How Public Payers Are Adopting VBID Principles Despite Constraints

During a session on expanding the role of value-based insurance design (VBID) in public payers at the University of Michigan V-BID Center’s annual V-BID Summit on March 14, panelists representing 3 different payers shared how they have seen value-based principles take hold in their plans and their predictions for the future.

Moderator Cliff Goodman, PhD, senior vice president at The Lewin Group, asked the panelists to introduce themselves and describe the type of payer they represent.

Captain Edward Simmer, MC, USN, chief clinical officer for the TRICARE program, explained that he oversees the clinical care provided to 9.5 million military service members, retirees, and dependents covered by the Military Health System. TRICARE is unique in that service members are not charged for medications or care, and cost sharing for retirees or dependents is capped at $3500 per year. The generous benefit requirements and cost-sharing restrictions imposed by Congress have forced program officials to be creative in how they incentivize beneficiaries to change their healthcare utilization habits, Simmer explained.

Claire Levitt, MS, deputy commissioner for the New York City Mayor’s Office of Labor Relations, could empathize with that challenge, as the 1.2 million city employees, dependents, and retirees in the city’s health benefits program are represented by unions that consistently ensure that their health plans have no deductibles or premiums.

Finally, Adam Finkelstein, JD, MPH, counsel with Manatt Health, explained that his prior experience as a health insurance specialist at CMS’ Center for Medicare & Medicaid Innovation had given him insight on how VBID principles are being tested in Medicare Advantage (MA) plans. He called it “remarkable” that CMS was willing to take the leap into VBID by letting MA plans offer reduced cost sharing for some high-value services in certain chronic diseases.

Asked to explain their plans’ specific strategies to implement VBID, the panelists presented the program changes and outcomes they had seen so far. Levitt explained that the city had agreed with the unions to attempt to save $3.4 billion in healthcare costs over 4 years by strategically adding costs in specific areas and “changing plan design in concert with foundational VBID principles.”

For instance, the plan increased co-payments for emergency department (ED) and specialist visits and covered all preventive care services, thus shifting utilization toward the primary care setting. It also offered wellness initiatives and health management programs at work sites, which she said have resulted in positive engagement and retention outcomes.

Simmer outlined some of the ways that TRICARE attempts to steer beneficiaries to the right care instead of charging different amounts for different services, which current law likely would not allow. One tactic was to require a referral for ED visits, but not urgent care visits, to encourage patients to choose urgent care over the costlier ED. Lists of participating maternity care providers now feature a “golden stork” next to high-performing providers as ranked by Leapfrog scores. Members receiving preventive care, such as mammograms, get a pass that rewards them with the privilege of going to the head of the line at the pharmacy.

“In a way, we’re kind of building up a set of tools and leverage that aren’t necessarily financial,” Goodman paraphrased, “and we’ve also learned that they don’t have to apply to all services.”

According to Finkelstein, CMS hasn’t collected many data since the limited test model was rolled out in 10 MA parent organizations in 2017, but no news may be good news: the agency has not heard any public complaints from participants. Although not many plans have rushed to apply yet, Congress has mandated that the model be conducted in all 50 states by 2020.

“Both Congress and the administration have given plans a lot of new flexibility … so there’s a bigger palette for plans to paint with in terms of benefits,” Finkelstein explained.

In response to an audience question about communicating the “carrots and sticks” of VBID, the panelists described strategies that differed based on which group or entity needs to buy into the changes. Simmer explained that TRICARE has convinced Congress to adopt VBID principles in the program by partnering with the constituents and advocacy groups that policy makers tend to listen to.

Levitt recounted her experiences negotiating with the municipal labor committee by tying wage increases to the unions’ willingness to participate in the health cost savings experiment. Union leadership had to be on board with the idea and then sell it to the employees, she said. The plan is on track to save more than $3.4 billion by the end of the 4-year period in July, so the unions will receive any extra savings above that benchmark.

Next, Goodman asked the panelists to share their practical expectations about the viability of VBID expanding to all 50 states. Finkelstein anticipated that we will see plans “start to get braver” about adopting VBID; specifically, the private sector may respond well to being able to choose a standardized VBID plan “off the shelf.”

Levitt agreed that the movement focusing on VBID and population health will have to grow nationally in order for plans to push back against rising costs while still benefiting the patient population. She also noted that these efforts in the city’s health plan moved more slowly than she had hoped, but they have still accomplished a number of positive changes.

Simmer said that the next area of focus for TRICARE will be to involve the beneficiaries by asking what value means to them. He also talked about the need for greater flexibility, which can be difficult in TRICARE, which has a 5000-page manual governing how the program provides healthcare.

“How do we work that 5000-book to allow that flexibility so that each patient and provider can find the right solution for them?” he asked.