TRICARE Will Implement a VBID Demonstration

Value-based insurance design (VBID) is one of just a few areas that has bipartisan support, and now the concept of VBID is being brought to TRICARE, the healthcare program of the United States Department of Defense Military Health System.

The National Defense Authorization Act for fiscal year 2017 is scheduled for votes in the House and Senate and includes a demonstration of VBID in the TRICARE program. The bill calls for a pilot demonstrating the feasibility of incorporating VBID by “reducing co-payments or cost shares for targeted populations of covered beneficiaries in the receipt of high-value medications and services and the use of high-value providers” no later than January 1, 2018.

The pilot will assess how implementing VBID concepts impacts adherence to medication, quality measures, health outcomes, and patient experience. TRICARE currently implements cost sharing in a “one-size-fits-all” way, similar to Medicare. Beginning January 1, 2017, Medicare Advantage is implementing its own VBID demonstration, which will run for 5 years.

The demonstration will only be available in 7 states in 2017 (Arizona, Iowa, Indiana, Massachusetts, Oregon, Pennsylvania, and Tennessee) with 3 additional states (Alabama, Michigan, and Texas) being added in 2018. In the first year, plans can offer varied benefit design for enrollees who fall into certain clinical categories: diabetes, congestive heart failure, chronic obstructive pulmonary disease, past stroke, hypertension, coronary artery disease, and mood disorders. In 2018, the demonstration will expand to include dementia and rheumatoid arthritis.

In February, A. Mark Fendrick, MD, director of the University of Michigan Center for V-BID and co-editor-in-chief of The American Journal of Managed Care (AJMC), had testified before the United States Senate Committee on Armed Services Subcommittee on Personnel regarding the benefit of implementing VBID in TRICARE. Fendrick developed the VBID concept with the other co-editor-in-chief of AJMC, Michael E. Chernew, PhD, of Harvard Medical School.

One of the core tenets of VBID is clinical nuance, which recognizes 2 things: 1) medical services differ in the amount of health produced; and 2) the clinical benefit derived from a medical service depends on who is using it, who is delivering the service, and where it is being delivered. Unfortunately, under the current system in the United States, despite differences in clinical value, consumer out-of-pocket costs remain the same for every clinician visit within a network.

Clinical nuance sets cost sharing to encourage the use of high-value providers and services (such as a first-degree relative of a colon cancer sufferer getting screened for colorectal cancer), and to discourage the use of low-value providers and services (such as a 30-year-old with no family history of colon cancer getting that same colorectal cancer screening).