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Value-Based Insurance Design: Helping Employers Improve the Value of Health Care

WASHINGTON, August 24 /PRNewswire/ -- As members of Congress continue to debate proposals for health care reform, the National Pharmaceutical Council (NPC) has released a new report on an important approach being used by leading edge employers for improving patient health outcomes - Value-Based Insurance Design (VBID). Featuring case studies, the report takes a closer look at how VBID is helping employers nationwide "get more health out of every health care dollar."

The report, "Value-Based Insurance Design Landscape Digest," authored by Dr. A. Mark Fendrick, Co-Director of the Center for Value-Based Insurance Design at the University of Michigan, explains how companies are using VBID to lower or eliminate financial barriers to the purchase of "high-value" drugs or health care services with the intention of improving adherence to therapy and avoiding more expensive future medical costs, such as hospitalization. These benefit design changes are most often coupled with education and other strategies for consumer engagement in order to have maximum impact.

"Under a VBID program, the alignment of financial incentives - for patients and providers - encourages the use of high-value care, while discouraging the use of low-value or unproven services. Ultimately, this can produce more health at any level of health care expenditure," said Dr. Fendrick.

In the report, Fendrick explains how VBID encompasses several key principles: value equals the clinical benefit achieved for the money spent; health care services differ in the health benefits they produce; and the value of health care services depends upon the individual who receives them. The more clinically beneficial a therapy is for a patient, the lower the patient's cost share. Thus, VBID encourages the use of medically necessary therapies and services and reduces barriers to access for these services.

The report also highlights how companies like Caterpillar, Inc., Hannaford Brothers Company, and UnitedHealthcare, among others, have improved employee health via one of the four basic approaches to VBID:

    - Design by service, in which copayments or coinsurance are waived or
      reduced for select drugs or services, such as statins or cholesterol
      tests, no matter which patients are using them.

    - Design by condition, in which copayments or coinsurance are waived or
      reduced for medications or services, based on the specific clinical
      conditions with which patients have been diagnosed.

    - Design by condition severity, in which copayments or coinsurance are
      waived or reduced for high-risk members who would be eligible for
      enrollment in a disease management program.

    - Design by disease management participation, in which high-risk members
      who actively participate in a disease management program are provided
      reduced or waived copayments or coinsurance.

"VBID, along with comparative effectiveness research, could assist public and private payers in realizing the best value for their health care dollar while improving the quality of health care services and employee health," said NPC President Dan Leonard. "These programs already are leading to a healthier workforce, with reductions in absenteeism, medical disability, and productivity losses associated with health conditions. Implementing them on a wider scale could help policy makers reach their goal of improving quality in the system while 'bending the curve' of overall health care spending in the right direction."

The study and a video interview with Dr. Fendrick are available on NPC's website at

About the National Pharmaceutical Council

NPC's overarching mission is to sponsor and conduct scientific analyses of the appropriate use of biopharmaceuticals and the clinical and economic value of innovation. The organization's strategic focus is on evidence-based medicine (EBM) for health care decision-making, to ensure that patients have access to high-quality care. NPC was established in 1953 and is supported by the nation's major research-based biopharmaceutical companies. For more information, visit

Contact: Andrea Hofelich,, +1-703-715-2741

SOURCE National Pharmaceutical Council
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