(Cross-posted from Pelto’s Point at the New Haven Advocate)
Will Value Based Health Care save American health care and the Connecticut budget?
Is what is being proposed really Value Based Health Care?
Is it a bit ironic that Anthem Blue Cross, the state’s primary health plan carrier, happens to be rolling out what it claims to be a Value Based Health Care Plan in the Northeast at the very same time?
When the news about the Malloy/SEBAC agreement started to trickle out, many people saw the proposed new “Value Based Health Care” as little more than a form of managed care on “steroids.”
But advocates for the coming changes say that, in fact, this new system is really one based on paying for performance (where the medical community is paid for keeping people healthy rather than the present fee-for-service system that pays doctors and hospitals for simply providing services, regardless of the actual outcome).
The new system is projected to be so much better that the Malloy administration and the State Employee Unions believe that, over the next two years, the state will be able to reduce its state employee health care spending by a quarter of a billion dollars.
Considering that the state will save about $140 million a year from the across-the-board wage freeze, the shift to Value Based Health Care will be the 2nd biggest element in the Malloy/State Employee Concession Package.
The proposed SEBAC agreement describes “Value Based Health Care” as a new system, in which employees will sign “a commitment form each year promising to get scheduled yearly physicals, age-appropriate diagnostics (such as a colonoscopy), and two free dental cleanings per year. In addition, employees with one or more of the 5 listed diseases (Diabetes, COPD or ASTHMA, Hypertension, Hyperlipidemia (high cholesterol), and Heart Failure) which respond particularly well to disease management programs and which are a large part of total healthcare costs––must enroll and comply with the disease management programs.”
As a result of the free office visits and reduced pharmacy co-pays for any of the listed diseases, plus the other elements of the disease management program, healthcare costs for everyone will go down.
The stick to the carrot is that “Employees who after proper notice refuse to sign the commitment or fail to get their physicals (or if they have a listed
disease, refuse to participate in disease management), will have a premium increase of $100 per month, and a deductible of $350 per person per year.”
Finally, “current retirees will also have the option to participate in value based health care, while new retirees will continue to have a choice of free (the POE Plan) or nominally charged (the POS Plan) health care for life, but will be required to participate in value-based health care or pay the $100 per month extra premium.”
So, if the SEBAC Agreement is approved and adopted, state employees and anyone retiring after 9/1/2011 will be required to participate in the new “value based health care system” or pay an additional $1,200 a year and have an additional $350 deductible per person, per year, on top of their existing deductibles and co-pays.
Google “Pay for Performance” or “Value based health care” for some additional background on these issues, but apparently plans based on this type of reform were initially developed in California in early 2000s, and England adopted a more robust system using value based healthcare in 2004.
One of the questions that immediately surfaces is whether the Malloy/SEBAC agreement is a true change to a “value based health care system” or merely an expanded employee wellness program. Employee wellness programs can be important for employees but do not fundamentally change the way in which health care is funded. Reading through the available literature on this topic, it appears that a true, value based health care system
(one in which doctors are paid for outcomes rather than services) might save money in the long run; but, according to experts, the “return on investment doesn’t start to really pay off for “several years.”
Another issue is question whether the large health insurance companies are really ready to oversee such an approach. They are only now gearing up to handle these new approaches to health care.
According to a report in the Crain’s Detroit Business journal last year, Anthem is offering a Value Based Health product in Colorado that “that guarantees up to a 3% reduction in subsequent-year premiums if plan members participate in screenings and health promotion programs that
lead to improvements in their health status.”
Crain’s also reports that an Anthem official, Greg Hughes, the company’s commercial product development director, said that the company was awaiting approval for a new “VBID product” that it planned to introduce in the U.S. Northeast.
To back up their claim that savings will be forthcoming, the Anthem official said, “the findings in the [research and medical journal] literature are very compelling. We’ve also had some pilot groups with outstanding results from both a clinical and financial perspective, generally in the [administrative services-only] space,” Mr. Hughes said also, “but if it works in the ASO population, it’s a natural fit to start doing it in the fully insured market.”
Interestingly, the description of the new Anthem plan is very similar to the language being used in the Malloy/SEBAC Agreement. The Business Journal, quoting Anthem, said, “the product will attempt to remove the cost barrier to medication compliance by reducing copayments for high-value drugs and medical services while encouraging plan members to participate in the insurer’s condition management education programs…Initially, it will target five conditions: asthma, diabetes, coronary artery disease, chronic obstructive pulmonary disease and congestive heart failure.”
But unlike the win/win situation being projected in Connecticut (no increase in premiums and savings of a quarter of a billion dollars in two years” the report goes on to say that, “because of the additional cost of lowering or waiving copayments for prescription drugs and some services, the Anthem official explained, “The pricing is still being worked out…The promise of a value-based insurance design is to make an investment in your employees. When you do that, you are really looking at increasing the plan’s cost.”
In true health care industry fashion, another Anthem official said that it wasn’t so much about reducing premiums as about increasing employee
productivity. “One thing fully insured clients will benefit from is the effect on overall productivity…when their employees are compliant and educated, they’ll see decreased absenteeism, disability costs and increased productivity.”
Good news about the increased productivity, since the Malloy/SEBAC plan also relies on more than 1,000 employees leaving state service and not being replaced next year.
Here is the link to the Crain’s story for those interested in reading more: http://www.crainsdetroit.com/article/20100315/HEALTH/100319908/fully-insured-market-has-yet-to-embrace-value-based-design#