Building Better Equity-Based Benefit Designs

Health equity is not a new concept, and policy makers, researchers, and others have been working on solutions for decades, with some innovations like value-based insurance design (VBID) around for years. However, many of these innovations and solutions just haven’t gained traction yet, noted Annette James, chair, Health Equity Work Group of the Health Practice Council, American Academy of Actuaries, during a session at the V-BID Summit, hosted by the University of Michigan’s V-BID Center.

James participated in the panel discussion “Equity Implications in Health Plan Benefit Design” alongside Mark Friedberg, senior vice president, performance measurement and improvement Blue Cross Blue Shield of Massachusetts (BCBSMA); and Mila Kofman, JD, executive director, DC Health Benefit Exchange Authority.

Similar to speakers in the keynote session, the panelists noted that a real turning point for elevating health equity work was George Floyd’s murder in the summer of 2020. According to Friedberg, the incident opened up a political and policy window to make major strides in health equity, moving it from something being solely done internally to part of the insurer’s focus.

In Washington, DC, Kofman’s team took note when they saw Floyd’s murder taking place at the same time that pandemic data showed hospitalizations and deaths in Black and Brown communities on the rise. They needed to figure out what was within their jurisdiction to help address what they were seeing.

They convened a social justice working group made up of health plans, hospitals, physician groups, experts, and consumer advocates to gain an understanding of what they could do.

Through this working group, they learned about what institutionalized racism in health care looks like, as fallacies are repeated or based on faulty data.

Examples that perpetuate poor care include medical students reporting Black skin is thicker than White skin; thinking Black patients have a higher tolerance for pain; or the fact that oximeters for measuring blood-oxygen level are calibrated for White skin and are therefore less accurate when giving readings for anyone with pigmented skin.

The working group also discussed financial barriers, highlighting that twice as many Hispanics as Whites reported cost being a major barrier to seeing their doctor. The group came up with a recommendation to tackle these financial barriers to care, which could be done by changing the benefit design in standard plans to be equity-based benefit design.

Kofman’s group started with conditions that disproportionately impact communities of color, such as type 2 diabetes (T2D). They changed the standard plan design so that they all cover T2D treatments with no cost sharing. Insulin and other prescriptions needed for diabetes, foot and eye exams, and related lab work were all free to people enrolled in these plans.

Next year, pediatric mental health will be available at reduced cost sharing.

“In DC, we are at risk of losing an entire generation of Black and Brown children,” Kofman said. “A lot of it is due to the ongoing impact of the pandemic: isolation, the vicarious trauma, and other reasons. So, we wanted to focus on kids.”

Co-payments for physicians and certain specialists will be lowered to just $5, as well as certain medications and tests children need in this space.

The DC Health Benefit Exchange Authority is also starting to look at other conditions that disproportionately impact communities of color. She also pointed out that while these areas were chosen because of the impact on people of color, anyone who enrolls in the plans will receive the benefit.

Kofman also noted that these changes to eliminate financial barriers to care only help to address one particularly problem.

“This is not the answer to the bias or the reason why some of the wealthiest women in the world—like Serena Williams and Beyonce—almost die during pregnancy,” she said. “We need different solutions for all of these problems, because the problems are just different. Equity-based design is a critical way to address the issue of financial barriers to care.”

At BCBSMA, there is an emphasis on better measurement and investment in gathering self-reported race and ethnicity data from members, Friedberg said. The insurer has transitioned all of its quality measures to being quality and equity measures. There is a new “pay-for-equity” component of contracts to create an explicit business case for large provider organizations to make investments to improve the equity of care.

Another area of focus has been benefit design, and there are analyses of variation in benefit design to see if a benefit design explained some of the inequities by race and ethnicity being observed. When members are asked to spend different amounts out of pocket depending on the plan they are in, or if minority members are more likely to be in high-deductible health plans, those could factor into observed inequities in care, he explained.

In addition, the exact same benefit design can affect different members populations in different ways. Members who are wealthier may have the same out-of-pocket exposure as patients with lower incomes.

“That same exact out-of-pocket exposure might have very different effects on discouraging both necessary and unnecessary care,” Friedberg said. “And we're especially worried about discouraging unintentionally high-value, unnecessary care.”

For the actuaries James worked with on the health equity committee, plan design was one area they felt they could add their voices to the conversation in a meaningful and appropriate way, but there were other areas too, such as pricing, provider contracting, network development, population health management, and data algorithms.

“We're taking a holistic look at health equity, because the health ecosystem is really complex, and everything's interconnected,” she said. “Actuaries are…often in the room working alongside health care professionals and decision makers in many areas that may impact equity. So, it made sense for us to join the equity conversation.”

The approach James and other actuaries is taking is to look at the analytic and actuarial methodology being used in their work to see how their practices may impact health equity either positively or negatively.

Health benefit design is more than just cost sharing, it is services and benefits covered and the extent to which they are standardized, drug formularies, and utilization management controls, such as prior authorization and review protocols.

They are also looking at data collection methodologies and measurement of health disparities to ensure these are being measure appropriately and that biases are not being embedded into the process.

It’s known that historically marginalized populations underutilize health care services, and if the data actuaries use to project costs in the future reflects that underlying bias of underutilization, the results will also be biased, James explained. “For some purposes, it may be important to understand the biases and to adjust our data to avoid unintended consequences. And we've seen that play out in the population health management arena.”

There is also going to be a series of workshops to tackle the barriers to implementing innovative solutions. For instance, the concept of VBID has been around for years, but just hasn’t gone mainstream yet, and the workshops are going to help clarify why that is. Do those in the C-suite still need to be convinced? Is the return on investment being looked at correctly? Should some sort of social adjustment be used? These are the types of questions the American Academy of Actuaries is hoping to answer through the series of workshops.

“The one thing that I've learned is that collaboration is essential,” James said. “Each of us has a slice of the pie. We have a small view of what the problem is, and we can't solve it unless we work together. Our goals essentially, regarding health equity…is to use our actuarial expertise to work towards solutions that would decrease health disparities and health inequity.”