Bipartisan bill now before both houses of Congress would allow high-deductible health plans to do the same

Newswise — ANN ARBOR – A health insurance concept born from University of Michigan research may soon reach millions of people covered by Medicare across the United States, and allow them to keep more dollars in their wallets while getting treated for chronic diseases such as diabetes, depression and heart failure. 

The new national budget signed by President Trump instructs the agency that runs Medicare to allow Medicare Advantage plans in all 50 states to test “value based insurance design” for people with chronic health conditions.

And a bipartisan bill just introduced in the House and Senate could allow private insurers to do the same for anyone with a high-deductible health plan.

“The expansion of the Medicare Advantage V-BID Demonstration provides plans in all 50 states the flexibility to create benefit designs that promote personal responsibility, improve patient centered outcomes, and lower healthcare expenditures," said A. Mark Fendrick, director of the U-M Center for Value-Based Insurance Design and a professor at the U-M Medical School and School of Public Health. "This achievement, coupled with a bipartisan bill allowing for the voluntary implementation of V-BID concepts in commercial health plans demonstrates growing momentum for this University of Michigan concept."

Paying less for what helps most

VBID, as it’s called, lets insurance companies charge people with chronic diseases less for the medicines, tests and treatments they need the most to keep their illness in check.

It reduces out-of-pocket costs for the types of care that research has shown will give patients the most long-term value -- and potentially prevent costly complications and hospital stays.

The idea, created and studied at the VBID Center in SPH, aims to keep patient costs from getting in the way of effective, and potentially cost-effective, care.

For instance, a VBID plan might charge people with diabetes no copay for the blood sugar medicines that have been proven to reduce their long-term risk of diabetes-related kidney, eye, nerve or heart problems.

Medicare Advantage V-BID Model test

Under a pilot program that began last year, seven Medicare Advantage plans in three states offer VBID plans. About half of the plans also require participants to take part in a wellness program before they can get access to cost reductions.

Together, the plans enroll about 2 percent of all Medicare Advantage participants in the United States, according to independent research, though it is not known how many participants have enrolled in the VBID plans.

The new budget calls for the Centers for Medicare and Medicaid Services to expand the pilot program to all states by January 1, 2020, so that Medicare Advantage plans everywhere can decide if they want to use a VBID approach.

The existing model allows insurers to offer VBID-style plans to people with diabetes, congestive heart failure, chronic obstructive pulmonary disease, hypertension, coronary artery disease, depression or other mood disorders, or a history of stroke.

Potential expansion to high-deductible health plans

Also this month, a bill that includes provisions for value-based designs in certain private insurance plans was jointly introduced into the House and Senate.

The “Chronic Disease Management Act of 2018” would, if enacted, allow insurance companies to use VBID concepts in high-deductible health plans.

HDHPs have become popular with employers and individuals who buy their own insurance, because they offer lower monthly premiums. But in exchange for that, they set a deductible of several thousand dollars that participants must pay before their insurance coverage takes over.

To help them prepare for health costs they’ll encounter before they meet their deductible, HDHP participants can put away money in special tax-exempt accounts.

But experts such as Fendrick have shown that individuals’ out-of-pocket costs make a major difference in their tendency to follow through with preventive chronic disease care – no matter how much long-term value that care brings.

The new bills would tweak federal tax law to allow insurers to cover the cost of high-value chronic disease prevention and treatment, without requiring that patients meet their deductible first. This would be in addition to the preventive services that all HDHPs must cover outside of the deductible, an extremely popular federal provision in which the UM VBID Center played an important role.

If the new bills become law, a person with a $3,000 deductible in a HDHP who has diabetes might be able to get their blood sugar medicines covered, rather than having to spend $3,000 in total healthcare costs before having their insurance kick in. 

“This bill allows for the voluntary implementation of clinically nuanced HDHPs with the potential to mitigate cost-related non-adherence, enhance patient-centered outcomes, allow for lower premiums, and substantially reduce health care expenditures," says Fendrick.  "This enhanced HDHP would provide millions of Americans a plan option that better meets their clinical and financial needs.”

In addition to Medicare Advantage and potential use in HDHPs, the VBID concept is currently being tested in the TRICARE insurance system that covers active-duty military personnel and their dependents.

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