Value-Based Design for Chronic Conditions

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2. Today's discussion. SlideVBD background 3BCBSM's diabetes VBD product 5Cost savings and VBD 8Key questions for employers 11Appendix: Medication adherence 13. 3. VBD background. In the context of chronic conditions, value-based design is a plan that provides members with a financ

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Value-Based Design for Chronic Conditions

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1. Value-Based Design for Chronic Conditions

2. 2 Today’s discussion Slide VBD background 3 BCBSM’s diabetes VBD product 5 Cost savings and VBD 8 Key questions for employers 11 Appendix: Medication adherence 13

3. 3 VBD background In the context of chronic conditions, value-based design is a plan that provides members with a financial incentive to seek care of high clinical value The higher the clinical value of a service, the lower the cost sharing, and vice versa VBD emerged partly from recognition that people with chronic conditions were not buying clinically proven medications because of high cost sharing

4. 4 VBD background Consumption of services with high clinical value should produce better health, resulting in financial value for an employer in two ways: Direct health care cost savings Avoided costly health events, most notably inpatient admissions Indirect savings Increased productivity at work Reduced absenteeism BCBSM offers a diabetes VBD product that can be adapted to other chronic conditions

5. 5 BCBSM’s diabetes VBD product Available to self-insured customers Members age 18+ can qualify for specific, high-value, diabetes related care at $0 copay This “enhanced” copay benefit is lower than members would otherwise pay Members qualify for the enhanced copay benefit level by meeting the chronic-condition management program participation requirements Qualification requirements apply each year Services available at a $0 copay include: Office visits with a primary or secondary diabetes diagnosis, and diabetes-related eye and foot exams Diabetic supplies: syringes, test strips, lancets, glucose meters, insulin pumps Diabetes-related lab tests, e.g. blood sugar testing Diabetes prescription medications: oral and injected

6. 6 BCBSM’s diabetes VBD product

7. 7 BCBSM’s diabetes VBD product

8. 8 Cost savings and VBD There is no solid evidence that employers are likely to realize significant direct health care cost-savings Employer health care costs can be expected to rise in the short term from absorption of waived/lowered copays Most studies purporting to show savings were not conducted with sufficient rigor to conclude that the benefit design caused the savings The cause may have been some other factor(s) that were not controlled for, such as regression to the mean. Return-on-investment could substantially differ by employer Significant health care cost savings may not be plausible This is not to imply that health care cost savings or break-even is not possible Employer culture and promotion of VBD are also key to realizing savings

9. 9 Cost savings and VBD A VBD implemented by Aetna for Marriott has often been cited as evidence of the effectiveness of VBD The financial incentives (lowered copays) covered four medication classes and five chronic conditions The incentives were not predicated on chronic condition management engagement A third-party assessment1 concluded that employer health care savings were not plausible, noting: Overall demand for prescriptions does not change much, even with a reduction as large as $15 in member costs. [Many other factors significantly influence whether people purchase high-value medications, see Appendix, Medication Adherance]. Potential reductions in hospitalization and ER rates are generally not large enough to offset the additional costs of lowered copays, most of which go to individuals whose behavior is not impacted by those reductions (because they were already compliant).

10. 10 Cost savings and VBD Indirect savings may be significant When enhanced benefits are predicated on chronic condition management engagement, the ROI is further influenced by the value the employer places on chronic condition management

11. 11 Key questions for employers considering VBD Is there an opportunity to reduce high costs related to poor management of chronic conditions? Are you seeing higher-than-normal admission rates, lost productivity or other costs? Is there a substantial opportunity to improve the health of the population with chronic conditions? Is the cost of adhering to evidence-based care, especially medications, a barrier for your employees? Are your current benefits so rich that reducing members’ financial liability may not prove to be much of an incentive? What is the income level of the target population?

12. 12 Key questions for employers considering VBD Are you willing to spend more in the near term for a potential payoff, including health-related savings (e.g. absenteeism and productivity) later on? Is your employee turnover such that you would benefit from this investment in better health? How engaged with disease management is your high-risk population already?

13. 13 Appendix: Medication adherence Change random capitalization to: Non-adherence rates and costChange random capitalization to: Non-adherence rates and cost

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