Anticipate challenges with value-based benefit design

One concept that Republican and Democratic legislators should be able to agree on is value-based benefit design. It combines market-based incentives and an opportunity to weed out wasteful spending-objectives the two parties have rallied, respectively.

Now that most coverage plans by law have to provide a package of high-value preventive services with zero out-of-pocket costs (mammograms, for example), consumers are beginning to get a taste of the carrot. Most have yet to see the stick, however.

Other factors also work against value-based design, the most significant of which is the fact that we don't have many definitive answers on which services are high-value and which are low-value. Physicians rely on the literature to the degree that they're able to keep up with it, as well as their clinical experience and intuition. Plans try to draw conclusions from claims data. That's a start, but it's not nearly enough.

Emerging comparative effectiveness research (CER) will shed some light on pure clinical value, but it's a long time in coming. It's also very expensive to produce, and many big-name industry groups continue to lobby against it.

Translating CER into coverage policy is another hurdle. A typically low-value service could actually be high-value for a very small subset of patients, for example. In that case, multiple, granular coverage models will be necessary.

Consumers want the opportunity to pay the best price for the care that's best for their unique needs. However, consumers also think more care is better care, so education efforts surrounding value designs must be thorough and engaging.

I could easily see the 1990s backlash against HMOs repeating itself as a backlash against value-based benefit designs, can't you? Anyone who's serious about implementing the model will need to anticipate negative consumer reaction and prepare to address their concerns.

Providers also will need the tools and the time to execute a value-based design. While they might be able to discuss clinical options at the point of care, few are technologically enabled to do so in the context of a patient's financial reality.

While there are serious challenges, value-based benefit design is a viable model. A few self-insured employers are seeing success on early pilot projects, and most members have already learned how to choose their prescription drugs based on varied cost sharing and copay amounts. So there's hope.

AWARD-WINNING FEATURES

This year has been a rollercoaster for managed care. The legislative changes alone have kept us quite busy here at MHE.

But it was great year for us overall. We earned a prestigious National Gold Award from the American Society of Business Publication Editors as well as several No. 1 readership scores among a tough competitive set. We hope you've enjoyed the ride and look forward to again bringing you the best analysis from managed care's most authoritative sources in 2011.

Julie Miller is editor-in-chief of MANAGED HEALTHCARE EXECUTIVE. She can be reached at julie.miller@advanstar.com