The July issue of Health Affairs included a systematic review of observational studies of value-based insurance design for prescription drugs, by Joy Lee and colleagues. Let’s review what value-based insurance design is.
Value-based insurance design (VBID), or evidence-based plan design, attempts to promote adherence by lowering patients’ out-of-pocket spending for treatments that are associated with large reductions in illness, death, or both. This tool is distinct from traditional insurance design, which prices medications based only on their cost, so that patients face low cost sharing for low-cost medications, regardless of their efficacy.
It makes sense to target scarce resources toward medications that are more effective, and to encourage patients to use them by reducing out of pocket costs. But does the approach work?
The investigators found only 13 studies that met their selection criteria. All of them were offered the “carrot” of reduced copayments for a few, specific, high value drugs; none of them investigated the “stick” of increased copayments for specific, low value drugs. All of them reported an increase in adherence to medication, on average 3% after one year, in response to copayment reductions that ranged from 0.5% to almost 10%. This is consistent with prior work that found small decreases in copayments can have substantial adherence effects.
Reduced copayments meant that the insurer was paying more. So it’s not surprising that studies also find that VBID policies are associated with increased insurer and total expenditures.
This ranged from a 0.2 percent increase in expenditures for diabetes, hypertension, and asthma medications at Novartis to a 61 percent increase in expenditures for diabetes medications for the State of Colorado.
On the other hand, some studies find some cost offsets.
Two of the studies examined the impact of value-based insurance design on health services use. Nair and colleagues found that the policy was associated with significant decreases in emergency department visits (-36 percent, p < 0:01), physician office visits (-5 percent), and hospitalizations (-13 percent) at two years. Likewise, Choudhry and colleagues observed significant reductions in rates of physician visits for statin and clopidogrel users after copayment reduction (relative change: statin users: 0.80, 95% confidence interval: 0.57, 0.98; clopidogrel users: 0.87, 95% CI: 0.59, 0.96). Reductions in hospitalizations and emergency department admissions were also observed (relative change: statin users: 0.90, 95% CI: 0.80, 0.92; clopidogrel users: 0.89, 95% CI: 0.74, 0.90).
Overall, the conclusion is encouraging to the extent that increased adherence leads to better health. We should not expect greater use of medication to cost less, even if there are some cost offsets. However, delivery of better health via pill as opposed to an ED or hospital visit, say, has social value that typical cost studies don’t take into account. It’s less disruptive to one’s work and non-work life and that of family members, for example.
Still, I agree with the authors that more, longer-term studies of VBID are warranted. Beyond the scientific and health motivation for them, there’s another: the Affordable Care Act also encourages VBID.
The Affordable Care Act included a provision that “the Secretary may develop guidelines to permit a group health plan and a health insurance issuer offering group or individual health insurance coverage to utilize value-based insurance designs.”
I have no particular insight as to what the Secretary “may” do in this regard. But I am certainly interested in what comes of it.