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UM-based health care reform initiative gets federal pilot programs

Timeline of Value-Based Insurance Design research and implementation, before the approval of new federal pilot-programs
Center for Value-Based Insurance Design at UM
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Timeline of Value-Based Insurance Design research and implementation, before the approval of new federal pilot-programs.

The U.S. Department of Defense and Medicare are set to launch pilot programs to test a healthcare policy idea conceived at the University of Michigan.

So-called Value-Based Insurance Design, or V-BID, ditches a uniform co-pay structure in favor of lowering costs for medical care deemed to be of high value to patients.

“We like to think life-saving drugs for diabetes, cancer, depression and HIV should cost less than toenail-fungus drugs or drugs that make your hair grow back,” said Mark Fendrick, director of the Center for Value-based Insurance Design at the University of Michigan.

Fendrick concedes that lowering co-pays in order to increase access to critical medical care could lead to higher health care costs in the early stages. But the theory goes, making it more affordable for people to take necessary care of themselves will prevent more expensive costs in the long run. 

“Taking better care of chronic conditions may lead to decreases in emergency visits and costly hospitalizations,” Fendrick said. “And we are fairly certain these interventions will be saving over time.”

The recently passed National Defense Authorization Act included a provision for the military’s health care insurance program, TRICARE, to test a V-BID program beginning in 2018.

Before that, seniors covered by certain Medicare Advantage plans in Massachusetts, Pennsylvania and Indiana, will have access to V-BID stylized insurance.

The Medicare pilot-program begins in January.

According to Fendrick, private sector employers have been implementing some aspects of a V-BID system for nearly a decade, and the concept has rare bipartisan political support.