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Life Health > Health Insurance > Health Insurance

The Catch: Look at the Bang, Not Just the Buck

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Maybe spending what it takes to keep people who are at a high risk of having a stroke, or to keep someone who is at a very high risk of needing an organ transplant from having an organ transplant, makes more sense than simply decreeing that health plans should cover all preventive services.

Dr. A. Mark Fendrick, co-director at the Center for Value-Based Insurance Design at the University of Michigan, made the case for maximizing bang for the health care buck today during a hearing on health care delivery system reform that was organized by the Senate Health, Education, Pension and Labor Committee.

In many cases, Fendrick said, health plans try to save money by using one-size-fits-all rules to keep patients from using too many health care services.

A plan might increase cost-sharing to discourage a consumer from getting diagnostic tests or taking prescription drugs that might not really be necessary, Fendrick said, according to a written version of his testimony posted on the committee website.

In the real world, Fendrick said, it makes no sense that his patients often pay the same co-payment to see a cardiologist after a heart attack that they would pay to see a dermatologist for mild acne, and they often pay the same co-payment for drugs that protect against serious complications that they pay for acne medications.

That kind of value-blind cost-sharing discourages many patients from getting care that they clearly need and clearly could keep them out of the hospital, Fendrick said.

Many private plans already use “value-based insurance design” (VBID) – or arrangements that try to take the expected value of treatments into account when setting patients’ out-of-pocket charges – and other public and private plans should do the same, Fendrick said.

Good VBID features should encourage patients to get basic immunizations and also encourage patients with asthma, diabetes and other chronic diseases to get appropriate care, Fendrick said.

A VBID plan might charge a $50 co-payment for ordinary brand-name drugs but $10 for drugs that help control diabetes.

One new obstacle is that well-intentioned preventive services coverage requirements created by the Patient Protection and Affordable Care Act of 2010 (PPACA) limit VBID plans’ flexibility, Fendrick testified.

PPACA requires all non-grandfathered major medical plans to cover basic preventive services without imposing cost-sharing obligations on the patients.

“Setting uniform requirements for co-pays and deductibles can have the unintended effect of prohibiting value-based principles,” Fendrick said. “The potential result of strict cost-sharing requirements without clinical nuance would be underuse of high-value services and overuse of low-value services.”

Congress and federal and state regulators also should keep the needs of VBID plans in mind when setting up the new PPACA health insurance exchanges, which are supposed to start making health coverage available to individuals and small groups Jan. 1, 2014.

The more specific mandates states add, the harder time VBID plan designers will have with tailoring their plans, Fendrick said.

And designers of preventive services packages should find ways to offer low out-of-pocket costs for the “secondary prevention” services needed by people who already have chronic conditions, Fendrick said.

He noted that people with diabetes need regular eye exams and people who have had depression may need counseling.

“Allowing high-value secondary prevention services that would be made available without patient cost-sharing, similar to those primary prevention services selected in [PPACA] Section 2713, would be an important extension of the health enhancing and cost containment goals of health reform,” Fendrick said.


The U.S. Supreme Court justices apparently conferred in private about PPACA cases today, but, as far as we can tell, no special announcements were made or special orders released.

Some are saying news about consideration of PPACA could come out Monday, when the court releases its weekly batch of orders.


The New Jersey Main Street Alliance, Highland Park, N.J., a group that likes PPACA, has put out a press release with the headline, “Small Business Owners Demand Horizon Come Clean on Dark Money.”

The group wants Horizon Blue Cross Blue Shield of New Jersey, Newark, N.J., to disclose how it spends customers’ money on dues and contributions to trade associations and other third parties that can then be used for political purposes without disclosure of the original source.


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