



University of MichiganVBID Overview

Partnered with UM Benefits office, UM MCO, and PBMto implement copayment reductions

UM employees and dependents with diabetes receiving2 year intervention of copay reductions for:

− ACE Inhibitors and ARBs− Other antihypertensives− Statins− Glycemic agents− Antidepressants



University of Michigan InterventionOverview

Design: Interrupted time series with comparable control group

2,507 in UM VBID group and 8,637 in control group identified bypharmacy claims for diabetes medications

VBID designed to maintain underlying incentive structure− Tier 1 (Generics) Copays waived− Tier 2 (Preferred Brand) Copays reduced 50%− Tier 3 (Non-preferred brand) Copays reduced 25%

Outcomes measured:− Medication uptake, medication adherence***− pharmacy and non-pharmacy spending



Medication Uptake by Individuals with DiabetesBefore and After Intervention

Metformin ACE/ARBs Statins SSRIs

Pre UM 54% 43% 45% 22%

Post UM 61% 48% 50% 24%

Pre Control 54% 49% 45% 19%

Post Control 56% 48% 45% 19%

Relative Diff Relative Diff +9.0%+9.0% +10.4%+10.4% +11.5%+11.5% +11.2%+11.2%



Mean Adherence to ACE/ARB(Conditional on Using an ACE/ARB)

5 0 %

5 5 %

6 0 %

6 5 %

7 0 %

7 5 %

8 0 %

8 5 %

9 0 %

Q tr1 Q tr2 Q tr3 Q tr4

Quarte rs Pre (7/05 - 6/06) & Pos t (7/0

M e a n A d h e r e n c e ( A

d j u s t e d M P R )



Focus on DiabetesConclusions from Preliminary Analyses

Targeted copay reductions increased uptake of drugs

Among those using the medications, adherenceremained unchanged

VBID-type interventions may be a useful adjunct toefforts aimed at increasing patient initiation of highvalue medications



"There's a lot of buzz from vendors and consultants aboutconsumer-driven health plans, but many employers are

skeptical about cost savings. Some have crunched thenumbers themselves and don't see the savings."

− Paul Ginsburg, Center for Health System Change

Most Common VBID Question From Employers:What Is The Return On Investment?



Value Based Insurance DesignMaximizing Return On Investment

Incremental costs of increased use of high value servicescan be subsidized by:

1. Medical cost offsets− Amount saved by preventing adverse events will be

directly related to level of clinical targeting

1. Enhanced productivity

2. Reduced disability costs3. Higher cost sharing for services of lower value



Fundamental Health Policy Question

How do we organize and finance health care toachieve maximum value for what we spend?

**NOT: “How do we save money?”



“The challenges will be substantive for insurerswho pursue value-based insurance design. Yet,…it reminds us that the primary objective of

giving patients “skin in the game”is to enhance their health.”

Bach PB. NEJM. 2008.358:411

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