1. Kim Bailey Health Action 2014 January 23, 2014 Consumer-Friendly Value Based Insurance Design

2. Families USA 2014 What is the policy context in which VBID is emerging? What is VBID? How can VBID programs be designed in a consumer-friendly way? What are the key differences between VBID and wellness programs? Roadmap: Four Key Questions

3. Families USA 2014 1) Health care expenditures are high and rising Policy Context

4. Families USA 2014 Health Spending as a Share of GDP, Select OECD Countries, 2000-2010 U.S. OECD Avg. Source: Health at a Glance 2013: OECD Indicators, available online at: http://www.oecd.org/els/health-systems/Health-at-a-Glance- 2013.pdf.http://www.oecd.org/els/health-systems/Health-at-a-Glance- 2013.pdf

5. Families USA 2014 1)Health care expenditures are high and rising 2)As a result, premiums continue to grow, too Policy Context

6. Families USA 2014 Premiums for Employer-Based Coverage, 1999-2013 * Estimate is statistically different from estimate for the previous year shown (p<.05). Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2013.

7. Families USA 2014 1)Health care expenditures are high and rising 2)As a result, premiums continue to grow, too 3)Employers and other purchasers are looking for ways to contain the cost of coverage Policy Context

8. Families USA 2014 Two Models: 1) Tiered cost-sharing based on clinical value 2) Tiered cost sharing by quality and efficiency of provider Goal: To control costs and improve access to effective, evidence-based care and providers Value-Based Insurance Design

9. Families USA 2014 Key Elements to Effective VBID Benefit Design Clinical Evidence & Performance Metrics Consumer and Provider Engagement Transparency VBID

10. Families USA 2014 How it works – Reduces/waives cost-sharing for services with evidence of strong clinical benefit relative to cost – May increase cost-sharing for services that are not clinically effective Requirements for consumer-friendly design – Robust, reliable evidence base – Accessible exceptions and appeals – Consumer education and the availability of tools and resources to aid consumers – Paired with policies that address provider pricing and behavior VBID: Tiered Cost-Sharing

11. Families USA 2014 Value-Based Care High Value ServicesLow Value Services Age appropriate cancer screenings Eye and foot exams for diabetics Medications for chronic heart disease, asthma, diabetes and hypertension Transplant drugs Defribillators for certain patients with congestive heart failure Early Elective C-Sections MRI for low back pain (w/ no red flags) Sleep studies Annual EKG/cardiac screening for low risk patients Bone density test for low- risk women under 65

12. Families USA 2014 Pitney Bowes Experience Design: Reduced/waived co-pays for medications for heart disease, asthma, diabetes and hypertension Results: Improved medication adherence for statins and blood clot inhibitors Reduced ER visits by 26% in diabetics Slowed rate of cost growth VBID in Practice: Tiered Cost-Sharing Sources: Choudhry NK, Rosenthal MB and Milstein A. Assessing the evidence for value-based insurance design. Health Affairs. 2010 Nov; 29(11): 1988-94 and Choudhry NK et al. At Pitney Bowes Value-Based Insurance Design Cut Co-payments and Increased Drug Adherence. Health Affairs 2010 Nov.; 29(11): 2028-31.

13. Families USA 2014 How it works – Providers placed into tiers based on performance data and other factors – Cost-sharing varied based on tier within which provider falls Requirements for consumer-friendly design – Robust, reliable quality metrics and measures of provider performance – Sufficient availability of providers to meet the needs of all plan enrollees – Consumer education on plan design – Accessible exceptions and appeals VBID: Tiered Provider Networks

14. Families USA 2014 Aetna Aexcel Performance Network Design: Designates doctors and provider groups in 12 specialties (e.g. cardiology and orthopedics) as high-performing with a blue star Factors considered: 1)Volume 2)Clinical Performance 3)Efficiency VBID in Practice: Tiered Provider Networks Sources: http://www.aetna.com/docfind/pdf/aexcel_understanding.pdf and http://www.aetna.com/insurance-producer/document-library/aexcel- member-brochure.pdf

15. Families USA 2014 VBID vs. Wellness Penalties Value-Based InsuranceWellness Penalties Evidence BasedNot-Evidence Based Cost-sharing based on clinical value Cost-sharing based on participation in program or health status Never alters premiumsHigher premiums for enrollees with health risks/who cannot participate Lowers cost-sharing for high value care for enrollees with related health risks Raises cost-sharing for enrollees with health risks/who cannot participate

16. Families USA 2014

17. Families USA 2014 Principles for Consumer Friendly Value-Based Insurance Design: http://familiesusa2.org/assets/pdfs/VVBID-Brief.pdfhttp://familiesusa2.org/assets/pdfs/VVBID-Brief.pdf Key Difference between Wellness Reward/Penalty Programs and Value-Based Insurance Design: http://familiesusa2.org/assets/pdfs/health-system- reform/VBID-Wellness-Programs.pdf http://familiesusa2.org/assets/pdfs/health-system- reform/VBID-Wellness-Programs.pdf Additional Resources

18. Families USA 2014 Kim Bailey Kbailey@familiesusa.org 202-628-3030 Familiesusa.org Contact Information