Sheet metal & Air Conditioning Contractors’ National Association

Trustee Advisor Blog

This blog educates industry trustees to aid them in better fund operations in order to control costs and provide quality benefits to fund participants.

Moving Toward a Value-Based Health-Care Plan Design

Nov 21, 2011

Trust Experts

If you saw the recent article in the Washington Post about Maryland’s efforts to introduce value-based health care, it probably wasn’t the first time you heard of the idea. Our guest blogger, Peter M. Rosene, a partner with the firm Felhaber, Larson, Fenlon & Vogt, SMACNA’s outside legal counsel, shares his thoughts on why the idea of value-based health care is taking hold:

Employee Benefits practitioners of all stripes are currently awash in information regarding “value-based health-care design”. The concept is loosely defined, and evolving. Simply stated: Value-based design (VBD) recognizes that value equals quality (sometimes expressed as outcomes) over price (Value=Quality/Price).

For trusts that are involved in the purchase and delivery of health-care services for groups, it means that in each phase of contracting for services, plans strive to push the equation in vendor relationships toward value. For those utilizing health care, it means becoming more engaged in understanding the quality and the price of care that we receive in an effort to stay healthy. As our life spans increase, which statistically shows no limits, it will be increasingly important to suppress the speed at which disease develops.

Most of our current health-care plan designs are based on old “one size fits all” models that evolved in the 1960s and 1970s. These designs did not differentiate between services that were particularly effective in reducing the incidence or progression of disease from those that are not particularly effective. These designs have been perpetuated, without much thought given to how design drives both utilization and quality. As such, health-care spending does not get directed toward care that has been proven to improve the quality of life of plan participants, and decrease demand for services.

The practice of medicine has evolved rapidly. There are emerging insights into how we can intervene, in cost-effective ways, to slow the growth of disease within our covered populations with the use of “high-value” services. These “high-value” services help reduce both current demand for services and the erosion of health.

For instance, it is well known that the use of medication to control blood pressure and cholesterol prevents a wide range of disease that is costly to treat. Despite that, we do little to try to help plan participants achieve successful compliance with simple medication plans, even though it is in their best interests and can dramatically decrease the future demand for services.

We still do poorly in screening for diabetes affecting our plan participants, even though it is now estimated that one in ten adults in the world is diabetic. Simple measures to control blood glucose in diabetics can provide huge returns, both in terms of quality of life, and in terms of demand for expensive services.

Plan design focus needs to be on decreasing both the current cost of care and the future demands for service. Plans should reward behavior that enhances value and removes barriers to effective health care, as well as provide disincentives to the use of low-value services that do not lead to effective resolution or control of a medical problem.

Medicare contracting is moving in the direction of value-based health-care plan design. Watch for these contracting and delivery designs to be adopted in the general population. In the future, we will see “Medical Homes,” with advanced primary care delivery and “whole-person” care coordination. We will see the development of “Accountable Care Organizations” that will offer bundled services that allow medical providers to either be at risk, or be rewarded, based on the outcomes of treatment, rather than the fee for service model that predominates today.

In sum, there is no such thing as a neutral plan design; each feature of our plans pushes and pulls the delivery of health care, which affects both quality and cost. If we are to achieve success in moderating cost trends, we need to understand and experiment with programs that are aimed at achieving value.