How to Improve the Consumer Experience and Reduce Out-Of-Pocket Costs Using Value-Based Insurance Design Models

The United States spends more on healthcare per capita than any other nation — including about $492 billion in out-of-pocket costs in 2021. Implementing value-based insurance designs (VBID) shifts the focus to encouraging use of “high-value” services — those that result in better health outcomes — by lowering the associated out-of-pocket costs for consumers.

What is VBID?

VBID models can improve care, reduce health disparities, and make healthcare more affordable — all of which are much-needed outcomes. When costs are reasonable, consumers’ health may be affected: A 2022 poll found that 51% of people surveyed put off medical services because of cost. Keeping costs manageable can encourage consumers to receive necessary, high-value services that ultimately will lead to improved health outcomes.

The passage of the Patient Protection and Affordable Care Act (ACA) in 2010 mandated preventive care with no cost-sharing for plans subject to the law; this included annual wellness check-ups, flu vaccines, and certain screenings. In the last decade, federal regulators, employers, and health plans have explored the use of VBID models to encourage consumers to prioritize high-value primary care. These efforts often reduce costs for individuals while strengthening the relationship between people and their primary care providers to improve outcomes.

What Is the Definition of Value-Based Insurance Design (VBID)?

VBID can be defined as health benefits (i.e., plan designs) that place the emphasis on providing high-value services to improve overall health outcomes. Models include removing or reducing consumers’ out-of-pocket costs for high-value services — such as primary care visits. Additionally, VBID may incentivize people to use healthcare services that can help care providers detect and treat potentially negative health events at an early stage. Early treatment often can prevent more serious health concerns or illnesses, including reducing hospitalizations.

“VBID and value-based care enable a future where our care provider partners can be successful in improving outcomes and lowering costs for consumers, all while ensuring that people are getting the best access to high-quality care,” said Dr. Catherine Gaffigan, president of Health Solutions for Elevance Health.

AJMC Study: Evaluation of Value-Based Insurance Design for Primary Care

Elevance Health-affiliated health plans evaluated the impact of a large employer’s decision to remove out-of-pocket costs for primary care physician (PCP) visits. The results helped determine the potential consumer health and financial benefits of VBID models.

The study, Evaluation of Value-Based Insurance Design for Primary Care, was published in the American Journal of Managed Care (AJMC). It compared six years of data for the affiliated health plans’ commercially insured members “VBID cohort” (which had no out-of-pocket costs for PCP visits) with the “comparison cohort” (which did have out-of-pocket costs for PCP visits). The study measured the frequency with which members visited their physicians, total healthcare spending, out-of-pocket costs, and more.

VBID Key Findings

The findings of the study revealed that in the comparison cohort (which did have PCP out-of-pocket costs), the out-of-pocket costs for all physician visits increased by nearly 10%.

In the VBID cohort (which did not have PCP out-of-pocket costs):

• out-of-pocket costs for all physician visits decreased by nearly 13% annually
• outpatient and emergency department visits were reduced for conditions that could be treated with a primary care visit
• total medical spending increased at a slower rate, translating to $144 in savings per member per year for the consumer and health plan
  
  

Value-Based Insurance Design Pros for Employers and Their Employees

In a competitive labor market, employers can use VBID models to further differentiate themselves to prospective employees through their benefits offering. Reducing or completely removing out-of-pocket costs for primary care visits allows better access to preventive care, which can lead to a healthier, more productive workforce. For employers who explore VBID, education is critical to ensure employees know that primary care visits and other preventive healthcare services are available to them at no cost.

By having lower or no cost-sharing for primary care visits, employees have improved access to care. Increasing PCP visits can help drive down the use of high-cost medical services, including emergency room visits and hospitalizations. Eliminating potential cost barriers to primary care provides opportunity for employees to work more closely with their PCPs to achieve better health outcomes.

Value-based insurance design is part of an effort to continually evaluate and implement innovative solutions that improve health outcomes. Removing financial barriers to primary care can create a more positive, accessible healthcare experience.