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  • 1 Joyce GF, Escarce JJ, Solomon MD et al. Employer drug benefit plans and spending on prescription drugs. JAMA. 2002;288(14):1733-1739. 2. Fairman KA, Motheral BR, Henderson RR. Retrospective, long-term follow-up study of the effect of a three-tier prescription drug copayment system on pharmaceutical and other medical utilization and costs. Clinical Therapeutics. 2003;25(12):3147-3161.
  • As with any predictive modeling, these need to be validated in the real world.
  • Advantage of difference-in-differences method:
    any change in control group’s medication acquisition reflects changes unrelated to the copayment
    while any change in the experimental groups’ medication acquisitions reflects both the (same) naturally occurring change plus the impact of the copayment change
  • **Because the actual Intervention group (UM employees) did not face price changes, their utilization of services should have been unaffected
  • The total value of health can only be derived from the sum of the measures of healthcare and pharmacy costs, and productivity including time-away-from-work (absenteeism, short and long term disability and worker’s compensation) and presenteeism,” according to the UM-HMRC’s director, D.W. Edington.
  • Caution, however, should be taken because the results are not statistically significant and are only of directional value – if at all.
  • Although Pitney Bowes and Asheville have the greatest name recognition as employers that have embraced value-based benefit design, they are not alone—far from it.
    Here are some other U.S. employers that are using value-based benefit design principles in their companies.
  • STATINS:
    Vijan S, Hayward RA, American College of Physicians. Pharmacologic lipid-lowering therapy in type 2 diabetes mellitus: background paper for the American College of Physicians. Annals of Internal Medicine 2004;140(8):650–658.
    ASA:
    Antithrombotic Trialists' Collaboration. Collaborative metaanalysis of randomised trials of antiplatelet therapy for prevention of death, myocardial infarction, and stroke in high risk patients. BMJ 2002;324:71–86.
    Tight BP Control:
    Annals review – Sandeep and Rod
    Tight Blood Glucose Control:
    ACCORD
    Metformin in Overweight T2DM:
    Effect of intensive blood-glucose control with metformin on complications in overweight patients with type 2 diabetes (UKPDS 34). UK Prospective Diabetes Study (UKPDS) Group. Lancet 1998 Sep 12;352(9131): 854-65.
    ACE/ARBs:
    HOPE Study Investigators. Effects of an angiotensin-converting enzyme inhibitor, ramipril, on cardiovascular events in high-risk patients. New England Journal of Medicine 2000 342: 145-153.
    HOPE Study Investigators. Effects of ramipril on cardiovascular and microvascular outcomes in people with diabetes mellitus: result of HOPE study and MICRO-HOPE substudy. Lancet 2000 355: 253-259.
  • Caution, however, should be taken because the results are not statistically significant and are only of directional value – if at all.
  • Caution, however, should be taken because the results are not statistically significant and are only of directional value – if at all.
  • Mort is lower in high comp areas for hip fracture, so its doesn't fit pattern described in slide.
  • Caution, however, should be taken because the results are not statistically significant and are only of directional value – if at all.
  • Intervention population consists of A and B for analyses requiring only pharmacy claims (adherence and uptake). For analyses requiring additional data (non-pharmacy claims, survey data, etc.), intervention group consists of B alone.
    For all analyses, control group consists of C.
  • All bullet quotes from Fendrick slide presentation – Value-Based Insurance Design –Lessons Learned –accessed on UM Center for VBID website
    First bullet also in Fendrick –Chernew publication in reference source documents – 01/06
  • Rosen slides

    1. 1. Value-Based Insurance Design:Value-Based Insurance Design: Preserving Quality While Containing CostPreserving Quality While Containing Cost Presented at the Leonard Davis Institute, University of PennsylvaniaPresented at the Leonard Davis Institute, University of Pennsylvania April 3, 2009April 3, 2009 Funding from University of Michigan Health System, Hartford Foundation, and theFunding from University of Michigan Health System, Hartford Foundation, and the Michigan Diabetes Research Training Center (NIDDK)Michigan Diabetes Research Training Center (NIDDK) Allison B. Rosen, MD, ScDAllison B. Rosen, MD, ScD University of Michigan Center for Value-Based Insurance DesignUniversity of Michigan Center for Value-Based Insurance Design
    2. 2. Outline of TalkOutline of Talk • BackgroundBackground • A story of serendipity (and a bit of hard work)A story of serendipity (and a bit of hard work) • UM intervention study – primary outcomesUM intervention study – primary outcomes • Preliminary secondary analysesPreliminary secondary analyses • Policy implicationsPolicy implications – LocallyLocally – More broadlyMore broadly
    3. 3. Health Care Cost CrisisHealth Care Cost Crisis ““The nation’s long-term fiscal balance will beThe nation’s long-term fiscal balance will be determined primarily by the future rate of healthdetermined primarily by the future rate of health care cost growth.”care cost growth.” -- Peter Orszag, Director, Congressional Budget Office-- Peter Orszag, Director, Congressional Budget Office Testimony before Senate Budget Committee, June 21, 2007.Testimony before Senate Budget Committee, June 21, 2007.
    4. 4. Value of Care is PoorValue of Care is Poor • Substantial underutilization of high value health care services • U.S. adults receive only about half of recommended care* • For some chronic diseases, like diabetes,For some chronic diseases, like diabetes, patients get fewer than half of needed clinicalpatients get fewer than half of needed clinical services*services* *McGlynn et al. N Engl J Med, 2003.
    5. 5. Fundamental Health Policy QuestionFundamental Health Policy Question How do we organize and finance the healthHow do we organize and finance the health care system to achieve maximum value forcare system to achieve maximum value for what we spend?what we spend? ***Not: how do we save money?***Not: how do we save money?
    6. 6. Health Care Cost Crisis:Health Care Cost Crisis: Remedies Must Recognize Cost / Quality TradeoffRemedies Must Recognize Cost / Quality Tradeoff • Financial incentives to moderate utilization will beFinancial incentives to moderate utilization will be a fundamental part of the solutiona fundamental part of the solution • Yet, if not carefully aligned, they may worsenYet, if not carefully aligned, they may worsen already pervasive problems in quality of carealready pervasive problems in quality of care
    7. 7. Today’s Talk Will Focus on Chronic MedicationsToday’s Talk Will Focus on Chronic Medications
    8. 8. Recent Drug Copayment Trends Based Largely on CostRecent Drug Copayment Trends Based Largely on Cost
    9. 9. 429 63 0 100 200 300 400 500 Primary Prevention Secondary Prevention Different Patients Get Different BenefitsDifferent Patients Get Different Benefits from Medicationsfrom Medications NNTtopreventCVevent Ellis JJ. J Gen Intern Med 2004;19:639-646. Example: Number needed to treat with statins to prevent one cardiovascular event
    10. 10. No Difference in Statin Compliance Stratified byNo Difference in Statin Compliance Stratified by Prevention CategoryPrevention Category. Survival Curves for Persistence to Statin Therapy Stratified by Prevention Category Ellis JJ. J Gen Intern Med 2004;19:639-646. Secondary prevention cohort Primary prevention cohort
    11. 11. Statin Discontinuation Rates StratifiedStatin Discontinuation Rates Stratified by Mean Prescription Copaymentby Mean Prescription Copayment Ellis JJ. J Gen Intern Med 2004;19:639-646. $0 to <$10 $10 to <$20 >$20 Copay amount was the most important predictor of drug discontinuation rate No difference between primary and secondary prevention groups
    12. 12. Does Cost-Related Medication Underuse Matter?Does Cost-Related Medication Underuse Matter? For Employers: • Shifting costs to employees reduces employer drug spending • However, evidence growing that overall costs may increase *For excellent review, see Goldman et al., JAMA 2007;298:61. Fendrick AM, et al. Am J Managed Care, 2001; Rosen AB. Med Care, 2006. For Consumers: • Growing evidence* shows that cost-related underuse: – Increases adverse outcomes (chronically ill & poor most at risk) – Increases health care costs in some cases
    13. 13. Getting Services to People WhoGetting Services to People Who NeedNeed Them:Them: Should the Patient Decide?Should the Patient Decide? • If increased cost sharing decreases the use of essentialIf increased cost sharing decreases the use of essential medications & leads to worse outcomes, is it appropriatemedications & leads to worse outcomes, is it appropriate to place the burden of weighing the benefits and costs ofto place the burden of weighing the benefits and costs of medical interventions on the patient?medical interventions on the patient? • If not, the system should provide some guidance andIf not, the system should provide some guidance and incentives to promote better decisionsincentives to promote better decisions
    14. 14. Getting Services to People WhoGetting Services to People Who NeedNeed Them:Them: Value-Based Insurance DesignValue-Based Insurance Design • Value-based insurance design has been proposed toValue-based insurance design has been proposed to realign incentives for valuerealign incentives for value • Cost sharing is based on likelihood of benefit, notCost sharing is based on likelihood of benefit, not (solely) the acquisition cost(solely) the acquisition cost − The greater the benefit, the lower the co-payThe greater the benefit, the lower the co-pay • Such a system would provide financial incentives toSuch a system would provide financial incentives to targetedtargeted patients most likely to benefit frompatients most likely to benefit from specificspecific therapiestherapies Fendrick AM. Am J Managed Care, 2001. Rosen AB. Med Care, 2006. Chernew M. Health Affairs, 2007.
    15. 15. Numerous VBID Experiments Ongoing:Numerous VBID Experiments Ongoing: But in Need of Rigorous EvaluationBut in Need of Rigorous Evaluation • Several employer-based experiments underway with variousSeveral employer-based experiments underway with various forms of VBID for different diseases and/or drugsforms of VBID for different diseases and/or drugs – These efforts are largely coming out of the private sectorThese efforts are largely coming out of the private sector • Reported ‘results’ are excellentReported ‘results’ are excellent  over a dozen companiesover a dozen companies reporting a “positivereporting a “positive financialfinancial return on investment (ROI)”return on investment (ROI)” • Few rigorous evaluations exist to support these claimsFew rigorous evaluations exist to support these claims
    16. 16. • Two basic approaches in useTwo basic approaches in use 1.1. TargetTarget servicesservices that are high value (e.g., beta blockers)that are high value (e.g., beta blockers) 2.2. TargetTarget patientspatients with select clinical diagnoses (e.g., diabetes)with select clinical diagnoses (e.g., diabetes) • Most employers have taken services approachMost employers have taken services approach • Example: Marriott InternationalExample: Marriott International – Waived copays for generics and cut branded copays in halfWaived copays for generics and cut branded copays in half – Adherence increased from 2% to 4%Adherence increased from 2% to 4% – Medication costs increased → medical claims decreased byMedication costs increased → medical claims decreased by roughly same amountroughly same amount • Rigorous evaluation needed of the second flavor of VBIDRigorous evaluation needed of the second flavor of VBID Targeting is Critical to Attain ValueTargeting is Critical to Attain Value
    17. 17. Benefit Based Copay forBenefit Based Copay for ACE-Inhibitors and Angiotensin ReceptorACE-Inhibitors and Angiotensin Receptor Blockers for UM employees with DiabetesBlockers for UM employees with Diabetes Proposal to the Michigan HealthyProposal to the Michigan Healthy Community Initiative Task ForceCommunity Initiative Task Force July 14, 2005July 14, 2005
    18. 18. Why Diabetes?Why Diabetes? Sources: ADA. Economic costs of diabetes in the U.S., 2007. Diabetes Care. 2008;31:1-20. CDC. Diabetes Public Health Resource. http://www.cdc.gov/diabetes/ Accessed on Oct 7, 2008. • Almost 24 million Americans have diabetes (90–95% Type 2) • Diabetes and its complications are a leading source of morbidity, mortality, and costs, as well as lost productivity • In 2007, direct medical costs of diabetes were $116 billion, & indirect costs (from reduced productivity) totaled $58 billion • Several therapies markedly reduce the risk of complications • Yet, these therapies are underutilized in practice • Increasing out-of-pocket (OOP) costs an important cause
    19. 19. Value Based Insurance DesignValue Based Insurance Design (VBID)(VBID) Example: Predictive ModelingExample: Predictive Modeling • Diabetes Mellitus*Diabetes Mellitus* – Medicare first-dollar coverage (co-pays waived) of ACEMedicare first-dollar coverage (co-pays waived) of ACE inhibitors resulted in nearly one million life years gainedinhibitors resulted in nearly one million life years gained and a net savings of $7.4 billion over the cohort lifetimeand a net savings of $7.4 billion over the cohort lifetime *Rosen AB, et al. Ann Intern Med. 2005;143:89.
    20. 20. Proposal for a Value-Based InsuranceProposal for a Value-Based Insurance Design for UM Employees with DiabetesDesign for UM Employees with Diabetes Michigan Healthy Community InitiativeMichigan Healthy Community Initiative Task ForceTask Force February 15, 2006February 15, 2006
    21. 21. Timing is EverythingTiming is Everything
    22. 22. FOD Objectives and OutcomesFOD Objectives and Outcomes • Objectives: – To examine the impact of targeted value-based copayment reductions on the use of evidence-based medications by UM employees and dependents with diabetes – To successfully implement VBID program in real world setting • Primary outcomes: – Medication uptake (or utilization) – Medication adherence • Secondary outcomes: Health care utilization & expenditures
    23. 23. FOD InterventionFOD Intervention • Targeted copayment reductions for evidence-based therapies:Targeted copayment reductions for evidence-based therapies: − Antihypertensives (lower blood pressure)Antihypertensives (lower blood pressure) − ACE-Inhibitors & Angiotensin Receptor Blockers (ACE/ARBs)ACE-Inhibitors & Angiotensin Receptor Blockers (ACE/ARBs) − Statins (lower cholesterol)Statins (lower cholesterol) − Glycemic agents (lower blood sugar)Glycemic agents (lower blood sugar) − AntidepressantsAntidepressants • VBID designed to maintain underlying incentive structure:VBID designed to maintain underlying incentive structure: − Tier 1 (Generics)Tier 1 (Generics) Copays waivedCopays waived − Tier 2 (Preferred Brand)Tier 2 (Preferred Brand) Copays reduced 50%Copays reduced 50% − Tier 3 (Non-preferred brand)Tier 3 (Non-preferred brand) Copays reduced 25%Copays reduced 25%
    24. 24. Original Study TimelineOriginal Study Timeline July 1, 2005July 1, 2005 –– June 30, 2007June 30, 2007 Q5 Q6 Q7 Q8 Q1 Q2 Q3 Q4 6/30/077/1/05 6/30/087/1/04 July 1, 2006 FOD Intervention Q5 Q6 Q7 Q8Q1 Q2 Q3 Q4 **Disenrollment rates increased**Disenrollment rates increased after M-CARE sale announced.after M-CARE sale announced. XX Sale of M-CARE to BCNSale of M-CARE to BCN announcedannounced XX BCN officially takesBCN officially takes ownership of M-CAREownership of M-CARE UM Open Enrollment Control Firms Open Enrollment Windows
    25. 25. Revised Timeline Used for EvaluationRevised Timeline Used for Evaluation July 1, 2005 to June 30, 2007July 1, 2005 to June 30, 2007 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 6/30/077/1/05 6/30/087/1/04 July 1, 2006 FOD Intervention Q5 Q6 Q7 Q8Q1 Q2 Q3 Q4 X POST-PERIOD 7/1/06–6/30/07 PRE-PERIOD 7/1/05–6/30/06 Look-back window to ID study population Evaluation WindowEvaluation Window X
    26. 26. Study Design and PopulationStudy Design and Population • Study Design:Study Design: Interrupted time series with concurrent control groupInterrupted time series with concurrent control group • Intervention GroupIntervention Group (N = 1777)(N = 1777) – UM employees and dependents with at least one glucose lowering drugUM employees and dependents with at least one glucose lowering drug filled in the prior yearfilled in the prior year – Continuous enrollment in drug benefit for the period of interestContinuous enrollment in drug benefit for the period of interest • Control GroupControl Group (N = 3273)(N = 3273) – Employees & dependents of other (non-UM) employers, enrolled in M-Employees & dependents of other (non-UM) employers, enrolled in M- CARE, and meeting same inclusion criteria as intervention groupCARE, and meeting same inclusion criteria as intervention group • Sample Identification:Sample Identification: SeparateSeparate for PRE and POST periodsfor PRE and POST periods – Example:Example: Intervention group sample in PRE period (7/05Intervention group sample in PRE period (7/05––6/06)6/06) includes:includes: » UM actives with glycemic agent filled in 7/04 – 6/05 (year before PRE period)UM actives with glycemic agent filled in 7/04 – 6/05 (year before PRE period) » Continuously enrolled from 7/05 to 6/06 (entire year of PRE period)Continuously enrolled from 7/05 to 6/06 (entire year of PRE period)
    27. 27. Analytic ApproachAnalytic Approach • Difference-in-Difference Regression Model – Means of predicted values for intervention and control groups » Uptake: measured once in PRE year & once in POST year » Adherence: at quarterly intervals before and after program – Bootstrapped SEs for differences & difference-in-differences • Generalized Estimating Equations (GEEs) – Accounts for correlation of multiple measures in same person • Control Variables: – Baseline age, gender, employee/dependent, comorbidity score, neighborhood median household income, # medications
    28. 28. Co-Pay Reductions Begin Pre-Period Post-Period Medication Adherence Control GroupCo-Pay Reduction Group (FOD) Feb 2002 Difference-in-Difference FrameworkDifference-in-Difference Framework EFFECT = Difference in Difference (D-in-D) Diff. Diff. 50%50% 100%100%
    29. 29. Definitions – Primary OutcomesDefinitions – Primary Outcomes • Utilization:Utilization: At least one pharmacy fill of theAt least one pharmacy fill of the medication at any time during the one year periodmedication at any time during the one year period – Pre – year: 7/1/05 to 6/30/06Pre – year: 7/1/05 to 6/30/06 – Post – year: 7/1/06 to 6/30/07Post – year: 7/1/06 to 6/30/07 • Adherence:Adherence: Use prescription and days suppliedUse prescription and days supplied data to assess days with available medications perdata to assess days with available medications per quarter (Medical Possession Ratio, MPR)quarter (Medical Possession Ratio, MPR) – Adjust for partial eligibility over the quarterAdjust for partial eligibility over the quarter – Adjust for inpatient admissionAdjust for inpatient admission – Adjust for medication switchingAdjust for medication switching
    30. 30. Standard Adherence ApproachStandard Adherence Approach This group is ignored regardless of any indications for treatment Standard approach requires at least one pharmacy claim to calculate adherence.
    31. 31. Focus on Diabetes: Baseline CharacteristicsFocus on Diabetes: Baseline Characteristics Evaluation POST GroupEvaluation POST Group InterventionIntervention ControlControl Sample SizeSample Size 17771777 32733273 Female GenderFemale Gender 57.6%57.6% 54.0%**54.0%** Mean AgeMean Age 46.246.2 46.846.8 EmployeeEmployee 63.0%63.0% 64.2%**64.2%** ChildChild 4.7%4.7% 4.6%4.6% SpouseSpouse 30.8%30.8% 30.8%30.8% OtherOther 1.4%1.4% 0.4%0.4% Income*Income* $55,447$55,447 $55,608$55,608 Charlson ScoreCharlson Score 1.431.43 1.461.46 *Median household income by zip code **Significant at p<0.05
    32. 32. FOD InterventionFOD Intervention Significantly Increased UptakeSignificantly Increased Uptake of Medications in All Drug Classesof Medications in All Drug Classes BaselineBaseline UptakeUptake (FOD)(FOD) AbsoluteAbsolute IncreaseIncrease % reduction% reduction in non-usersin non-users MetforminMetformin 65.4%65.4% 3.2%3.2% 9.1%9.1% ACE/ARBACE/ARB 55.0%55.0% 4.7%4.7% 10.4%10.4% StatinsStatins 55.9%55.9% 5.2%5.2% 11.8%11.8% SSRIsSSRIs 22.0%22.0% 1.8%1.8% N.A.N.A. *All significant (p<0.001) RELATIVE UPTAKE INCREASED BY 5% TO 9%RELATIVE UPTAKE INCREASED BY 5% TO 9% 0 2 4 6 8 10 M etform in AC E/AR B Statins SSRIs IncreaseinUptake(%)
    33. 33. BaselineBaseline MPR (%)MPR (%) AbsoluteAbsolute Increase inIncrease in MPR (%)MPR (%) % Reduction% Reduction in non-in non- adherenceadherence Metformin*Metformin* 71.3%71.3% 2.5%2.5% 8.6%8.6% ACE/ARBACE/ARB◊◊ 82.3%82.3% 7.2%7.2% 40.6%40.6% StatinsStatins†† 78.3%78.3% 4.1%4.1% 18.6%18.6% SSRIs*SSRIs* 69.0%69.0% 5.1%5.1% 16.5%16.5% *NS, ◊ p<0.001, † p=0.067 ADHERENCE TO ACE/ARBs & STATINs INCREASED SUBSTANTIALLYADHERENCE TO ACE/ARBs & STATINs INCREASED SUBSTANTIALLY 0 2 4 6 8 10 M etform in AC E/AR B Statins SSR Is IncreaseinAdherence(%) FOD InterventionFOD Intervention Increased Adherence to the HighestIncreased Adherence to the Highest Value MedicationsValue Medications (ACE/ARBS & Statins)(ACE/ARBS & Statins)
    34. 34. Secondary Outcomes: CostsSecondary Outcomes: Costs • ExpendituresExpenditures − Pharmacy, non-pharmacy, totalPharmacy, non-pharmacy, total − Expenditure analyses complicated by co-interventionsExpenditure analyses complicated by co-interventions − I.e. other policy changes occurring during the study timeI.e. other policy changes occurring during the study time frame which impact UM expenditures but not controls’frame which impact UM expenditures but not controls’
    35. 35. UM PBM Renegotiated (Pharm Costs ) 1/1/061/1/06 Unanticipated ‘Co-Interventions’ Made Evaluation of ActualUnanticipated ‘Co-Interventions’ Made Evaluation of Actual Costs DifficultCosts Difficult Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4 6/30/077/1/05 July 1, 2006 FOD Intervention BCN Pricing Went Into Effect (Non-pharm Costs ) 1/1/071/1/07 *Intervention group OOP costs unaffected; evaluation ∴ applied industry standardized unit prices to changes in utilization due to FOD intervention Q5 Q6 Q7 Q8Q5 Q6 Q7 Q8 OOP = Out-of-pocket
    36. 36. Focus On DiabetesFocus On Diabetes Financial EffectsFinancial Effects  VeryVery PreliminaryPreliminary $0 $200 $400 $600 $800 Intervention Control Intervention Control MeanQuarterlyExpenditures ($permemberperquarter) pre post pre post pre post pre post Pharmacy Spending Non-Pharmacy Spending $63 $35 –$112 –$95 $28 –$18 Pharmacy was a little more costly -Diff-of-Diff +$28 Non-Pharmacy was a little less costly -Diff-of-Diff –$18 Overall was a little more costly -Diff-of-Diff +$10 Preliminary Story: *Note: Cost estimates are per member per quarter
    37. 37. Focus on Diabetes: ConclusionsFocus on Diabetes: Conclusions • Targeted co-pay reductions increased uptake of medicationsTargeted co-pay reductions increased uptake of medications • Among those on the medications, non-adherence ratesAmong those on the medications, non-adherence rates declined substantially for ACE/ARBs and statinsdeclined substantially for ACE/ARBs and statins • VBID-type interventions is a useful adjunct to efforts aimedVBID-type interventions is a useful adjunct to efforts aimed at increasing patient initiation of and adherence to highat increasing patient initiation of and adherence to high value medicationsvalue medications • Impact on cost remains to be seenImpact on cost remains to be seen
    38. 38. LimitationsLimitations • Ideal rate of use is not knownIdeal rate of use is not known – Most diabetics should be on statin and ACE/ARBMost diabetics should be on statin and ACE/ARB • Using ‘supply of medications filled’ as a proxy forUsing ‘supply of medications filled’ as a proxy for adherence may overstate actual adherenceadherence may overstate actual adherence • Comorbidity measured using claims data may beComorbidity measured using claims data may be underestimatedunderestimated • ROI not knownROI not known
    39. 39. A Comment on ROI and Cost-EffectivenessA Comment on ROI and Cost-Effectiveness • Cost-saving:Cost-saving: intervention is effective and costs less inintervention is effective and costs less in the long run than the cost of not interveningthe long run than the cost of not intervening • Cost-effective:Cost-effective: intervention provides a health benefit atintervention provides a health benefit at an acceptable costan acceptable cost • High-value:High-value: intervention prevents a significant amountintervention prevents a significant amount of illness and deathof illness and death andand is cost-effectiveis cost-effective Most clinical preventive services are cost-effective;Most clinical preventive services are cost-effective; Very few are cost savingVery few are cost saving
    40. 40. Value Based Insurance DesignValue Based Insurance Design Maximizing Return On InvestmentMaximizing Return On Investment Incremental costs of increased use of high value servicesIncremental costs of increased use of high value services can be subsidized by:can be subsidized by: 1.1. Medical cost offsetsMedical cost offsets − Amount saved by preventing adverse events will beAmount saved by preventing adverse events will be directly related to level of clinical targetingdirectly related to level of clinical targeting 1.1. Higher cost sharing for services of lower valueHigher cost sharing for services of lower value 2.2. Enhanced productivityEnhanced productivity 3.3. Reduced disability costsReduced disability costs
    41. 41. What Was the University’s Response?What Was the University’s Response?
    42. 42. Reporting Results at UMReporting Results at UM UM the university?UM the university? OrOr UM the employer?UM the employer?
    43. 43. Reporting Results at UM: Take 2Reporting Results at UM: Take 2
    44. 44. UM as a National Leader of VBID adoptionUM as a National Leader of VBID adoption • In response to UM program, other employers haveIn response to UM program, other employers have adopted programs almost identical to FODadopted programs almost identical to FOD – Health Alliance Medical Plan of IllinoisHealth Alliance Medical Plan of Illinois – Disney CorporationDisney Corporation –– Abbott LaboratoriesAbbott Laboratories – QuadgraphicsQuadgraphics –– Diabetes AmericaDiabetes America ““Setting an example is not the main means ofSetting an example is not the main means of leading others. It is the only means.”leading others. It is the only means.” –– Albert EinsteinAlbert Einstein
    45. 45. VBID PractitionersVBID Practitioners . . .. . . 4646
    46. 46. How Did Employees Respond?How Did Employees Respond? "As a member of the U-M community for nearly 20 years and"As a member of the U-M community for nearly 20 years and the mother of a daughter who has suffered from Type 1the mother of a daughter who has suffered from Type 1 Diabetes for 15 years, I celebrate this initiative! Thank you!“Diabetes for 15 years, I celebrate this initiative! Thank you!“ ““I was recently diagnosed with Type II diabetes by my primaryI was recently diagnosed with Type II diabetes by my primary care physician. Since I already have 4 meds that I fill eachcare physician. Since I already have 4 meds that I fill each month at $20.00 co-pay per month, I couldn't take on two moremonth at $20.00 co-pay per month, I couldn't take on two more prescriptions. She called them into my pharmacy and I neverprescriptions. She called them into my pharmacy and I never had them filled. I cannot afford them. I felt it more importanthad them filled. I cannot afford them. I felt it more important to take the Blood Pressure meds.”to take the Blood Pressure meds.”
    47. 47. Which Elements of the Intervention Are Most Important?Which Elements of the Intervention Are Most Important? Number Needed to Treat (NNT) to Prevent One Macrovascular (CVD) EventNumber Needed to Treat (NNT) to Prevent One Macrovascular (CVD) Event *Tight glucose control*Tight glucose control doesdoes have importanthave important micromicrovascular benefits (but macrovascular protection higher priority)vascular benefits (but macrovascular protection higher priority) 4040 3535 1616 1414 1212 99 AspirinAspirin StatinStatin 22ryry PreventionPrevention ACE/ARBsACE/ARBs StatinStatin 11ryry PreventionPrevention MetforminMetformin In ObeseIn Obese Other BP MedsOther BP Meds Glycemic AgentsGlycemic Agents** Blood pressure medications with extra CVD & renal benefits Only glycemic agent with macrovascular benefitsOnly glycemic agent with macrovascular benefits No evidence ofNo evidence of macromacrovascular benefits (unless A1c ~10)vascular benefits (unless A1c ~10) For reference onlyFor reference only
    48. 48. Annual Cost to Continue VBID for Actives,Annual Cost to Continue VBID for Actives, by Number Needed to Treat (NNT) to Prevent One CVD Eventby Number Needed to Treat (NNT) to Prevent One CVD Event NNTNNT Drug CostsDrug Costs CumulativeCumulative Costs*Costs* ACE (HOPE)ACE (HOPE) 99 84-118k84-118k —— Tight BP ControlTight BP Control 10-1410-14 96-121k96-121k 180-239180-239 Statins (1Statins (1ryry ⇒⇒ 22ryry prevention)prevention) 1414 ⇒⇒ 3535 73-11973-119 253-358253-358 Other Lipid Lowering AgentsOther Lipid Lowering Agents —— 18-3818-38 271-396271-396 Metformin in ObeseMetformin in Obese 14-1614-16 87-11087-110 358-506358-506 Other Glycemic AgentsOther Glycemic Agents NSNS 68-15568-155 427-661427-661 AntidepressantsAntidepressants —— 56-9656-96 483-757483-757 *If a budget threshold is reached, covering all drugs above that line will maximize health benefits relative to costs*If a budget threshold is reached, covering all drugs above that line will maximize health benefits relative to costs
    49. 49. Preliminary Assessment ofPreliminary Assessment of Secondary Outcomes of InterestSecondary Outcomes of Interest
    50. 50. The Adverse Impact of Cost Sharing Is More Pronounces in Vulnerable Groups Chernew, Rosen, Fendrick. JGIM. 2008
    51. 51. Could VBID Be a Tool to Reduce Disparities?Could VBID Be a Tool to Reduce Disparities?
    52. 52. Income DataIncome Data • Patient household income derived from zip-Patient household income derived from zip- code matched census datacode matched census data • Split into two groups: above and belowSplit into two groups: above and below median household incomemedian household income • Comparison by income of:Comparison by income of: – Mean number of medicationsMean number of medications – Medication uptakeMedication uptake
    53. 53. SES Effect on Mean Number Medications -0.16 -0.12 -0.08 -0.04 0.00 0.04 All Glucose Lowering BP Lowering ChangeinMean#MedsbyIncomeStatus Intervention Controls
    54. 54. Impact of FOD Intervention by Income StatusImpact of FOD Intervention by Income Status Metformin ACE-ARB Statin SSRI ChangeinUptakeDuetoFOD(∆–∆) Income below mean (Q1-Q2) Income above mean (Q3-Q4) ∆–∆–∆∆–∆–∆∆–∆–∆∆–∆–∆ ∆–∆–∆∆–∆–∆ 0% 1% 2% 3% 4% 5% 6%
    55. 55. ConclusionsConclusions • Among those with incomes below median, a VBIDAmong those with incomes below median, a VBID intervention, significantly increased:intervention, significantly increased: – Mean number of medicationsMean number of medications – Uptake of three of the four medication classesUptake of three of the four medication classes • Among those with incomes above median, the VBIDAmong those with incomes above median, the VBID intervention did not have a significant impactintervention did not have a significant impact • Big Caveat:Big Caveat: – Sample size is smallSample size is small – Analyses are prelimaryAnalyses are prelimary
    56. 56. Conclusions To DateConclusions To Date • Targeted co-pay reductions increased uptake of medicationsTargeted co-pay reductions increased uptake of medications • Among those on the medications, non-adherence ratesAmong those on the medications, non-adherence rates declined substantially for ACE/ARBs and statinsdeclined substantially for ACE/ARBs and statins • VBID-type interventions is a useful adjunct to efforts aimed atVBID-type interventions is a useful adjunct to efforts aimed at increasing patient initiation of and adherence to high valueincreasing patient initiation of and adherence to high value medicationsmedications and possibly an avenue for addressingand possibly an avenue for addressing disparities?disparities?
    57. 57. Future DirectionsFuture Directions • Evaluate impact on intermediate outcomeEvaluate impact on intermediate outcome • Assess for differential impact in other vulnerableAssess for differential impact in other vulnerable populationspopulations • Evaluate productivity outcomesEvaluate productivity outcomes – Work-related disability, absenteeism, presenteeismWork-related disability, absenteeism, presenteeism • Continue efforts to educate employers that positive ROI isContinue efforts to educate employers that positive ROI is unrealistic expectationunrealistic expectation – When that fails, revisit importance of productivity measurementWhen that fails, revisit importance of productivity measurement • Initiating a smoke-free work place intervention at UMInitiating a smoke-free work place intervention at UM – Looking for control universityLooking for control university
    58. 58. The Power of Financial IncentivesThe Power of Financial Incentives
    59. 59. Extra SlidesExtra Slides mean number of medicationmean number of medication
    60. 60. Intermediate OutcomesIntermediate Outcomes • Have incomplete lab data on cohortHave incomplete lab data on cohort • Analyses not prespecifiedAnalyses not prespecified A1c LDL FOD Diff   -0.30 -5.68 Control Diff   -0.06 -2.17 FOD-Control Diff   -0.23 -3.51
    61. 61. FOD Study PopulationFOD Study Population M-CARE* (~200,000) U of M* (~70,000) UM FOD (2,507) a b Controls (8,637) c *Estimates from 2006, UM includes actives and dependents only Diabetics Analyses restricted to M-CARE if used: -Medical claims -Lab data -Survey data
    62. 62. Extra Slides FollowExtra Slides Follow
    63. 63. Value-Based Insurance Design (VBID) inValue-Based Insurance Design (VBID) in the Medicare Prescription Drug Benefit:the Medicare Prescription Drug Benefit: An Analysis of Policy OptionsAn Analysis of Policy Options
    64. 64. Policy Options for ImplementingPolicy Options for Implementing VBID in Part DVBID in Part D Option 1:Option 1: Reduce cost sharing for specific drugs or drug classesReduce cost sharing for specific drugs or drug classes Option 2:Option 2: Exempt specific drugs or drug classes from 100% costExempt specific drugs or drug classes from 100% cost sharing in the coverage gapsharing in the coverage gap Option 3:Option 3: Reduce cost sharing for enrollees with chronic conditionsReduce cost sharing for enrollees with chronic conditions Option 4:Option 4: Reduce cost sharing for enrollees participating inReduce cost sharing for enrollees participating in medication therapy management programs (MTMPs)medication therapy management programs (MTMPs) Option 5:Option 5: Reduce cost sharing for chronic condition special needsReduce cost sharing for chronic condition special needs plans (CC-SNPs)plans (CC-SNPs)
    65. 65. Political Support Ability to Implement  Policy CMS Authority to  Change Policy Feasibility Size of Medicare  Population Affected Potential to Improve Medicare Option 5 Policy Options Option 1 Option 2 Option 3 Option 4 Political Support Ability to Implement  Policy CMS Authority to  Change Policy Feasibility Size of Medicare  Population Affected Potential to Improve Medicare Option 5 Policy Options Option 1 Option 2 Option 3 Option 4 Greatest Potential / Most Feasible Moderate Potential / Feasibility Least Potential / Feasible Greatest Potential / Most Feasible Moderate Potential / Feasibility Least Potential / Feasible We Evaluated Each Option’s Impact And FeasibilityWe Evaluated Each Option’s Impact And Feasibility According To Four CriteriaAccording To Four Criteria
    66. 66. Greatest Potential / Most Feasible Moderate Potential / Feasibility Least Potential / Feasible Size of MedicareSize of Medicare PopulationPopulation AffectedAffected Policy ChangePolicy Change RequiredRequired OperationalOperational Change RequiredChange Required Political SupportPolitical Support Option 1: Reduce Cost Sharing for SpecificOption 1: Reduce Cost Sharing for Specific Drugs or Drug ClassesDrugs or Drug Classes  Potential to reach a large number of Part D beneficiaries  Can be implemented in the current policy environment   Plans can create new formulary tier for targeted drugs  Incentives needed to encourage plans to take advantage of the option Low or no cost sharing for high-value drugs would encourage adherence among all enrollees who may benefit from a drug in these classes, regardless of their chronic condition diagnosis Most Promising
    67. 67. Greatest Potential / Most Feasible Moderate Potential / Feasibility Least Potential / Feasible Size of MedicareSize of Medicare PopulationPopulation AffectedAffected Policy ChangePolicy Change RequiredRequired OperationalOperational Change RequiredChange Required Political SupportPolitical Support Option 2: Exempt Specific Drugs or Drug Classes fromOption 2: Exempt Specific Drugs or Drug Classes from 100% Cost Sharing in the Coverage Gap100% Cost Sharing in the Coverage Gap  Affects fewer beneficiaries, but targets patients with high drug  spending Can be implemented in the current policy environment   Incentives needed to encourage plans to add gap coverage for  targeted drugs or drug classes Because adherence may decline as enrollees are exposed to high cost sharing, this option would offer protection when costs are generally the greatest—during the coverage gap Promising, But Smaller Impact
    68. 68. Greatest Potential / Most Feasible Moderate Potential / Feasibility Least Potential / Feasible Size of MedicareSize of Medicare PopulationPopulation AffectedAffected Policy ChangePolicy Change RequiredRequired OperationalOperational Change RequiredChange Required Political SupportPolitical Support Option 3: Reduce Cost Sharing for EnrolleesOption 3: Reduce Cost Sharing for Enrollees with Chronic Conditionswith Chronic Conditions Potential to reach a large number of Part D beneficiaries May require exemption from non-discrimination clause and uniform  benefit requirement Requires process to identify enrollees with specific chronic condition  diagnoses and to select drugs eligible for reduced cost sharing Targeting enrollees with a specific chronic condition for lower cost sharing—for all drugs or just those that treat the particular condition—would lessen the out-of-pocket burden associated with the chronic condition Effective Targeting, But Legislative Barriers
    69. 69. Size of MedicareSize of Medicare PopulationPopulation AffectedAffected Policy ChangePolicy Change RequiredRequired OperationalOperational Change RequiredChange Required Political SupportPolitical Support Option 4: Reduce Cost Sharing for EnrolleesOption 4: Reduce Cost Sharing for Enrollees Participating in MTMPsParticipating in MTMPs Targets small percentage of Medicare population Positively reinforces MTMP efforts to improve beneficiaries’  medication adherence May require exemption from non-discrimination clause and uniform  benefit requirement  Plans may wish to monitor MTMP participation to identify beneficiaries  who qualify for low cost sharing Enrollees participating in Part D’s MTMP would benefit from reduced cost sharing for specific drugs, in addition to other patient outreach and counseling on medication use Greatest Potential / Most Feasible Moderate Potential / Feasibility Least Potential / Feasible MTMP: Medication Therapy Management Program Potential to Improve Adherence, But Legislative Barriers
    70. 70. Greatest Potential / Most Feasible Moderate Potential / Feasibility Least Potential / Feasible Size of MedicareSize of Medicare PopulationPopulation AffectedAffected Policy ChangePolicy Change RequiredRequired OperationalOperational Change RequiredChange Required Political SupportPolitical Support Option 5: Reduce Cost Sharing for CC-SNPOption 5: Reduce Cost Sharing for CC-SNP Enrollees Based on the Plan’s Target ConditionEnrollees Based on the Plan’s Target Condition Affects fewest beneficiaries    Can be implemented in the current policy environment   No operational changes required  May be an ideal first step in implementing VBID in the Medicare Part  D program SNPs designed for a specific chronic condition could reduce cost sharing for drugs treating the target condition as part of an overall model of care aimed at better disease management Path of Least Resistance
    71. 71. While VBID Can Be Implemented in Part D,While VBID Can Be Implemented in Part D, Policymakers Should Consider How toPolicymakers Should Consider How to Encourage Plan AdoptionEncourage Plan Adoption • Several options are now available to Part D plansSeveral options are now available to Part D plans – No legislative or regulatory changes needed for Options 1, 2, or 5No legislative or regulatory changes needed for Options 1, 2, or 5 – Plans may requirePlans may require incentives to adopt VBIDincentives to adopt VBID • Additional analysis is needed to further exploreAdditional analysis is needed to further explore VBID in MedicareVBID in Medicare – Identify incentives that would be most attractive to Part D plansIdentify incentives that would be most attractive to Part D plans – Define high-value drugs or chronic conditionsDefine high-value drugs or chronic conditions – Project costs or savings from VBID implementationProject costs or savings from VBID implementation – Examine VBID opportunities for other Medicare services (Parts A&B)Examine VBID opportunities for other Medicare services (Parts A&B)
    72. 72. 35% 58% 19% 27% 0% 25% 50% 75% 100% 2006 2009 5 tier+ 4 tier N = 1,429 Could VBID Take Off As Other Part D BenefitCould VBID Take Off As Other Part D Benefit Designs Have?Designs Have? Source:  Avalere Health analysis using DataFrame®, a proprietary database of Medicare Part D plan features. 2009 data from  November 2008. 2006 data from July 2006. *N = Total number of PDPs offered each year. N = 1,648 Percent of Medicare Prescription Drug Plans (PDPs) with Four or More Tiers

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