Patient Engagement
Talk
Value-Based Insurance Design: Theory vs. Practice (04:23)

Compelling literature backs up the idea of basing co-payments on the clinical value of a service. However, broader adoption of this strategy is complicated by several barriers, according to Niteesh Choudhry, Executive Director of the Center for Healthcare Delivery Sciences at Brigham and Women’s Hospital.

The first is figuring out which services to apply this concept to and the basic details of their design. Value-based insurance design has thus far been almost exclusively applied to drugs, but there are a number of other services to consider for cost sharing, such as non-drug therapeutics.

“Perhaps the greatest benefit or potential benefit of this idea of basing co-payments on value would be achieved by raising co-payments for those things that are of low value,” says Choudhry. “If we’re really going to drive economic value, that’s where it would come [from].”

“Equally important when it comes to applying value-based insurance design in practice is that we need to really be thoughtful about how we do it,” adds Choudhry. “So if you’ve seen one value-based insurance program you’ve seen exactly one value-based insurance program.”

Second, because most health care in the U.S. is employer sponsored, insurance is often fragmented: employees change employers frequently, and employers change insurers frequently. Employers and insurers may therefore be reluctant to adopt value-based insurance strategies. “We need to think thoughtfully about how to create incentives for employers to actually do this in the short run,” says Choudhry.

Lastly, Choudhry says, we need to do a better job of targeting who we use this strategy for. Much of the improvement in adherence resulting from these strategies has come from patients who had already been adherent. “There are small improvements in adherence for the population as a whole and many patients who did not actually respond at all,” notes Choudhry. “So as we move forward for this quality improvement intervention or any of the wide varieties in benefit design or broader into technology, we need to do a much better job of making this trade-off.”

From the NEJM Catalyst event Patient Engagement: Behavioral Strategies for Better Health at the University of Pennsylvania, February 25, 2016. Watch Part 1 of Niteesh Choudhry’s talk: An Alternative Approach to Insurance Design.

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