Value-based insurance design (V-BID) is a health plan feature that encourages optimal use of high-valued health care by lowering member out-of-pocket costs through reductions in deductibles, coinsurance, or copays. Given that chronic disease progression, exacerbations, and adverse events are routinely controlled using medication, the application of V-BID in prescription drug coverage should make clinical and economic sense. Analyzing a random sample of 2.4 million individuals continuously enrolled during 2019, this week’s Fast Fact takes a look at whether decreasing out-of-pocket costs will help patients to increase their medication adherence — which will prompt medical cost savings.
C — her wnew, ith the m M. E., R ost dros am en, A. atic eB las ., & tici Fen ty and dri m ck, A. edica M. ( l –cos 200 t o 7) ff. set "V as alsu uem -B pas tio ed I ns, nsu emr panc loye e D r spe esindi gn.n " g H w ea oul lth Af d in fcr aie rs as , e Wby eb Data and Methods 0.94 percent. Exclusive, w195 –w203. ® Using the Merative ™ MarketScan Commercial Database, we analyzed a random sample of 2.4 million Fronstin, P., Roebuck, M. C., & Fendrick, A. M. (2022). "The Impact of Expanding Pre-Deductible Coverage in Percentage Change in Health Care Spending as a Result of individuals continuously enrolled during 2019 in a non-capitated private health plan (including employment- September 28, 2023, #482 HSA-Eligible Health Plans on Premiums." EBRI Issue Brief, no. 558. based and other commercia C l i on ssur t-Sanc hare in ). The g Ch coho ange rs t co fonsi r Osrta ed l A of n po tidila icyho betic lde Mre s d an icd t atihe on ir s dependents under age 65, across all U.S. geographic regions, and in a variety of plan types (e.g., preferred provider organizations, health Fronstin, P., Roebuck, M. C., & Fendrick, A. M. (2023). "Imposing Cost Sharing on Preventive Services Impact on Impact on Impact on maintenance organizations, and high-deductible health plans). The prevalence of diabetes was 4.3 percent in the Significantly Impacts Expenditures for Eligible Enrollees but Does Not Substantially Reduce Aggregate Total Spending Employer Spending Member Costs study sample. Using Health Plan Design to Incentivize Pre-Deductible Coverage Employer Health Care Spending: Implications of Braidwood Management Inc. v. Becerra." EBRI Fast 0.00% 0.03% -1.60% (15% coinsurance) Facts. Using pharmacy and medical claims, we calculated mean per-member-per year (PMPY) spending on inpatient, Medication Adherence Among Diabetics: Copays Only ($3 generics, 0.02% 0.15% -5.10% outpatient, and pharmacy health care. In addition to total spending, average employer spending and member out- $35 brand name) Goldman, D., Joyce, G., Escarce, J., Pace, J., Soloman, M., Laouri, M., . . . Teutsch, S. (2004). "Pharmacy of-pocket paymentImpa s were derc ivt on ed. As a s Em ubsetployer of overall ph and P armacy spendi ati ng, o ent Spen ral antidiabetidin c medig cat ion costs $0 Cost Sharing 0.01% 0.30% -16.10% Benefits and the Use of Drugs by the Chronically Ill." Journal of the American Medical Association, 3 were also measured. We derived the proportion of days covered (PDC) for each medication utilizer and 291(19), 2344 –2350. considered patients adherent if their PDC equaled or exceeded 0.80, a commonly used threshold for adherence ( Disc Roebuc ussi k, Lib on erman, Gemmill-Toyama, and Brennan 2011). Background Roebuck, M. C., Liberman, J. N., Gemmill-Toyama, M., & Brennan, T. A. (2011). "Medication Adherence Leads To Lower Health Care Use And Costs Despite Increased Drug Spending." Health Affairs, 30(1), 91 –99. N It i ext s now g , we si ene mul ral atled y ac thc rept ee al ed t ter ha nat t m ive aint cos enanc t-shae ridr ng ugs arr an forgem chre oni nts c he foral or th con al antd id itiiabe onst ihel c m p esl diow cat d ion. F iseasie rst pr , og we ression Value-based insurance design (V-BID) is a health plan feature that encourages optimal use of high-valued health and exam low ineer d a s ratce esn o ar f hos io in pi w tahi liza ch t tion a hese d nd e rug ms wer ergen e a cy de fforp de ard cove tment us rage e ( pr Roe ior buck, L to the d ibe ed ruct man, Ge ible be m ing milm l-Toy et. For ama, and Smith, N. K., & Fendrick, A. M. (2022). "Value-Based Insurance Design: Clinically Nuanced Consumer Cost care by lowering member out-of-pocket (OOP) costs through reductions in deductibles, coinsurance, or copays B prres enna cript n 2011 ions w ).i tIh n t a po his s sittud ive y, w dole f lari nd t amoun hat tr pr edes uci en ng co t in tshe de t shardu ing f ctibl ore o frial el an d, w tid e ir ab eaet di jc m udica edi ted cattihe c ons lw aioul ms- d se have tting a (Chernew, R Sharose ing t n, and F o Increend ase rtihe ck U 2007 se of ). H Giigh ven t -Va hat lue chr Me od ni ica c d tiio se nas s." e J pr ourna ogress l o ion, ex f Heala th Po cerbat litiions, cs, Pol and a icy and Law dverse eve , nts m deduc inimtal ib lie mto pa $0 ct on and toitns alt dr eau d g and impose md eda c icaoi l sp nsur end anc ing e r w at he of ile di 15 spr per opce orn titon — at tel he y over beneaflilt ia ng ver pa age tien m ts e m thr be ou r co ghst reduc shared e are routinely controlled using medication, the application of V-BID in prescription drug coverage should make 47(6), 797 –813. out mea -of sur -pock ed in t eth c e s ost tudy s s and i am mp pr le oved . The adhe second rence sce . Sp naec rio r ifiep calllac y, t ed t he m he e ost xi sagg ting m ressi em ve s ber cena cosrti o sha ofr e mw aki ith a ng or flat al copay of clinical and economic sense. In response to lower OOP costs, patients will likely increase their medication ant $3 f idi orabe gen tier c im cs e di and $35 cation f fro ee r br of and co st na sha mers. Th ing fes ore pa va tile ues nts cl wos oul eld l y rea ese d m to bl a e c ver op y s ay li-gh onl t y phar (0.30 p m er ac cy be ent) i nef ncr itea des se i igns n tot in al adherence, which will prompt medical cost savings —sometimes exceeding the additional pharmacy costs st em atp es loye wh rer sp e t end hey m ing. us Att be o the sa ffm ere t ed i( m e.g., e, t C he e olnr oro ado lleeand s usi Mont ng or ana al an ). tN idi otabe e th tiat c w me edi diad ti not ons woul have d inf exp orm er at ienc ion e a to further incurred (Agarwal, Gupta, and Fendrick 2018). ### di subs sting tan ui tis ah be l decr tw ea ee se n p in re tf he erirred a indi nd n vidu on al- out pre- fof err -ed poc br ket and sp s. endi The ng thi , pr rd a esu ltm erab nat ly ive lea cos ding t-sha to be rint g ar ter r adhe ange rm enc en et set all oral i ant mp idi rove abe m tie c nt m s i em n b gl er y ce OOP mic ccont osts rt ol o $ and 0. Irn al edulct sc ions enariin o s, diabe plan p tes- ai re d la atm ed c oun om ts we plica re i tio nc ns a reand ho sed to cov spitaler iza rtedu ionct s. iA ons s ai n V-BID principles have been applied by health plan sponsors to some degree (Smith and Fendrick 2022) and have m ree su m ltbe , enc r Oo O ur P cos aging ts.m edication adherence by lowering member out-of-pocket costs should not only improve also made their way into federal law, most notably Section 2713 of the Patient Protection and Affordable Care pat ient health, but might also be economically efficient for sponsors. Act (ACA) that requires all ACA Marketplace and non-grandfathered private health plans eliminate member cost Pat ients facing the lower OOP costs under the three scenarios would likely respond with increased utilization of sharing (i.e., without copayment or coinsurance, regardless of whether the deductible has been met) for specific Th and a ese dh res eru elnce ts a r to o e in l rai lne w antid itih abe prtiior c d EB rug R s. To a I resea cc rch. oun It n o fone s r thits, udy, we w as e sum exaed a min 1 ed how percent re m dec ovi rea ng co se in O st sha OP ring cost fo sr 116 preventive health care. The U.S. Department of Health and Human Services has estimated that in 2020, 151.6 1 t w her oul ape d p urtom icapt l dr aug c 0.23 las inc sers ea in se H iSA n use -el i(gi Gbl ole dm hea an e ltht pl alan . 2s004) woul . We d af a fec lloca t prte ed mitum he ac s aco nd f mpany ound ing thaitnc prre em asie um in ph s war ou m ld acy million people had access to free preventive care under the ACA. Moreover, in July 2019, the IRS issued cos incrtea s ts oe by the pl an e an a stind ma m ted em 1b .3 t er ac o 4.7 cor per ding ce tn o t ea (Fch rons cos tin, t-sh Rar oebuc ing sc k, ena and Fen rio. We dri ck 2 appl02 ied 2) thi . Is a n ano ssum the pt r s ion a tudy, w t the p e atient guidance allowing health savings account (HSA)-eligible health plans the flexibility to cover some prescription 2 l exa eve m l an ine d t d how hen r ad em ded c easuost red s PD har C ing f and t orhe pr pr eve opor ntive tiose n ad rviher cesen wtoul . Md af edica fec tito e n adh mploye erern a ce nd enr in dia ol bet lee es spe has nd b iee ngn s and hof w on t und o drugs prior to members satisfying their deductibles. Recently, the Inflation Reduction Act of 2022 incorporated t lha ead t en to rlol ow lee er s us medi ing p calr ev cos ent ts;i t ve s herer efv or ic e, esf o m r ea ay ch facnew e a s lub y ast dher antie al nt i nc pat ri ea en se t, w in t e a hei ssru im nd ei d a r vidual educ out tion -of of -po $ cke 3,126 t spe in nding, V-BID elements, including a cap on cost sharing for insulin at $35 per month for diabetics covered by Medicare m whi edlie ca itl w co oul stsd ( R have oebuck, L a minii m ber al i m m an, Ge pact o m n ove mill-rToya all em m pal, oyer and Bre healnnan 2 th care s 011) pendi . ng (Fronstin, Roebuck, and Fendrick Part D and elimination of patient cost sharing for vaccinations covered by Medicare Part C. Despite the benefits, 2023). Ultimately, this study and prior studies find that the overall impact of selectively reducing or eliminating many employers and commercial insurers have not implemented V-BID, perhaps due to concerns about higher pr Afes tecr r r ie pt adj ion d udirca ug ting costthe sha or ra ing l an on tide im abp et loye ic prr es spcr endi ipting on d is rlug c ow, lw aiim ths f a o nregl eaich o giblf e t ih m e ptac hrtee o n ove scenar ra il os, w l spee c ndia ng lcud lue ate t d o plan costs and premiums. expe the pc er ted cent ofage fset d tiing ffe by renc sa es vi i ngs n ave fro rage m r em duc em tib on ers i On O hos P co pi st tal , e im zap tilo oye ns a r sp nd ot end her ing m , a end dica tot l al cos ct ost s. between the status quo and each scenario. Finally, we conducted a sensitivity analysis of selected results by varying the OOP copay In addition to the federal requirement for cost sharing elimination for preventive health care services, the most A elbou astici t E ty B aR ssI: um The E ption f mrp om loy 0.05 t ee Bene o 0.40 fit Ra es nd eava rch I ryins ng titth ut e e i ms edi a pr cal iva cos te, t of nonpa fset a rtss isa un, mpt and nonp ion from rof $750 it rese to $5 arch ,750 inst.i tute common implementation of V-BID has been to improve access to, and affordability of, high-value services used based in Washington, D.C., that focuses on health, savings, retirement, and economic security issues. EBRI does to treat common chronic conditions such as diabetes. Although the impact of these programs on use of the not lobby and does not take policy positions. The work of EBRI is made possible by funding from its members Results targeted health services has been fairly well studied, less is known about how V-BID affects plan and member and sponsors, which include a broad range of public and private organizations. For more information, visit spending. Accordingly, in this Fast Fact, we estimate the average impact of reducing patient cost sharing for oral www.ebri.org. All three cost-sharing arrangements were estimated to have a near-zero impact on total costs, since spending antidiabetic medications, comparing current average cost sharing for these drugs with that under three alternative would shift from patients to employers. Patients would see their OOP costs decline by between 1.6 percent and plan design scenarios: A Thank You to Our Funders: This study was conducted through the EBRI Center for Research on Health 16.1 percent, and employer spending would increase by between 0.03 percent to 0.30 percent. Changing the plan Benefits Innovation (EBRI CRHBI), with the funding support of the following organizations: Aon, Blue Cross design from the status quo to 15 percent coinsurance would have the lowest impact on spending, while making all 1) Replacing deductibles with 15 percent coinsurance. Blue Shield Association, ICUBA, JP Morgan Chase, Pfizer, and PhRMA. oral antidiabetic medications free to patients would have the largest impact. Findings from the sensitivity analysis 2) Implementing a copay-only regime. suggest that even under the most aggressive scenario — $0 patient cost sharing for oral antidiabetic medications 3) Making the medications free of all OOP costs. References Agarwal, R., Gupta, A., & Fendrick, A. M. (2018). "Value-Based Insurance Design Improves Medication 1 https://aspe.hhs.gov/sites/default/files/documents/786fa55a84e7e3833961933124d70dd2/preventive-services-ib-2022.pdf. 3 This category consisted of the following therapeutic classes: incretin mimetics, sodium-glucose cotransporter 2 inhibitors, Adherence Without An Increase In Total Health Care Spending." Health Affairs, 37(7), 1057 –1064. biguanides, dipeptidyl peptidase 4 inhibitors, bile acid sequestrants, sulfonylureas, thiazolidinediones, meglitinides, and 2 https://www.irs.gov/pub/irs-drop/n-19-45.pdf. alpha-glucosidase inhibitors. 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