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

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.”