Implementing value-based insurance design programs in health care reform law

U-M Center working with key stakeholders to implement strategy that removes barriers to high value health care services

Value-based insurance design programs -- a concept created at the University of Michigan -- are part of the nation's new national health care plan, and U-M physician A. Mark Fendrick, M.D. is working with policy setters to implement the strategy.

Value-based insurance design programs focus on removing barriers for screenings, tests, and treatments that are proven to be effective. When out of pocket costs are reduced, patients are more likely to use high value services.

Section 2713 (c) of the Patient Protection Affordable Health Care Act, which President Barack Obama signed into law on March 23, allows the Secretary of Health and Human Services to develop guidelines to permit health plans to use the concepts of value-based insurance design.

"We are thrilled that our efforts to get these concepts into health care reform law have been successful," said Fendrick, co-director of the University of Michigan's Center for Value-Based Insurance Design [www.vbidcenter.org].

"Every clinician in this country has seen patients who, because of increased premiums, increased co-payments or the economic downturn in general, stop coming to follow up visits or don't get the recommended diagnostic tests or don't take the medications that will save their lives – preventing a heart attack or stroke.

"What value-based insurance design does is invest in those medical services that produce the most health and maximize benefits of care."

Watch Fendrick explain VBID programs here:>

The VBID Center provided the conceptual foundation and empirical research to allow health plans nationwide to remove barriers for high-value preventive, diagnostic, and therapeutic medical services – all directed in the new legislation.  The Center's faculty and government relations director has been invited to meet with senior staff from the U.S. Health and Human Services division this week to discuss how best to implement the VBID concept.  

Fendrick, who also is a professor in the Department of Internal Medicine and professor of Health Management and Policy at U-M, created the VBID concept and launched the VBID Center with Michael Chernew, Ph.D., professor in the Department of Health Care Policy at Harvard Medical School.

"The basic premise of value-based insurance design is to remove barriers to encourage the use of high-value screenings, diagnostic tests, medications and procedures," says Fendrick.  "With better alignment of patient and clinician incentives, we can produce more health at any price."

The center's faculty has published widely on the clinical and economic merits of VBID programs, which have been implemented widely by private companies, public organizations, unions, and health plans.

"VBID been endorsed by all key health care stakeholders.  While we recognize that health care costs need to be addressed, we believe that cost containment efforts – such as increasing premiums or co-payments – should not produce avoidable reductions in quality of care."  said Fendrick.

"We are proud that the University of Michigan is influencing health care policy in the nation," said Dean Smith, Ph.D., director of the U-M VBID center in the School of Public Health. "We believe our efforts to develop this concept will result in better health outcomes for the entire country."