Value-Based Insurance Design: Value-Based Insurance Design:
Preserving Quality While Containing CostPreserving Quality While Containing Cost
Presented at the Leonard Davis Institute, University of PennsylvaniaPresented at the Leonard Davis Institute, University of PennsylvaniaApril 3, 2009April 3, 2009
Funding from University of Michigan Health System, Hartford Foundation, and the Funding from University of Michigan Health System, Hartford Foundation, and the Michigan Diabetes Research Training Center (NIDDK)Michigan Diabetes Research Training Center (NIDDK)
Allison B. Rosen, MD, ScDAllison B. Rosen, MD, ScDUniversity of Michigan Center for Value-Based Insurance DesignUniversity of Michigan Center for Value-Based Insurance Design
Outline of TalkOutline of Talk
• BackgroundBackground
• A story of serendipity (and a bit of hard work)A story of serendipity (and a bit of hard work)
• UM intervention study – primary outcomesUM intervention study – primary outcomes
• Preliminary secondary analysesPreliminary secondary analyses
• Policy implicationsPolicy implications– LocallyLocally
– More broadlyMore broadly
Health Care Cost CrisisHealth Care Cost Crisis
““The nation’s long-term fiscal balance will be The nation’s long-term fiscal balance will be determined primarily by the future rate of health determined primarily by the future rate of health care cost growth.”care cost growth.”
-- Peter Orszag, Director, Congressional Budget Office -- Peter Orszag, Director, Congressional Budget Office Testimony before Senate Budget Committee, June 21, 2007. Testimony before Senate Budget Committee, June 21, 2007.
Value of Care is PoorValue of Care is Poor
• Substantial underutilization of high value health care services
• U.S. adults receive only about half of recommended care*
• For some chronic diseases, like diabetes, For some chronic diseases, like diabetes, patients get fewer than half of needed clinical patients get fewer than half of needed clinical services*services*
*McGlynn et al. N Engl J Med, 2003.
Fundamental Health Policy QuestionFundamental Health Policy Question
How do we organize and finance the health How do we organize and finance the health care system to achieve maximum value for care system to achieve maximum value for what we spend? what we spend?
***Not: how do we save money?***Not: how do we save money?
Health Care Cost Crisis:Health Care Cost Crisis:Remedies Must Recognize Cost / Quality TradeoffRemedies Must Recognize Cost / Quality Tradeoff
• Financial incentives to moderate utilization will be Financial incentives to moderate utilization will be a fundamental part of the solutiona fundamental part of the solution
• Yet, if not carefully aligned, they may worsen Yet, if not carefully aligned, they may worsen already pervasive problems in quality of carealready pervasive problems in quality of care
Today’s Talk Will Focus on Chronic MedicationsToday’s Talk Will Focus on Chronic Medications
Recent Drug Copayment Trends Based Largely on CostRecent Drug Copayment Trends Based Largely on Cost
429
63
0
100
200
300
400
500
Primary Prevention Secondary Prevention
Different Patients Get Different BenefitsDifferent Patients Get Different Benefitsfrom Medicationsfrom Medications
NN
T t
o p
reve
nt
CV
eve
nt
Ellis JJ. J Gen Intern Med 2004;19:639-646.
Example: Number needed to treat with statins to prevent one cardiovascular event
No Difference in Statin Compliance Stratified by No Difference in Statin Compliance Stratified by Prevention CategoryPrevention Category
. Survival Curves for Persistence to Statin Therapy Stratified by Prevention Category
Ellis JJ. J Gen Intern Med 2004;19:639-646.
Secondary prevention cohort
Primary prevention cohort
Statin Discontinuation Rates Stratified Statin Discontinuation Rates Stratified by Mean Prescription Copaymentby Mean Prescription Copayment
Ellis JJ. J Gen Intern Med 2004;19:639-646.
$0 to <$10
$10 to <$20
>$20
Copay amount was the most important predictor of drug
discontinuation rate
No difference between primary and secondary
prevention groups
Does Cost-Related Medication Underuse Matter?Does Cost-Related Medication Underuse Matter?
For Employers:
• Shifting costs to employees reduces employer drug spending
• However, evidence growing that overall costs may increase
*For excellent review, see Goldman et al., JAMA 2007;298:61. Fendrick AM, et al. Am J Managed Care, 2001; Rosen AB. Med Care, 2006.
For Consumers:
• Growing evidence* shows that cost-related underuse:
– Increases adverse outcomes (chronically ill & poor most at risk)
– Increases health care costs in some cases
Getting Services to People Who Getting Services to People Who NeedNeed Them: Them: Should the Patient Decide?Should the Patient Decide?
• If increased cost sharing decreases the use of essential If increased cost sharing decreases the use of essential medications & leads to worse outcomes, is it appropriate medications & leads to worse outcomes, is it appropriate to place the burden of weighing the benefits and costs of to place the burden of weighing the benefits and costs of medical interventions on the patient?medical interventions on the patient?
• If not, the system should provide some guidance and If not, the system should provide some guidance and incentives to promote better decisionsincentives to promote better decisions
Getting Services to People Who Getting Services to People Who NeedNeed Them: Them: Value-Based Insurance DesignValue-Based Insurance Design
• Value-based insurance design has been proposed to Value-based insurance design has been proposed to realign incentives for valuerealign incentives for value
• Cost sharing is based on likelihood of benefit, not Cost sharing is based on likelihood of benefit, not (solely) the acquisition cost(solely) the acquisition cost− The greater the benefit, the lower the co-payThe greater the benefit, the lower the co-pay
• Such a system would provide financial incentives to Such a system would provide financial incentives to targetedtargeted patients most likely to benefit from patients most likely to benefit from specificspecific therapiestherapies
Fendrick AM. Am J Managed Care, 2001.Rosen AB. Med Care, 2006. Chernew M. Health Affairs, 2007.
Numerous VBID Experiments Ongoing: Numerous VBID Experiments Ongoing: But in Need of Rigorous EvaluationBut in Need of Rigorous Evaluation
• Several employer-based experiments underway with various Several employer-based experiments underway with various forms of VBID for different diseases and/or drugsforms of VBID for different diseases and/or drugs
– These efforts are largely coming out of the private sectorThese efforts are largely coming out of the private sector
• Reported ‘results’ are excellent Reported ‘results’ are excellent over a dozen companies over a dozen companies reporting a “positive reporting a “positive financialfinancial return on investment (ROI)” return on investment (ROI)”
• Few rigorous evaluations exist to support these claimsFew rigorous evaluations exist to support these claims
• Two basic approaches in useTwo basic approaches in use1.1. Target Target servicesservices that are high value (e.g., beta blockers) that are high value (e.g., beta blockers)
2.2. Target Target patientspatients with select clinical diagnoses (e.g., diabetes) with select clinical diagnoses (e.g., diabetes)
• Most employers have taken services approachMost employers have taken services approach
• Example: Marriott InternationalExample: Marriott International– Waived copays for generics and cut branded copays in half Waived copays for generics and cut branded copays in half
– Adherence increased from 2% to 4%Adherence increased from 2% to 4%
– Medication costs increased → medical claims decreased by Medication costs increased → medical claims decreased by roughly same amountroughly same amount
• Rigorous evaluation needed of the second flavor of VBIDRigorous evaluation needed of the second flavor of VBID
– Targeting specific services to specific patientsTargeting specific services to specific patients
Targeting is Critical to Attain ValueTargeting is Critical to Attain Value
Benefit Based Copay forBenefit Based Copay for
ACE-Inhibitors and Angiotensin Receptor ACE-Inhibitors and Angiotensin Receptor
Blockers for UM employees with DiabetesBlockers for UM employees with Diabetes
Proposal to the Michigan Healthy Proposal to the Michigan Healthy Community Initiative Task ForceCommunity Initiative Task Force
July 14, 2005July 14, 2005
Why Diabetes?Why Diabetes?
Sources: ADA. Economic costs of diabetes in the U.S., 2007. Diabetes Care. 2008;31:1-20. CDC. Diabetes Public Health Resource. http://www.cdc.gov/diabetes/ Accessed on Oct 7, 2008.
• Almost 24 million Americans have diabetes (90–95% Type 2)
• Diabetes and its complications are a leading source of morbidity, mortality, and costs, as well as lost productivity
• In 2007, direct medical costs of diabetes were $116 billion, & indirect costs (from reduced productivity) totaled $58 billion
• Several therapies markedly reduce the risk of complications
• Yet, these therapies are underutilized in practice
• Increasing out-of-pocket (OOP) costs an important cause
Value Based Insurance DesignValue Based Insurance Design (VBID) (VBID)Example: Predictive ModelingExample: Predictive Modeling
• Diabetes Mellitus*Diabetes Mellitus*
– Medicare first-dollar coverage (co-pays waived) of ACE Medicare first-dollar coverage (co-pays waived) of ACE inhibitors resulted in nearly one million life years gained inhibitors resulted in nearly one million life years gained and a net savings of $7.4 billion over the cohort lifetimeand a net savings of $7.4 billion over the cohort lifetime
*Rosen AB, et al. Ann Intern Med. 2005;143:89.
Proposal for a Value-Based Insurance Proposal for a Value-Based Insurance
Design for UM Employees with DiabetesDesign for UM Employees with Diabetes
Michigan Healthy Community Initiative Michigan Healthy Community Initiative Task ForceTask Force
February 15, 2006February 15, 2006
Timing is EverythingTiming is Everything
FOD Objectives and OutcomesFOD Objectives and Outcomes
• Objectives:
– To examine the impact of targeted value-based copayment reductions on the use of evidence-based medications by UM employees and dependents with diabetes
– To successfully implement VBID program in real world setting
• Primary outcomes:
– Medication uptake (or utilization)
– Medication adherence
• Secondary outcomes: Health care utilization & expenditures
FOD InterventionFOD Intervention
• Targeted copayment reductions for evidence-based therapies: Targeted copayment reductions for evidence-based therapies: − Antihypertensives (lower blood pressure)Antihypertensives (lower blood pressure)
− ACE-Inhibitors & Angiotensin Receptor Blockers (ACE/ARBs)ACE-Inhibitors & Angiotensin Receptor Blockers (ACE/ARBs)
− Statins (lower cholesterol)Statins (lower cholesterol)
− Glycemic agents (lower blood sugar)Glycemic agents (lower blood sugar)
− AntidepressantsAntidepressants
• VBID designed to maintain underlying incentive structure:VBID designed to maintain underlying incentive structure:− Tier 1 (Generics) Tier 1 (Generics) Copays waivedCopays waived
− Tier 2 (Preferred Brand) Tier 2 (Preferred Brand) Copays reduced 50%Copays reduced 50%
− Tier 3 (Non-preferred brand) Tier 3 (Non-preferred brand) Copays reduced 25%Copays reduced 25%
Original Study TimelineOriginal Study TimelineJuly 1, 2005 July 1, 2005 –– June 30, 2007 June 30, 2007
Q5 Q6 Q7 Q8 Q1 Q2 Q3 Q4
6/30/077/1/05 6/30/087/1/04 July 1, 2006FOD Intervention
Q5 Q6 Q7 Q8 Q1 Q2 Q3 Q4
**Disenrollment rates increased **Disenrollment rates increased after M-CARE sale announced.after M-CARE sale announced.
XX
Sale of M-CARE to BCN Sale of M-CARE to BCN announcedannounced
XX
BCN officially takes BCN officially takes ownership of M-CARE ownership of M-CARE
UM OpenEnrollment
Control Firms OpenEnrollment Windows
Revised Timeline Used for EvaluationRevised Timeline Used for EvaluationJuly 1, 2005 to June 30, 2007July 1, 2005 to June 30, 2007
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
6/30/077/1/05 6/30/087/1/04 July 1, 2006FOD Intervention
Q5 Q6 Q7 Q8 Q1 Q2 Q3 Q4X
POST-PERIOD7/1/06–6/30/07
PRE-PERIOD7/1/05–6/30/06
Look-back window
to ID study population
Evaluation WindowEvaluation Window
X
Study Design and PopulationStudy Design and Population
• Study Design:Study Design: Interrupted time series with concurrent control group Interrupted time series with concurrent control group
• Intervention Group Intervention Group (N = 1777)(N = 1777)
– UM employees and dependents with at least one glucose lowering drug UM employees and dependents with at least one glucose lowering drug filled in the prior yearfilled in the prior year
– Continuous enrollment in drug benefit for the period of interestContinuous enrollment in drug benefit for the period of interest
• Control Group Control Group (N = 3273)(N = 3273)
– Employees & dependents of other (non-UM) employers, enrolled in M-Employees & dependents of other (non-UM) employers, enrolled in M-CARE, and meeting same inclusion criteria as intervention groupCARE, and meeting same inclusion criteria as intervention group
• Sample Identification:Sample Identification: SeparateSeparate for PRE and POST periods for PRE and POST periods
– Example:Example: Intervention group sample in PRE period (7/05 Intervention group sample in PRE period (7/05––6/06) 6/06) includes:includes:
» UM actives with glycemic agent filled in 7/04 – 6/05 (year before PRE period)UM actives with glycemic agent filled in 7/04 – 6/05 (year before PRE period)
» Continuously enrolled from 7/05 to 6/06 (entire year of PRE period)Continuously enrolled from 7/05 to 6/06 (entire year of PRE period)
Analytic ApproachAnalytic Approach
• Difference-in-Difference Regression Model– Means of predicted values for intervention and control groups
» Uptake: measured once in PRE year & once in POST year» Adherence: at quarterly intervals before and after program
– Bootstrapped SEs for differences & difference-in-differences
• Generalized Estimating Equations (GEEs)– Accounts for correlation of multiple measures in same person
• Control Variables:– Baseline age, gender, employee/dependent, comorbidity score,
neighborhood median household income, # medications
Co-Pay Reductions
Begin
Pre-Period Post-Period
MedicationAdherence
Control GroupCo-Pay Reduction Group (FOD)
Feb 2002
Difference-in-Difference FrameworkDifference-in-Difference Framework
EFFECT =
Difference in Difference
(D-in-D)
Diff.
Diff.
50%50%
100%100%
Definitions – Primary OutcomesDefinitions – Primary Outcomes
• Utilization:Utilization: At least one pharmacy fill of the medication At least one pharmacy fill of the medication at any time during the one year periodat any time during the one year period
– Pre – year: 7/1/05 to 6/30/06Pre – year: 7/1/05 to 6/30/06
– Post – year: 7/1/06 to 6/30/07Post – year: 7/1/06 to 6/30/07
• Adherence:Adherence: Use prescription and days supplied data to Use prescription and days supplied data to assess days with available medications per quarter assess days with available medications per quarter (Medical Possession Ratio, MPR)(Medical Possession Ratio, MPR)
– Adjust for partial eligibility over the quarterAdjust for partial eligibility over the quarter
– Adjust for inpatient admissionAdjust for inpatient admission
– Adjust for medication switchingAdjust for medication switching
Standard Adherence ApproachStandard Adherence Approach
This group is ignoredregardless of any
indications for treatment
Standard approach requires at least one pharmacy claim to
calculate adherence.
Focus on Diabetes: Baseline CharacteristicsFocus on Diabetes: Baseline Characteristics
Evaluation POST GroupEvaluation POST Group
InterventionIntervention ControlControl
Sample SizeSample Size 17771777 32733273
Female GenderFemale Gender 57.6%57.6% 54.0%**54.0%**
Mean AgeMean Age 46.246.2 46.846.8
EmployeeEmployee 63.0%63.0% 64.2%**64.2%**
ChildChild 4.7%4.7% 4.6%4.6%
SpouseSpouse 30.8%30.8% 30.8%30.8%
OtherOther 1.4%1.4% 0.4%0.4%
Income*Income* $55,447$55,447 $55,608$55,608
Charlson ScoreCharlson Score 1.431.43 1.461.46
*Median household income by zip code **Significant at p<0.05
FOD Intervention FOD Intervention Significantly Increased UptakeSignificantly Increased Uptakeof Medications in All Drug Classesof Medications in All Drug Classes
Baseline Baseline Uptake Uptake (FOD)(FOD)
Absolute Absolute IncreaseIncrease
% reduction % reduction in non-usersin non-users
MetforminMetformin 65.4%65.4% 3.2%3.2% 9.1%9.1%
ACE/ARBACE/ARB 55.0%55.0% 4.7%4.7% 10.4%10.4%
StatinsStatins 55.9%55.9% 5.2%5.2% 11.8%11.8%
SSRIsSSRIs 22.0%22.0% 1.8%1.8% N.A.N.A.
*All significant (p<0.001)
RELATIVE UPTAKE INCREASED BY 5% TO 9%RELATIVE UPTAKE INCREASED BY 5% TO 9%
0
2
4
6
8
10
Met
form
in
ACE/ARB
Statin
s
SSRIs
Incr
ease
in
Up
take
(%
)
Baseline Baseline MPR (%)MPR (%)
Absolute Absolute Increase in Increase in
MPR (%)MPR (%)
% Reduction % Reduction in non-in non-
adherenceadherence
Metformin*Metformin* 71.3%71.3% 2.5%2.5% 8.6%8.6%
ACE/ARBACE/ARB◊◊ 82.3%82.3% 7.2%7.2% 40.6%40.6%
StatinsStatins†† 78.3%78.3% 4.1%4.1% 18.6%18.6%
SSRIs*SSRIs* 69.0%69.0% 5.1%5.1% 16.5%16.5%
*NS, ◊ p<0.001, † p=0.067
ADHERENCE TO ACE/ARBs & STATINs INCREASED SUBSTANTIALLYADHERENCE TO ACE/ARBs & STATINs INCREASED SUBSTANTIALLY
0
2
4
6
8
10
Met
form
in
ACE/ARB
Statin
s
SSRIs
Incr
ease
in
Ad
her
ence
(%
)
FOD Intervention FOD Intervention Increased Adherence to the Highest Increased Adherence to the Highest Value MedicationsValue Medications (ACE/ARBS & Statins) (ACE/ARBS & Statins)
Secondary Outcomes: CostsSecondary Outcomes: Costs
• ExpendituresExpenditures
− Pharmacy, non-pharmacy, totalPharmacy, non-pharmacy, total
− Expenditure analyses complicated by co-interventionsExpenditure analyses complicated by co-interventions
− I.e. other policy changes occurring during the study time I.e. other policy changes occurring during the study time frame which impact UM expenditures but not controls’frame which impact UM expenditures but not controls’
UM PBM Renegotiated(Pharm Costs )
1/1/061/1/06
Unanticipated ‘Co-Interventions’ Made Evaluation of Actual Unanticipated ‘Co-Interventions’ Made Evaluation of Actual Costs DifficultCosts Difficult
Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4
6/30/077/1/05 July 1, 2006FOD Intervention
BCN Pricing Went Into Effect(Non-pharm Costs )
1/1/071/1/07
*Intervention group OOP costs unaffected; evaluation ∴ applied industry standardized unit prices to changes in utilization due to FOD intervention
Q5 Q6 Q7 Q8Q5 Q6 Q7 Q8
OOP = Out-of-pocket
Focus On DiabetesFocus On DiabetesFinancial Effects Financial Effects Very Very
PreliminaryPreliminary
$0
$200
$400
$600
$800
Intervention Control Intervention Control
Mea
n Q
uar
terl
y E
xp
end
itu
res
($
per
mem
ber
pe
r q
ua
rter
)
pre post pre post pre post pre post
Pharmacy Spending Non-Pharmacy Spending
$63$35
–$112 –$95
$28–$18
Pharmacy was a little more costly
-Diff-of-Diff +$28 Non-Pharmacy was a
little less costly -Diff-of-Diff –$18
Overall was a little more costly
-Diff-of-Diff +$10
Preliminary Story:
*Note: Cost estimates are per member per quarter
Focus on Diabetes: ConclusionsFocus on Diabetes: Conclusions
• Targeted co-pay reductions increased uptake of medications Targeted co-pay reductions increased uptake of medications
• Among those on the medications, non-adherence rates Among those on the medications, non-adherence rates declined substantially for ACE/ARBs and statinsdeclined substantially for ACE/ARBs and statins
• VBID-type interventions is a useful adjunct to efforts aimed VBID-type interventions is a useful adjunct to efforts aimed at increasing patient initiation of and adherence to high at increasing patient initiation of and adherence to high value medicationsvalue medications
• Impact on cost remains to be seenImpact on cost remains to be seen
LimitationsLimitations
• Ideal rate of use is not knownIdeal rate of use is not known– Most diabetics should be on statin and ACE/ARBMost diabetics should be on statin and ACE/ARB
• Using ‘supply of medications filled’ as a proxy for Using ‘supply of medications filled’ as a proxy for adherence may overstate actual adherence adherence may overstate actual adherence
• Comorbidity measured using claims data may be Comorbidity measured using claims data may be underestimatedunderestimated
• ROI not knownROI not known
A Comment on ROI and Cost-EffectivenessA Comment on ROI and Cost-Effectiveness
Cost-saving:Cost-saving: intervention is effective and costs less in intervention is effective and costs less in the long run than the cost of not interveningthe long run than the cost of not intervening
Cost-effective:Cost-effective: intervention provides a health benefit at intervention provides a health benefit at an acceptable costan acceptable cost
High-value:High-value: intervention prevents a significant amount intervention prevents a significant amount of illness and death of illness and death andand is cost-effective is cost-effective
Most clinical preventive services are cost-effective;Most clinical preventive services are cost-effective;
Very few are cost savingVery few are cost saving
Value Based Insurance Design Value Based Insurance Design Maximizing Return On Investment Maximizing Return On Investment
Incremental costs of increased use of high value services Incremental costs of increased use of high value services can be subsidized by: can be subsidized by:
1.1. Medical cost offsetsMedical cost offsets− Amount saved by preventing adverse events will be Amount saved by preventing adverse events will be
directly related to level of clinical targeting directly related to level of clinical targeting
2.2. Higher cost sharing for services of lower valueHigher cost sharing for services of lower value
3.3. Enhanced productivityEnhanced productivity
4.4. Reduced disability costsReduced disability costs
What Was the University’s Response?What Was the University’s Response?
Reporting Results at UMReporting Results at UM
UM the university?UM the university?
OrOr
UM the employer?UM the employer?
Reporting Results at UM: Take 2Reporting Results at UM: Take 2
UM as a National Leader of VBID adoptionUM as a National Leader of VBID adoption
• In response to UM program, other employers have In response to UM program, other employers have adopted programs almost identical to FODadopted programs almost identical to FOD
– Health Alliance Medical Plan of IllinoisHealth Alliance Medical Plan of Illinois
– Disney CorporationDisney Corporation – – Abbott LaboratoriesAbbott Laboratories
– QuadgraphicsQuadgraphics – – Diabetes AmericaDiabetes America
““Setting an example is not the main means of Setting an example is not the main means of leading others. It is the only means.”leading others. It is the only means.”
– – Albert EinsteinAlbert Einstein
VBID PractitionersVBID Practitioners . . . . . . VBID PractitionersVBID Practitioners . . . . . .
4646
How Did Employees Respond?How Did Employees Respond?
"As a member of the U-M community for nearly 20 years and "As a member of the U-M community for nearly 20 years and the mother of a daughter who has suffered from Type 1 the mother of a daughter who has suffered from Type 1 Diabetes for 15 years, I celebrate this initiative! Thank you!“Diabetes for 15 years, I celebrate this initiative! Thank you!“
““I was recently diagnosed with Type II diabetes by my primary I was recently diagnosed with Type II diabetes by my primary care physician. Since I already have 4 meds that I fill each care physician. Since I already have 4 meds that I fill each month at $20.00 co-pay per month, I couldn't take on two more month at $20.00 co-pay per month, I couldn't take on two more prescriptions. She called them into my pharmacy and I never prescriptions. She called them into my pharmacy and I never had them filled. I cannot afford them. I felt it more important had them filled. I cannot afford them. I felt it more important to take the Blood Pressure meds.”to take the Blood Pressure meds.”
Which Elements of the Intervention Are Most Important?Which Elements of the Intervention Are Most Important? Number Needed to Treat (NNT) to Prevent One Macrovascular (CVD) EventNumber Needed to Treat (NNT) to Prevent One Macrovascular (CVD) Event
*Tight glucose control *Tight glucose control doesdoes have important have important micromicrovascular benefits (but macrovascular protection higher priority)vascular benefits (but macrovascular protection higher priority)
4040
3535
1616
1414
1212
99
AspirinAspirin
StatinStatin22ryry Prevention Prevention
ACE/ARBsACE/ARBs
StatinStatin11ryry Prevention Prevention
MetforminMetforminIn ObeseIn Obese
Other BP MedsOther BP Meds
Glycemic AgentsGlycemic Agents**
Blood pressure medications with extra CVD & renal benefits
Only glycemic agent with macrovascular benefitsOnly glycemic agent with macrovascular benefits
No evidence of No evidence of macromacrovascular benefits (unless A1c ~10)vascular benefits (unless A1c ~10)
For reference onlyFor reference only
Annual Cost to Continue VBID for Actives, Annual Cost to Continue VBID for Actives, by Number Needed to Treat (NNT) to Prevent One CVD Eventby Number Needed to Treat (NNT) to Prevent One CVD Event
NNTNNT Drug CostsDrug Costs Cumulative Cumulative Costs*Costs*
ACE (HOPE)ACE (HOPE) 99 84-118k84-118k ——
Tight BP ControlTight BP Control 10-1410-14 96-121k96-121k 180-239180-239
Statins (1Statins (1ryry ⇒ ⇒ 22ryry prevention) prevention) 14 14 ⇒⇒ 35 35 73-11973-119 253-358253-358
Other Lipid Lowering AgentsOther Lipid Lowering Agents —— 18-3818-38 271-396271-396
Metformin in ObeseMetformin in Obese 14-1614-16 87-11087-110 358-506358-506
Other Glycemic AgentsOther Glycemic Agents NSNS 68-15568-155 427-661427-661
AntidepressantsAntidepressants —— 56-9656-96 483-757483-757
*If a budget threshold is reached, covering all drugs above that line will maximize health benefits relative to costs*If a budget threshold is reached, covering all drugs above that line will maximize health benefits relative to costs
Preliminary Assessment of Preliminary Assessment of Secondary Outcomes of InterestSecondary Outcomes of Interest
The Adverse Impact of Cost SharingIs More Pronounces in Vulnerable Groups
Chernew, Rosen, Fendrick. JGIM. 2008
Could VBID Be a Tool to Reduce Disparities?Could VBID Be a Tool to Reduce Disparities?
Income DataIncome Data
• Patient household income derived from zip-Patient household income derived from zip-code matched census datacode matched census data
• Split into two groups: above and below Split into two groups: above and below median household incomemedian household income
• Comparison by income of:Comparison by income of:– Mean number of medicationsMean number of medications
– Medication uptakeMedication uptake
SES Effect on Mean Number Medications
-0.16
-0.12
-0.08
-0.04
0.00
0.04
All Glucose Lowering BP LoweringCh
an
ge
in M
ea
n #
Me
ds
by
Inc
om
e S
tatu
s Intervention Controls
Impact of FOD Intervention by Income StatusImpact of FOD Intervention by Income Status
Metformin ACE-ARB Statin SSRI
Ch
ang
e in
Up
take
Du
e to
FO
D (∆
–∆)
Income below mean (Q1-Q2) Income above mean (Q3-Q4)
∆–∆–∆∆–∆–∆∆–∆–∆∆–∆–∆
∆–∆–∆∆–∆–∆
0%
1%
2%
3%
4%
5%
6%
ConclusionsConclusions
• Among those with incomes below median, a VBID Among those with incomes below median, a VBID intervention, significantly increased:intervention, significantly increased:– Mean number of medicationsMean number of medications
– Uptake of three of the four medication classesUptake of three of the four medication classes
• Among those with incomes above median, the VBID Among those with incomes above median, the VBID intervention did not have a significant impactintervention did not have a significant impact
• Big Caveat:Big Caveat:– Sample size is small Sample size is small
– Analyses are prelimaryAnalyses are prelimary
Conclusions To DateConclusions To Date
• Targeted co-pay reductions increased uptake of medications Targeted co-pay reductions increased uptake of medications
• Among those on the medications, non-adherence rates Among those on the medications, non-adherence rates declined substantially for ACE/ARBs and statinsdeclined substantially for ACE/ARBs and statins
• VBID-type interventions is a useful adjunct to efforts aimed at VBID-type interventions is a useful adjunct to efforts aimed at increasing patient initiation of and adherence to high value increasing patient initiation of and adherence to high value medications medications and possibly an avenue for addressing and possibly an avenue for addressing disparities?disparities?
Future DirectionsFuture Directions
• Evaluate impact on intermediate outcomeEvaluate impact on intermediate outcome
• Assess for differential impact in other vulnerable Assess for differential impact in other vulnerable populationspopulations
• Evaluate productivity outcomesEvaluate productivity outcomes– Work-related disability, absenteeism, presenteeismWork-related disability, absenteeism, presenteeism
• Continue efforts to educate employers that positive ROI is Continue efforts to educate employers that positive ROI is unrealistic expectationunrealistic expectation
– When that fails, revisit importance of productivity measurementWhen that fails, revisit importance of productivity measurement
• Initiating a smoke-free work place intervention at UM Initiating a smoke-free work place intervention at UM – Looking for control universityLooking for control university
The Power of Financial IncentivesThe Power of Financial Incentives
Extra SlidesExtra Slidesmean number of medicationmean number of medication
Intermediate OutcomesIntermediate Outcomes
• Have incomplete lab data on cohortHave incomplete lab data on cohort
• Analyses not prespecifiedAnalyses not prespecified
A1c LDL
FOD Diff -0.30 -5.68
Control Diff -0.06 -2.17
FOD-Control Diff -0.23 -3.51
FOD Study PopulationFOD Study Population
M-CARE*(~200,000)
U of M*(~70,000)
UM FOD(2,507)
ab
Controls(8,637)
c
*Estimates from 2006, UM includes actives and dependents only
Diabetics
Analyses restricted to M-CARE if used: -Medical claims -Lab data -Survey data
Extra Slides FollowExtra Slides Follow
Value-Based Insurance Design (VBID) in Value-Based Insurance Design (VBID) in the Medicare Prescription Drug Benefit:the Medicare Prescription Drug Benefit:
An Analysis of Policy OptionsAn Analysis of Policy Options
Policy Options for Implementing Policy Options for Implementing VBID in Part DVBID in Part D
Option 1:Option 1: Reduce cost sharing for specific drugs or drug classes Reduce cost sharing for specific drugs or drug classes
Option 2:Option 2: Exempt specific drugs or drug classes from 100% cost Exempt specific drugs or drug classes from 100% cost sharing in the coverage gapsharing in the coverage gap
Option 3:Option 3: Reduce cost sharing for enrollees with chronic conditions Reduce cost sharing for enrollees with chronic conditions
Option 4:Option 4: Reduce cost sharing for enrollees participating in Reduce cost sharing for enrollees participating in medication therapy management programs (MTMPs)medication therapy management programs (MTMPs)
Option 5:Option 5: Reduce cost sharing for chronic condition special needs Reduce cost sharing for chronic condition special needs plans (CC-SNPs)plans (CC-SNPs)
Political Support
Ability to Implement Policy
CMS Authority to Change Policy
Feasibility
Size of Medicare Population Affected
Potential to Improve Medicare
Option 5
Policy Options
Option 1 Option 2 Option 3 Option 4
Political Support
Ability to Implement Policy
CMS Authority to Change Policy
Feasibility
Size of Medicare Population Affected
Potential to Improve Medicare
Option 5
Policy Options
Option 1 Option 2 Option 3 Option 4
Greatest Potential / Most FeasibleModerate Potential / FeasibilityLeast Potential / Feasible
Greatest Potential / Most FeasibleModerate Potential / FeasibilityLeast Potential / Feasible
We Evaluated Each Option’s Impact And FeasibilityWe Evaluated Each Option’s Impact And Feasibility According To Four CriteriaAccording To Four Criteria
Greatest Potential / Most FeasibleModerate Potential / FeasibilityLeast Potential / Feasible
Size of Medicare Size of Medicare Population Population
AffectedAffectedPolicy Change Policy Change
RequiredRequiredOperational Operational
Change RequiredChange Required Political SupportPolitical Support
Option 1: Reduce Cost Sharing for Specific Option 1: Reduce Cost Sharing for Specific Drugs or Drug Classes Drugs or Drug Classes
Potential to reach a large number of Part D beneficiaries Can be implemented in the current policy environment Plans can create new formulary tier for targeted drugs Incentives needed to encourage plans to take advantage of the option
Low or no cost sharing for high-value drugs would encourage adherence among all enrollees who may benefit from a drug in these classes, regardless of their chronic condition diagnosis
Most Promising
Greatest Potential / Most FeasibleModerate Potential / FeasibilityLeast Potential / Feasible
Size of Medicare Size of Medicare Population Population
AffectedAffectedPolicy Change Policy Change
RequiredRequiredOperational Operational
Change RequiredChange Required Political SupportPolitical Support
Option 2: Exempt Specific Drugs or Drug Classes from Option 2: Exempt Specific Drugs or Drug Classes from 100% Cost Sharing in the Coverage Gap 100% Cost Sharing in the Coverage Gap
Affects fewer beneficiaries, but targets patients with high drug spending
Can be implemented in the current policy environment Incentives needed to encourage plans to add gap coverage for
targeted drugs or drug classes
Because adherence may decline as enrollees are exposed to high cost sharing, this option would offer protection when costs are generally the greatest—during the coverage gap
Promising, But Smaller Impact
Greatest Potential / Most FeasibleModerate Potential / FeasibilityLeast Potential / Feasible
Size of Medicare Size of Medicare Population Population
AffectedAffectedPolicy Change Policy Change
RequiredRequiredOperational Operational
Change RequiredChange Required Political SupportPolitical Support
Option 3: Reduce Cost Sharing for Enrollees Option 3: Reduce Cost Sharing for Enrollees with Chronic Conditions with Chronic Conditions
Potential to reach a large number of Part D beneficiariesMay require exemption from non-discrimination clause and uniform
benefit requirementRequires process to identify enrollees with specific chronic condition
diagnoses and to select drugs eligible for reduced cost sharing
Targeting enrollees with a specific chronic condition for lower cost sharing—for all drugs or just those that treat the particular condition—would lessen the out-of-pocket burden associated with the chronic condition
Effective Targeting, But Legislative Barriers
Size of Medicare Size of Medicare Population Population
AffectedAffectedPolicy Change Policy Change
RequiredRequiredOperational Operational
Change RequiredChange Required Political SupportPolitical Support
Option 4: Reduce Cost Sharing for Enrollees Option 4: Reduce Cost Sharing for Enrollees Participating in MTMPs Participating in MTMPs
Targets small percentage of Medicare populationPositively reinforces MTMP efforts to improve beneficiaries’
medication adherenceMay require exemption from non-discrimination clause and uniform
benefit requirement Plans may wish to monitor MTMP participation to identify beneficiaries
who qualify for low cost sharing
Enrollees participating in Part D’s MTMP would benefit from reduced cost sharing for specific drugs, in addition to other patient outreach and counseling on medication use
Greatest Potential / Most FeasibleModerate Potential / FeasibilityLeast Potential / Feasible
MTMP: Medication Therapy Management Program
Potential to Improve Adherence, But Legislative Barriers
Greatest Potential / Most FeasibleModerate Potential / FeasibilityLeast Potential / Feasible
Size of Medicare Size of Medicare Population Population
AffectedAffectedPolicy Change Policy Change
RequiredRequiredOperational Operational
Change RequiredChange Required Political SupportPolitical Support
Option 5: Reduce Cost Sharing for CC-SNP Option 5: Reduce Cost Sharing for CC-SNP Enrollees Based on the Plan’s Target Condition Enrollees Based on the Plan’s Target Condition
Affects fewest beneficiaries Can be implemented in the current policy environment No operational changes required May be an ideal first step in implementing VBID in the Medicare Part
D program
SNPs designed for a specific chronic condition could reduce cost sharing for drugs treating the target condition as part of an overall model of care aimed at better disease management
Path of Least Resistance
While VBID Can Be Implemented in Part D, While VBID Can Be Implemented in Part D, Policymakers Should Consider How to Policymakers Should Consider How to
Encourage Plan AdoptionEncourage Plan Adoption
• Several options are now available to Part D plansSeveral options are now available to Part D plans– No legislative or regulatory changes needed for Options 1, 2, or 5No legislative or regulatory changes needed for Options 1, 2, or 5
– Plans may requirePlans may require incentives to adopt VBID incentives to adopt VBID
• Additional analysis is needed to further explore Additional analysis is needed to further explore VBID in Medicare VBID in Medicare – Identify incentives that would be most attractive to Part D plansIdentify incentives that would be most attractive to Part D plans
– Define high-value drugs or chronic conditions Define high-value drugs or chronic conditions
– Project costs or savings from VBID implementationProject costs or savings from VBID implementation
– Examine VBID opportunities for other Medicare services (Parts A&B)Examine VBID opportunities for other Medicare services (Parts A&B)
35%
58%
19%
27%
0%
25%
50%
75%
100%
2006 2009
5 tier+
4 tier
N = 1,429
Could VBID Take Off As Other Part D Benefit Could VBID Take Off As Other Part D Benefit Designs Have?Designs Have?
Source: Avalere Health analysis using DataFrame®, a proprietary database of Medicare Part D plan features. 2009 data from November 2008. 2006 data from July 2006.*N = Total number of PDPs offered each year.
N = 1,648
Percent of Medicare Prescription Drug Plans (PDPs) with Four or More Tiers
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