A STUDY ON VALUE-BASED INSURANCE DESIGN ON THOSE WITH MULTIPLE CHRONIC CONDITIONS AND ITS IMPACT

Introduction & background of the study In the current situation health care and health insurance has become the subject of much discussion across the globe, because the health care cost are rapidly increasing. If this situation continues, the costs are likely to become excessive and leading to severe problem financial burden on the family members. Disease burden is continuing due to the longevity and non communicable diseases, so the health needs of significant sections of the population are still remaining unmet. The study highlights on the Value Based Insurance Design. The concept of Value-Based Insurance Design (V-BID) was developed by Mark Fredrick, MD in 1990 along with his team in multidisciplinary research at the University of Michigan. The concept was built to restructure health benefit design so that it can be supported by the clinical indications for care. The concept Value-Based Insurance Design (V-BID), was intended to increase consumer adherence with recommended care guidelines by aligning consumer out-of-pocket costs with the potential clinical benefit of certain health services and medications. In 2002, Pitney Bowes, the health strategy team created and launched the company’s value-based design initiative. Pitney Bowes became the first company in the United States to fully implement this approach.  At the same time this approach was implemented tested through the employer. Employer sets the amount of cost-sharing for a medical service or treatment according to the value of the intervention rather than its cost. Statement of the problem: The costs of medical care have been increasing by 20 to 25% dramatically. While these high costs have been accompanied by substantial reductions in morbidity and mortality, Value-based insurance design (V-BID) describes a system of health insurance that varies patients’ cost-sharing in order to maximize use of high-value services while maintaining a focus on patient centeredness. Review of Literature: Many review of literatures shows that adoption of this Value based Insurance design (V-BID) is in practice in US. Reviews has shown that it is a successful model in the health care and 80.22% successful compared to the other innovative models. Need for the study: India is going to face the problem of ageing and it becomes worse if individual does not importance for health in the future. Spending from the Government is very less, and every individual has to think of buying health insurance. All the health insurance products exist with the clauses of co-pay and deductibles. When they reach 60+ the co-pay clause and co-insurance exists. In this situation the out of pocket expenditure also increases, when they take the treatment, because of the inflation. The study focuses on new product value based insurance design, which already in use in U.S.   It is well suitable to Indian health Insurance market. It can be implements for social health insurance schemes and also existing health insurance products, which can reduce the premium and also can control the individual out of pocket expenditure along with that it can control the fraud to certain extent. background of health condition of the ageing population: The cost of the health care during old age will appears to be very high and this in turn increases the out of pocket expenditure on health care particularly when private facilities are availed of. When older persons are economically dependent, increasing health expenditure adds to the economic burden on the family. India is the second largest population of the elderly that (60+) in the world. Projections in the report indicates that by 2000-2050 the overall population of  India will grow by 56% while the population of 60+ will grow by 326%.during the same period the population of 80+ will also grow by 700% with a predominance of widowed and highly dependent very old women. The number of older women compared to the number of older men will progressively increase with advancing ages from 60 through 80 years. Significant focus on policy programmes is needed for the special needs of oldest of old women. Income insecurity is a significant source of vulnerability among older women. More than four out of five women have either no personal income at all or very little income; income insecurity increases with advancing age. Only a small percentage of older women reporting no income actually receive a social pension. Overall, the country clearly needs to address these challenges for the healthcare needs and priorities associated to the demographic shift. Five diseases burden like cancer, asthma, chronic obstructive pulmonary disease, high cholesterol, diabetes and psychosis-disorder is increasing in India. The International Diabetes Federation gives an even higher estimate, positing that some 33% of adult diabetics in India remain undiagnosed year (IMS Institute for Health Informatics 2012).  63% of adults aged 65 and up were classed as overweight or obese. Obesity is on the rise in India due to a combination of readily available high-fat-content food products and increasingly sedentary lifestyles. The World Health Organization’s Study survey on Global Ageing and Adult Health (SAGE),  among several low- and middle-income countries including India, China, Ghana, and the Russian Federation, rates of  daily smoking among 50+ Indian adults were as high as 46.7% – the highest of all countries. The World Health Organization’s Study on Global Ageing and Adult Health (SAGE) in India found 30.6% of  respondents 70 and older reported having more than one chronic condition. NCDs t hat frequently affect older adults, such as stroke, musculoskeletal disorders, eye sight conditions other than cataracts, or chronic respiratory diseases other than asthma.Many Indians have more than one of these chronic conditions and people with multiple chronic conditions have higher out-of-pocket burdens and take more medications. Objective: In India, almost all the policies exist with co-pay with the age, and  after 60+, everyone is required to pay the same out-of-pocket amount for health care services whose benefits depend on patient characteristics, there is enormous potential for both under- and overuse. Unlike most current health plan designs, Value-Based Insurance Design (VBID) clearly acknowledges and responds to patient heterogeneity. It encourages the use of services when the clinical benefits exceed the cost and likewise discourages the use of services when the benefits do not justify the cost. The objective of this study is

1. To develop a comprehensive understanding of the key components and concept of Value Based Insurance Design (V-BID)
2. To know the applicability as a model to the Indian context

Research Methodology: It is a conceptual exploratory study, in which we have tried to understand the concept of value based Insurance Design (VBID), through studies from various research papers. The study, analyses the new idea for implementation which is advantageous to Indian situation. Introduction and meaning of Value Based Insurance Design: Value Based Insurance design (VBID) is popular in US,has given the good result and it is a very successful model. V-BID, is also known as value-based benefit design. It focuses on building cooperation between patients and their providers. It focuses on prices that patients pay out of pocket as a mechanism to encourage patients to use medications or treatments that are tied to improved health. Its improved adherence to treatment guidelines, it aims to improve current functioning and clinical outcomes, to reduce the occurrence of downstream adverse events, and potentially slow the progression of disease. Value Based Insurance design (VBID) is based on the economic theory to reduce or remove the financial barriers to essential treatments and high performance providers will guide consumers towards value-based health care and improved health status. The very purpose of using the cost sharing is to allocate medical services and contain costs followed by standard economic theory, which presumes that consumers will use only those services whose benefit exceeds the cost to them. By increasing costs at the point of service, moral hazard can be reduced and value increased. The optimal amount of cost sharing reflects a balance between the risk and income transfer effects of insurance against the moral hazard costs. The economic theory also suggests that the value of insurance arises because it allows people to alleviate the financial risk associated with the risk of illness and because it allows those who become ill to afford care they would otherwise not be able to purchase. However, by lowering the cost of care to patients at the point of service, insurance encourages use of services whose clinical benefits might not justify the total cost. This excess consumption is commonly termed “moral hazard” and reduces the value provided by the health care system. The value based Insurance Services is different from the tradition health insurance models as it uses the cost of sharing, in which patients (employees) and benefit payers (employers) share the cost of insurance coverage. In a traditional cost-sharing approach, there is typically no relationship between patients’ health care costs and their health status. Costs are generally distributed equally among employees participating in a workplace insurance plan, regardless of differences in their health behaviours, such as smoking, physical activity, or in the actions individuals with chronic health conditions take to improve their health (e.g., individuals with diabetes who consult with a nutritionist). The VBID can be well understood with the conceptual model Value Based Insurance Design uses different strategy: A successful V-BID model must be tailored to fit the employer, employee population, and health care setting. Previous studies shows that Value based Insurance Design can be incorporated in these approaches. Service provided

• Elimination or reduction in vision exam co-pays for diabetics.
• Reducing or eliminating co-payments for certain health care services or medications (e.g., cholesterol tests, asthma drugs), regardless of who uses them.
• Elimination or reduction in vision exam co-pays for diabetics.
• A primary care physician (PCP) participating in an accredited medical home or heart disease patients choosing to have non emergency surgery at cardiac centers of excellence.“High value” should be determined by the MA plan, using independent, external metrics. These providers should be identified by cost, coding accuracy, or intensity.

Bondition

• Reducing or eliminating co-payments for patients with specific clinical diagnoses (e.g., hypertension, prediabetes) for related services or medications

Severe condition

• Lowering co-payments for patients who are at high risk of disease (or costly complications) and could benefit from participating in disease management programs.

Disease management

• Lowering co-payments for high-risk patients who actively participate in disease management programs.
• Elimination or reduction in PCP copays for diabetics who meet with case managers or complete a health risk assessment (HRA).
• Supplemental tobacco cessation for COPD patients.

The design of the Value based Insurance Interventions – While the focus of the model is directly related to cost through lower cost sharing, supplemental benefits, and higher quality, a key driver of success in MA is proper diagnosis codes. The risk score for a given year (i.e., CY2017) is based on the member’s diagnoses from the prior year. Suitability of Value Based Insurance Design( VBID): “Value-based insurance design” objective is to increase health care quality and decrease costs by using financial incentives to promote cost efficient health care services and consumer choices.  It can be implemented in the Government sponsored health schemes, critical insurance policies as health benefit plans which can be designed to reduce barriers to maintaining and improving health.  In case of chronic conditions, by covering preventive care, wellness visits and treatments such as medications to control blood pressure or diabetes at low to no cost, health plans may save money by reducing future expensive medical procedures. In case of chronic conditions this VBID will  create disincentives as well, such as high cost-sharing, for health choices that may be unnecessary or repetitive, or when the same outcome can be achieved at a lower cost.  their plans. Good data about the effectiveness of value-based insurance design are limited, but early results have been promising. Challenges to VBID Despite these examples of VBID, the national trend in health insurance design does not use value in setting cost-sharing parameters.Several challenges to VBID implementation.

• Concern over costs of increased use. With health care costs rising rapidly, purchasers are looking for ways to constrain cost growth. VBID typically involves lowering copayments for some underused, high-value services. Lower co-payments are associated with higher costs and concerns that V-BID will increase spending
• Cost of implementation. Implementation of VBID involves identification of high-value services and, in cases in which the system targets specific patient groups, identification of which groups would be eligible for lower copayments. Systems that target patients will be more costly to implement, because the eligibility data must then be transferred from the payers to the point of service, often requiring data transfers and cooperation across organizations.
• Data issues: VBID programs focus on diabetes, because patients with diabetes can easily be identified using existing pharmaceutical data sets. Integrated claims data would facilitate progress in other disease areas but would likely be more costly.
• Additional challenges include absence of risk factors in claims data : Data relating to past ailments like heart attack and smoking status and also lack of data for new enrolees. VBID programs that target specific patient groups need alternative processes to deal with these data issues, which might add cost.
• Electronic medical records and health assessment data: Integration of VBID with disease management could offer a powerful program that might be more effective than either of these programs would be alone, while leveraging existing information systems.

Conclusion: V-BID is an opportunity to Indian Insurance Industry in reducing the healthcare cost  and also in reducing the out of pocket expenditure.  It is more suitable for bigger industries, where in the accountability of human capital becomes important. India has the advantage, in reducing and to have the plan according tailored made policy. It is also suitable to  Government sponsored schemes- it can reduce the cost of treatment, drugs and other services, since, all the diseases cant ‘be common to all, treatment cost and drugs can be reduced by this model. A plan must weigh the costs and benefits of offering it to their members. Prudent evaluation should help to minimize risk and lessen expenditure on health care of an individual. India has to look for standardisation of ICD CODES, diseases awareness, health insurance awareness. 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Author : Dr Vijaya Bhaskar.K M.Com, M.B.A, PhD in Management -Health Insurance, LII, Pursuing (Associateship in General Insurance) Insurance Institute of India Academician & Health Insurance domain specialist & Jaswanth Singh G MBA (Financial Management) FIII Insurance Domain Consultant (InsureTech) & Faculty for Insurance & Pension Studies