Value models require technology changes

July 1, 2010

One approach to aligning cost/quality outcomes is Value-Based Benefit Design which is designed to lower out-of-pocket costs for high-value services while providing greater quality of life for members

One approach to aligning cost/quality outcomes is Value-Based Benefit Design (VBBD) or Value-Based Insurance Design (VBID). VBBD is designed to lower out-of-pocket costs for high-value services while providing greater quality of life for members, reducing absenteeism, improving productivity for employers, and decreasing overall healthcare expenditures.

Using this new model, payers will offer customized benefits that encourage healthy behavior by members. For example, members may receive premium discounts, reduced medication co-pays, or free health club memberships. For a diabetic or someone at risk of developing diabetes, benefits could include low- or no-cost regular physician office visits, medications, testing supplies and nutritional coaching.

While most experts agree that VBBD plans are too new to fully determine their total return on investment, a number of early adopters are reporting lower or more stable costs, increased productivity, and enhanced employee satisfaction. There are a number of major hurdles that must be overcome before widespread VBBD adoption can become a reality in the United States. These include a new level of information transparency and the use of technology to increase individualization, personalization, and customization.

As payers increasingly recognize the need to replace or augment their legacy systems, they should seek technology that can deliver the following mission-critical functionality:

VBBD shows potential to help maximize the value received for the nation's healthcare spend. It aligns with reforms designed to keep people healthier at a lower cost by supporting greater involvement of consumers in their own care. Payers that harness the power of the latest technology platforms will gain a significant advantage over their competitors.

Ray Desrochers is COO of HealthEdge, a company that provides claim processing and benefit administration, business intelligence, and portal solutions.