Value-based insurance designs not only lower the out-of-pocket costs of essential visits and services but have been shown to improve health outcomes and enhance equity. (Image: Shutterstock)
Health care spending continues to rise, and with about half of the U.S. population covered by employer-sponsored insurance, employers continue to foot the majority of the bill. While insurers have spent the better half of the past two decades reforming the ways in which we pay for care, the transformation of the health care delivery system continues to depend on employers leveraging benefit design to encourage high-value care.
Employers, left with little control over payment, have opted to focus their efforts on mitigating spending by developing narrow and tiered networks, and by customizing deductibles, copays, and co-insurance rates. These have nevertheless resulted in passing costs onto employees without making marked differences in outcomes.
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In the past decade alone, deductibles in employer-sponsored insurance have increased by more than 100% to an average of $1,644 for single coverage, while the percentage of beneficiaries covered by large employer plans with annual deductibles exceeding $1,000 increased from 17% to 54%.
There are alternatives. Designing more clinically nuanced, value-based insurance designs is becoming an increasingly vital tool for improving employee health and protecting employers' bottom lines. As the movement for value-based care continues to accelerate, designing benefit plans that enable choice, while incentivizing the use of high-value providers by employees is the only way to create sustainability in a reformed health care system.
Leaving the old health plan behind
To combat the rise in spending, employers are increasingly rethinking their health plan benefits to focus on the holy grail of health care: value. These new benefit plans focus on high-performance providers who are fully accountable for outcomes, enabling better care at lower costs.
Value-based insurance designs not only lower the out-of-pocket costs of essential visits and services but have been shown to improve health outcomes and enhance equity. More than just steerage through narrow or tiered networks, these designs appreciate the fact that the clinical benefit of specific services differ depending on who receives them and where they are provided. Moreover, aligning financial beneficiary incentives with ongoing payment models that reward provider behavior to enhance quality is a necessary step toward improving patient-centered outcomes and increasing the efficiency of medical spending.
A recently published whitepaper demonstrates how employers can align benefit design with alternative payment models. Here are three ways employers can better design plan benefits to exercise more control over spending and create more value:
- Negotiate value guarantees with carriers. Strategic engagement with carriers is key to implementing and optimizing value-based benefit design. Carriers can be tasked with quantifying potentially low-value services and held contractually accountable for performance guarantees. These guarantees should hold carriers accountable for decreasing low-value care while increasing high-value care. With benchmarks in place, employers have the ability to demand refunds from carriers when low-value utilization targets are not met.
- Advocate for value-based rate adjustments. Employers may have limited control over payment models, but they still have the power to select carriers that offer robust APMs, as well as the ability to encourage carriers to expand and iterate models that work. While there is no doubt that the shift to value-based care is accelerating, the traditional fee-for-service system will continue to be the dominant form of payment for the majority of services for the foreseeable future. However, employers still have the ability to create value within that system by pressuring carriers to negotiate contracts that give rate increases to high-value, underutilized services while decreasing rates for low-value, overutilized services.
- Lower cost-sharing by incentivizing high-value clinical services. Employers can keep cost-sharing low by using value-based insurance designs that waive deductibles and lower co-pays for high-value services. While the increased use of essential care is unlikely to generate significant short-term savings, it can mitigate unintended consequences of other changes to cost-sharing designed to reduce spending.
As more employers align value-based insurance design with quality-driven payment reform, they will begin realizing improvements to the health of their employees and beneficiaries while simultaneously enhancing the efficiency of their medical spending.
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