value-based health care

While large-scale health care reform has been debated at length in political circles, academics and the industry itself have been exploring ways to improve the health care market. Of course, each health care enterprise, be it pharma, hospitals, insurers, or physician networks have their own interests, but these interests dovetail with the greater good more than you might think.

The future is value-based health care; the question is how exactly will we get there and what will it look like.

Value in this sense is the patient's clinical benefit per dollar spent. Currently, while payers (public and private) can put significant restrictions on products (be it physician procedures or pharmaceuticals) because of a high price, the best they can do drive utilization of more value-based treatments is to charge a higher co-pay (instead of $15, it maybe $50, or it may be 20%).

Or as the Center for Value-Based Insurance design puts it:

"Value – the clinical benefit achieved for the money spent – is absent from the current dialogue on how to solve the health care dilemma. Instead, the dialogue focuses on two trends in benefit design – cost containment and quality improvement – which create a conflict of incentives for patients.

For example, employers increasingly enroll beneficiaries in expensive disease management programs designed to improve patient self-management, often by intervening to enhance compliance with specific medications. However, at the same time, rising copayments and greater cost-sharing create financial barriers that discourage the use of recommended services. When patients are required to pay more for their health care, it is well known that they buy less – of both essential and excessive therapies alike."

Health care spending is for the most part cost-based, with each player taking a cut proportional to it's bargaining power. Value-based purchasing isn't impossible -- it can be the key to added payment for revolutionary products or procedures -- but it is the exception, not the rule.

Here's a quote from a Medical News article on the potential for value-based insurance:

"Like a one-size-fits-all shirt that doesn't fit anyone very well, American health insurance plans charge every person the same out of pocket cost for medical services - regardless of their effect on a person's health.

So, whether your visit to the doctor is for life-threatening cancer, or just the common cold or a sprained ankle, you'll pay the same co-pay or deductible. These cash costs set by your employer and your insurance plan are designed to keep you from using "too much" health care.

But what if those out-of-pocket costs are high enough to keep your co-worker from taking a medicine that could greatly reduce her risk of having a heart attack, or to keep her from refilling a prescription that could prevent her child's asthma attacks?

American employers - and citizens - could get a lot more value out of their health insurance by abandoning the old-fashioned system of charging everyone the same, says a team of University of Michigan and Harvard University researchers..."

How would this play out?

"Under their approach, a person with diabetes would pay little for drugs that can delay diabetes-related health problems, and for eye and blood tests that can spot those problems early. And employees in their 50s might get free or low-cost colonoscopies, to spot pre-cancerous polyps and treat them before they become cancer.

""It makes absolutely no sense to have the all patients pay the same for medical services that may have enormously different health effects. Costs should be lowest for those for whom the evidence of benefit is strongest - and vice versa, with higher costs for services where the proof of benefit isn't strong," says Fendrick. "

What's the biggest takeaway?

"We can't expand coverage, or maintain it at current levels, without dealing with the cost of care. VBID is a "fiscally responsible, clinically sensitive' way to improve quality, access and cost-effectiveness."