Get Schooled on Lowering Costs

November 15, 2011

Two University of Michigan (UM) developed healthcare initiatives were recommended to the U.S. Secretary of Health and Human Services in an Institute of Medicine report about the future of the nation’s healthcare.

Two University of Michigan (UM) developed healthcare initiatives were recommended to the U.S. Secretary of Health and Human Services in an Institute of Medicine report about the future of the nation’s healthcare.

One program, Choosing Healthplans All Together (CHAT) is a UM-created simulation exercise that engages the public in setting healthcare priorities. The other, dubbed Value-Based Insurance Design, is a concept created at the university that focuses on removing barriers for healthcare services.

The report points out that CHAT’s small group process allows people to make choices among competing healthcare priorities and that CHAT has been used in at least 10 states over more than a decade to help inform state and community leaders about covered benefits and benefit design.

Susan Dorr Goold, M.D. and professor of Internal Medicine and Health Management and Policy in the university’s Medical School and School of Public Health, says plans can learn from CHAT.

“Non-professional, ‘ordinary’ members of the public, given the opportunity that CHAT provides to learn about and discuss health spending priorities, exhibit a good and even sophisticated understanding that ‘you can't have it all,’” she says. “They recognize the need to prioritize what is needed for the community (or population served), not just what they-as individuals-want or need.”

The importance of Value-Based Insurance Design also was underscored in the report, which endorsed the premise, central to V-BID, that clinical nuance and cost should be central to determining the benefits offered. V-BID, the report says, identifies those services whose benefits relative to their costs represent an efficient use of resources for patients. The use of those services is then incentivized, usually through two mechanisms: minimal cost barriers and financial incentives.

“A V-BID approach to benefit plans recognizes that different health services have different levels of value,” says A. Mark Fendrick, MD and professor of internal medicine at UM. “It’s common sense-by reducing barriers to high-value treatments (through lower costs to patients) and discouraging low-value treatments (through higher costs to patients), these plans result in better health at any level of healthcare expenditure. Studies show that when patient barriers are reduced, compliance goes up, and, depending on the intervention or service, total costs go down."

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