Value based insurance design: All reward and no punishment?

Value based insurance design (VBID) is sometimes mocked as merely “free maintenance drugs for diabetics.” Although in concept it’s a lot more than that, in practice most VBID programs encourage the use of high value services but don’t discourage the use of low value services. A paper in the American Journal of Managed Care (Low-Value Services in Value-Based Insurance Design) by Peter Neumann of the Center for the Evaluation of Value and Risk in Health (where I am an Executive Advisory Board Member) et al. lays out the challenges in identifying low-value services and incorporating information about them into VBID.

Although at an aggregate level it’s clear that a lot of low-value services are being delivered, it’s hard to pin down the specifics.  The authors identify a number of challenges:

  • VBID programs have tended to just focus on drugs, ignoring other categories such as surgeries and specialist consultations
  • It’s hard to identify services that belong in the low-value category. For example, certain services that appear excessively costly do help some patient subgroups
  • Clinical information available to health plans is usually inadequate to place patients in appropriate subgroups. That may change with the widespread adoption of EHRs and ICD-10
  • In an era where cost containment of any kind is considered “rationing” (evoking memories of WWII and the Arab Oil Embargo) and coverage for discussion of end-of-life wishes equals death panels, it’s awfully hard to put these sort of restrictions into place
  • The comparative effectiveness and cost effectiveness literature is not yet rich enough to be able to address all the issues arising in plan design

To their credit, the authors do identify some specific candidates to be labeled as low-value services. These include five services that cost more than $100,000 per Quality Adjusted Life Year (QALY) gained compared with other available therapies and two (#6 and #7) where the cost is higher and the outcome is worse. These include:

  1. Lung volume reduction surgery compared to continued medical treatment
  2. Cetuximab for treatment of metastatic colorectal cancer after failure of chemo compared to active/best support care
  3. Anastrozole in women with estrogen-receptor positive breast cancer compared to tamoxifen
  4. Transmyocardial revascularization for patients with severe angina refractory to standard medical therapy compared to continued medical therapy
  5. Left ventricular assist devices compared to optimal medical care
  6. Pemetrexed to treat non-small-cell lung cancer compared to docetaxel or erlotinib and docetaxel
  7. Positron emission tomography in Alzheimer’s disease compared to standard examination

Assuming the Federal Coordinating Council for Comparative Effectiveness Research established under ARRA does its job, there will be a lot more fodder for this discussion in the future.

August 4, 2010

5 thoughts on “Value based insurance design: All reward and no punishment?”

  1. Pingback: Health Business Blog » Blog Archive » Value based insurance design … « blog01 – new life.
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  4. we suggest asking Dr. Nortin Hadler for a list of low-value services.

    You can be sure that his list is longer than you might predict, and backed with both substantial data and incisive thinking about the science of health care.

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