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Aligning employer strategies: Value-based insurance design and the patient-centered medical home
Bruce Sherman, MD, FCCP, FACOEM
PCPCC - Center for Employer Engagement - June 9, 2010
Joint Principles of the PCMH (February 2007) The following principles were formulated by the four
primary care physician organizations – the American Academy of Family Physicians, the American Academy of Pediatrics, the American College of Physicians, and the American Osteopathic Association. Principles:
• Ongoing relationship with personal physician• Physician directed medical practice• Whole person orientation• Coordinated care across the health system• Quality and safety • Enhanced access to care• Payment recognizes the added value
Why should employers care about PCMH? Improved coordination of healthcare Enhanced quality of care Better clinical outcomes Improved patient satisfaction with healthcare And (hopefully) lower health and lost
productivity costs Healthier workforce Healthier families in workforce Increased efficiency of care (reduces costs) More valuable health benefit
Typical US employer healthcare cost distribution
• Improving care quality with a PCMH, will increase primary care costs
• But… implementation of PCMH has been shown to result in lower hospitalization rates – and lower overall health care costs.
Patient-Centered Medical Home2009 Overview of Pilot Activity and Planning Discussions
RI
Multi-Payer pilot discussions/activity
Identified pilot activity
No identified pilot activity – six states
A comparison of then and now…Attribute 1990’s – Managed
care2009 and onward -
PCMH
Primary stakeholders involved:
Health plansEmployers
Health plansProviders
PCP role: Gatekeeper Medical home
Need to engage/involve:
Providers Employers
Patients have… Limited choices Informed choices
Good health means:
Lower costs Engaged individual
Employer focus: Cost-reduction through appropriate utilization
Value-generation through appropriate utilization
Benefit design considerations:
In/out of network; co-pay used as financial disincentive
Value-based insurance design as financial incentive
8
The importance of benefit design
Wise Investments in Employee Health Are Cost-Wise Investments in Employee Health Are Cost-EffectiveEffective
Wise Investments in Employee Health Are Cost-Wise Investments in Employee Health Are Cost-EffectiveEffective
Reduction Reduction in Medical in Medical
CostsCosts
Reduction Reduction in Medical in Medical
CostsCosts
Reduction Reduction in Health-in Health-Related Related
AbsencesAbsences
Reduction Reduction in Health-in Health-Related Related
AbsencesAbsences
Reduction Reduction in in
On-the-Job On-the-Job ProductivitProductivit
y Lossesy Losses
Reduction Reduction in in
On-the-Job On-the-Job ProductivitProductivit
y Lossesy Losses
BenefitBenefitCostCost
BenefitBenefitCostCost
Employers are increasingly adopting cost-effective – or value-based
Insurance design strategies
Employers are increasingly adopting cost-effective – or value-based
Insurance design strategies
9
The case for value-based insurance
Design of Value-Based Co-paymentsDesign of Value-Based Co-paymentsDesign of Value-Based Co-paymentsDesign of Value-Based Co-payments
ProblemProblemProblemProblem
Some employers are responding to rising healthcare costs by adopting across-the-board cost-shifting Many studies have shown that this reduces adherence, which
may have adverse clinical effects: Ellis JJ, et al. 2004; Goldman DP, et al. 2006
SolutionSolutionSolutionSolution
Set the patient co-payment amount relative to the value – not the cost – of the intervention This means considering the complications and consequent
services that are avoided on account of the intervention when assessing value
• Condition-specific (diabetes, hyperlipidemia)• Benefit offering (preventive care, generic
medications, PCMH)
Adapted from Fendrick AM and Chernew ME. Value-based insurance design: aligning incentives to bridge the divide between quality improvement and cost containment. Am J Manag Care. 2006;12:SP5-SP10.
10
VBID is relevant to all aspects of health management
Integrated Health and Productivity Management
Wellness and Health Promotion
Incidental Illness and Chronic Disease
Complex-Catastrophic Individual Cases
Health education
Health risk assessment and screening programs
Lifestyle management programs
Health insurance plan
Short-term disability
Disease management programs
High-cost case management
Long-term disability
Centers of excellence forhigh-cost conditions
New ACOEM and IBI partnership to promote health and productivity management in the workplace. [news release]. Chicago, IL: ACOEM. November 27, 2006.
VBID Strategies
PCMH and value-based insurance design
Medical home is a system/means of healthcare delivery
Unless individuals are encouraged to utilize a medical home, there is no value generation for employers
Financial incentives can steer individuals to use high-value services (value-based insurance design)
Medical home is a high-value service Incorporation of a value-based insurance design
to promote medical home use can drive PCMH use
Value-based insurance design includes more than lowering medication co-pays
Employer considerations for PCMH-related benefits
Co-pay reductions for: Medical home visits Specialist consults when referred by PCMH Ambulatory services when referred by PCMH
Contributions to HRA/HSA for PCMH provider selection
Compliance with recommended care: Tiered employee benefit contributions HRA/HSA contributions
Barriers to employer adoption of PCMH No pilots in the employer community
Employers can partner; work with health plans to implement (Kellogg, Roy O Martin Lumber, IBM)
Location-by-location implementation vs. ease of uniform benefit design change Consider involvement in existing plan-based pilots
Short-term focus on costs Ongoing education; build on VBID approach
(Whirlpool) Need for solid “proof of concept” data for PCMH
Enhance visibility of outcomes data for employer audience
Final thoughts Value generation occurs through appropriate
utilization of healthcare services PCMH should be considered as a focus for
value-based insurance design strategies Increased use of (and payment for) primary
care is offset by reductions in use of other healthcare services
Improved health results in greater workforce productivity
“My employer cares about my well-being” engenders greater employee engagement
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