September 01, 2009 | By George Miller
(Part of HI-WIRE’s weekly series of original reporting: Focus on Value-Based Benefit Design.)
It was unanimous: June’s National Institute for Health Care Management (NIHCM) Foundation Health Care Research award winner was the paper, “Impact of Decreasing Copayments on Medication Adherence Within a Disease Management Environment,” (Health Affairs 2008; 27(1):103-112). The paper was authored by researchers and analysts from Harvard University, the University of Michigan, and care management company ActiveHealth Management.
The study described in the paper evaluates the impact of selectively lowering co-pays for certain classes of drugs used in the treatment of chronic medical conditions.
“Research has proven that co-pays, even very small ones, can serve as financial barriers to accessing needed care,” says author Stephen Rosenberg, MD, ActiveHealth senior vice president for outcomes research, in an announcement. “This leads to costly and avoidable hospitalizations and emergency room visits. Our study demonstrated that reducing or eliminating co-pays significantly increases compliance with potentially life-saving medications. A value-based insurance design program can reduce a barrier to compliance, resulting in improved quality care and lower costs.”
In addition, two of the authors, A. Mark Fendrick, MD, University of Michigan Medical Center and Michael Chernew, PhD, Harvard Medical School, have produced an essay in the NIHCM publication New Expert Voices: “Value Based Insurance Design: Maintaining a Focus on Health in an Era of Cost Containment.”
The essay advocates varied cost sharing according to the value of the health service provided, encouraging patients to use high-value services and avoid services of low value. “The principles behind value-based insurance design can work synergistically with a range of patient- and provider-oriented cost containment strategies to promote value,” according to the essay. The paper also contains some historical context. The idea that higher patient cost sharing reduces the use of health care services and lowers spending for purchasers dates back to the 1970s. Consensus holds that a 10% price increase yields a utilization drop of 1.7%-”a modest effect, [but] the ramifications can still be meaningful,” the authors write.
But consensus also holds that increased cost sharing reduces use of both high- and low-value services, “even potentially life-saving services.”
Value-based insurance design, by contrast, applies “clinically sensitive” cost sharing, “preserving the demand-dampening advantages of higher cost sharing while lessening the adverse health consequences that can result when high out-of-pocket expenditures reduce the use of high-value clinical services,” according to the authors.
By contrast, a recent commentary that ran in Workforce Management appears to advocate an opposite approach: replacing co-pays with co-insurance, so that as healthcare costs rise, so too does the amount contributed by patients.
Author Jeffrey Shovlin, senior director for global benefits at human resources consultancy Hewitt Associates, argues that co-insurance forces employees to think about health care costs but does not require major benefit changes. “This makes employees better consumers, because their health care costs are directly related to the choices they make,” writes Shovlin. “A co-insurance model also protects the plan from bearing the full burden of health care inflation.”
Shovlin notes that the fixed co-payment model works in favor of plan participants during times of inflation, and favors heavy users, while co-insurance serves as a hedge in the plan’s favor during a period of rapidly escalating price increases.
Shovlin acknowledges the risk of co-insurance-that employees become noncompliant with their medication regimen because they can no longer afford prescriptions or check-ups. “This is particularly worrisome in today’s economy, when we know more employees are forgoing the cost of care because they can’t afford it.”
But he’s quick to dismiss the risk: “The compliance challenge can be overcome if employers put measures in place to encourage the right behaviors and discourage the wrong ones.” He identifies such measures as capping employees’ co-insurance obligation, providing prescriptions at no cost for employee enrolled in a disease-management program for their condition, and covering preventive services at 100%.
Shovlin concludes with the following: “My position is that co-payments should go the way of the dinosaur before health care as we know it today has the same fate as Tyrannosaurus rex.”
For their part, authors of the NIHCM-recognized Health Affairs article found that in the context of disease-management programs, medication adherence in the value-based intervention of reduced co-payments increased for four of five medication classes studied, reducing nonadherence by 7% to 14% compared with a control group using the same disease-management program without the reduced co-pays. The results, they write, “demonstrate the potential for copayment reductions for highly valued services to increase medication adherence above the effects of existing disease-management programs.” Article Content: AHIP-All Rights Reserved: © AHIP 2008 Source: http://www.ahiphiwire.org/LearningCenter/Feature.aspx?doc_id=393857