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January 21, 2010
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Sue Ducat

Can Value-Based Medical Insurance Programs Be Cost Effective?

Bethesda, MD - An article published today by Health Affairs reports new evidence that value-based insurance design (VBID) programs, in which patients pay little or no copayment fees for high value health care services, can break even - or even save money - from a financial perspective. The results came from analysis of data from one large corporation that implemented a VBID program in 2005. Copayment rates were reduced for employees using five classes of drugs used to treat several serious but common chronic conditions, including diabetes and hypertension.

Evidence That Value-Based Insurance Can Be Effective
By Michael E. Chernew, Iver A. Juster, Mayur Shah, Arnold Wegh, Stephen Rosenberg, Allison B. Rosen, Michael C. Sokol, Kristina Yu-Isenberg, and A. Mark Fendrick


Chernew is a professor at Harvard Medical School in Boston; Juster, Wegh, and Rosenberg are affiliated with ActiveHealth Management in New York City, where Shah was formerly employed; Rosen and Fendrick are professors at the University of Michigan at Ann Arbor; Sokol is corporate medical director for Merck and Company in Whitehorse Station, NJ; and Yu-Isenberg is an associate director at Ortho-McNeil Janssen Scientific Affairs in Titusville, NJ. This study was funded by support from GlaxoSmithKline and Pfizer.

In the VBID program, implemented by Active-Health Management, an independent subsidy of Aetna, patients using the specified medications were offered at least a 50% copayment reduction. The authors examined employee spending on the subsidized high value services and overall spending by the employer using the VBID plan, and compared both to a control employer with similar benefits who did not lower copayments. The percentage of eligible patients taking their medication increased from about 70 to 73 percent and, as a result, non-medical spending (e.g., hospitalizations) was reduced. The results suggest that the program likely had a favorable financial profile when both employer and employee costs were considered and that a substantial portion of the added employer spending on high value prescription drugs was offset by fewer hospitalizations and emergency department visits. Says Chernew: "It seems reasonable to conclude that the financial effects of this VBID intervention were at least cost neutral - if not cost saving - from a total cost perspective. Value-based insurance designs could be an important component of a broader cost containment strategy."


Health Affairs, published by Project HOPE, is the leading journal of health policy. Beginning in January 2010, the peer-reviewed journal appears each month in print, with additional Web First papers published weekly at http://www.healthaffairs.org/. The full text of each Health Affairs Web First paper is available free of charge to all Web-site visitors for a two-week period following posting, after which it switches to pay-per-view for nonsubscribers. Web First papers are supported in part by a grant from The Commonwealth Fund.


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