Here’s a health care reform idea that proponents say will bring Republicans and Democrats together: Make people pay more for high-priced medical interventions that may not be necessary or simply don’t deliver results.
Though it seems like an idea that can be easily attacked as just another scheme to ration care, the reform called value-based insurance design couples the Republican principles of market-based incentives and consumer choice with the Democratic reformers’ goal of eliminating costly and unnecessary care.
They’re giving it a shot in Oregon, a blue state where public employees and teachers next year will pay an extra $500 out of pocket when they get back surgery, an endoscopy, or an artificial knee, hip or shoulder. The state benefits board also slapped large co-pays on sleep studies and MRI and CT scan images in certain situations that were deemed “low-value.” The idea is to dissuade people who don’t really need the procedures from purchasing them.
The program follows on the heels of an earlier decision that went in the other direction. The state eliminated all co-pays and deductibles for services that were deemed high-value like glucose monitoring for diabetics and drugs to control high blood pressure.
This carrot-first, stick-later approach may account for what administrators claim is popular support for the new fees among the state’s 283,000 public employees, educators and their dependents. “We were surprised about how well it was received,” said Joan Kapowich, administrator of Oregon’s public employees benefit board and an author of a study describing the program in the current issue of Health Affairs.
They held dozens of meetings to inform beneficiaries about the reasoning behind the new plan, which goes into effect next year. Only about 4 percent of beneficiaries, mostly in the 55-to-65 age group, were directly affected by the higher co-pays. They also instituted a targeted program of patient education, where people whose physicians recommend any of the high co-pay procedures receive pamphlets and counseling about the risks and benefits, and learn about alternatives.
“People got it,” Kapowich said. “People said if you hit us with this high fee, it’s going to make us think if we should really do this. Even people who had the back surgery were nodding that it makes sense.”
Value-based insurance design (VBID) received some media attention in the mid-2000s when Pitney Bowes eliminated co-pays for drugs to treat asthma and diabetes, saving the company an estimated $1 million in the first year through lower hospital costs. According to the Center for Value-based Insurance Design at the University of Michigan, about 300 self-insured large firms and nonprofits (like the university) have incorporated at least some elements of VBID into their plans, as have insurers across the country.
The Democrats in Congress who passed the Affordable Care Act included the carrot side of VBID when they voted to eliminate all co-pays on preventive services rated highly by the U.S. Preventive Services Task Force (USPSTF). The law also allowed private insurers to introduce VBID plans, and issued new regulations in September implementing the law.
The USPSTF is the government-appointed group that got in hot water during the reform debate when it concluded mammograms provided minimal benefits for most women under 50. The ruling triggered a massive backlash against the USPSTF recommendation, claiming it was the first step toward rationing.
The group canceled this week’s regularly scheduled meeting, which was going to take up prostate cancer screening. At least one member publicly claimed its proximity to the election led to the cancellation. Kenneth Lin, an associate editor of the American Family Physician Journal and a government employee, resigned from the task force on Monday, claiming on his blog that “politics trumped science this time.”
VBID supporters do not think this past is prologue for the concept’s future. “The way they handled the breast cancer situation suggests there is no political backing for value-based insurance design,” said A. Mark Fendrick, the physician director of the University of Michigan Center. “But both Republicans and Democrats see as a positive (the section of the reform law that) mandates that those preventive services with the highest level of evidence have cost-sharing eliminated.”
But as the mammogram controversy revealed, that support can evaporate when insurers do not eliminate co-pays on preventive services not deemed cost-effective, or slap higher fees on high-cost, low-value procedures. Powerful interest groups like physicians, hospitals, and drug and device companies undoubtedly will lobby Capitol Hill to repeal any effort by Medicare or other government programs to put such plans in place.
But architects of the program insist their efforts to educate legislators are paying off. “We have as many if not more Republicans than we do Democrats supporting us,” said Fendrick. “It’s the idea of fiscal responsibility.”
However, a recent poll casts doubt on VBID’s acceptability to the broader public. It takes scientific evidence to determine which procedures and technologies are considered low-value. The Obama administration earmarked $500 million a year in addition to the $1 billion in the stimulus plan to conduct such research.
A YouGov/Polimetrix poll released last month showed broad support for comparative effectiveness research, but only if it was used to provide information to patients and physicians, or to create warning labels on unsafe products. When asked if the research could be used to charge patients higher fees on treatments shown to be ineffective, even if the patient’s own doctor recommended it, over 60 percent opposed that use while less than 20 percent supported it.