Aligning employer strategies: Value-based insurance design and the patient-centered medical home

1. Aligning employer strategies: Value-based insurance design and the patient-centered medical home Larry Pheifer and Dave Eitrheim, MD PCMH webinar series September 21, 2011

2. A comparison of then and now…

3. The importance of benefit design Wise Investments in Employee Health Are Cost-Effective Reduction in Medical Costs Benefit Cost Reduction in Health-Related Absences Reduction in On-the-Job Productivity Losses Employers are increasingly adopting cost-effective – or value-based benefits design strategies

4. The case for value-based insurance Problem • Some employers are responding to rising healthcare costs by adopting across-the-board cost-shifting • Many studies have shown that this reduces adherence, which may have adverse clinical effects: Ellis JJ, et al. 2004; Goldman DP, et al. 2006 Solution • Set the patient co-payment amount relative to the value – not the cost – of the intervention • This means considering the complications and consequent services that are avoided on account of the intervention when assessing value Design of Value-Based Co-payments • Condition-specific (diabetes, hyperlipidemia) • Benefit offering (preventive care, generic medications, PCMH) Adapted from Fendrick AM and Chernew ME. Value-based insurance design: aligning incentives to bridge the divide between quality improvement and cost containment. Am J Manag Care. 2006;12:SP5-SP10.

5. VBID Strategies VBID is relevant to all aspects of health management New ACOEM and IBI partnership to promote health and productivity management in the workplace. [news release]. Chicago, IL: ACOEM. November 27, 2006.

6. PCMH and value-based insurance design • Medical home is a system/means of healthcare delivery • Unless individuals are encouraged to utilize a medical home, there is no value generation for employers • Financial incentives can steer individuals to use high-value services (value-based insurance design) • Medical home is a high-value service • Incorporation of a value-based insurance design to promote medical home use can drive PCMH use

7. Typical US employer healthcare cost distribution • By improving care quality with a PCMH, primary care costs will increase • However, implementation of PCMH has been shown to result in lower hospitalization rates – and will likely lead to lower health care costs.

8. Value-based insurance design includes more than lowering medication co-pays Employer considerations for PCMH-related benefits • Co-pay reductions for: • Medical home visits • Specialist consults when referred by PCMH • Ambulatory services when referred by PCMH • Contributions to HRA/HSA for PCMH provider selection • Compliance with recommended care: • Tiered employee benefit contributions • HRA/HSA contributions

9. Barriers to employer adoption of PCMH • No pilots in the employer community • Employers can partner; work with health plans to implement (Kellogg, Roy O Martin Lumber, IBM) • Location-by-location implementation vs. ease of uniform benefit design change • Consider involvement in existing plan-based pilots • Short-term focus on costs • Ongoing education; build on VBID approach (Whirlpool) • Need for solid “proof of concept” data for PCMH • Enhance visibility of outcomes data for employer audience

10. Final thoughts • PCMH should be considered as a focus for value-based insurance design strategies • Value generation occurs through appropriate utilization of healthcare services • Increased use of (and payment for) primary care is offset by reductions in use of other healthcare services • Improved health results in greater workforce productivity • “My employer cares about my well-being” engenders greater employee engagement