Differentiating VBBD from CDHD and Value-Based Purchasing

A VBBD plan differs from a CDHP in a fundamental way. In a CDHP, also known as a high-deductible plan, the enrollee is responsible for the costs of services, and the deductible. This creates greater cost awareness and gives additional incentive to the enrollee to determine proper value. In VBBD, the proposition of value is integrated into the incentive structure. A VBBD plan does not have the potential risks associated with a CDHD plan, namely the risk of deferring needed services to avoid the full cost of services or to build balance in a tax-deferred account.
The National Business Coalition published a report called “Value-Based Benefit Design: A Purchaser’s Guide,”8 in which the following steps are outlined for the implementation of such a plan:
8 Available online at: www.sph.umich.edu/vbidcenter/registry/pdfs/VBBDPurchaserGuide[1].pdf.

  1. Population analysis: This is effectively data collection and analysis. This includes data on medical claims as well as prescription drugs. The purpose of this step is to identify areas that are at risk for losses due to health issues but that can be mitigated via treatment tracking and improvements in healthy lifestyles. A medical professional should review this collected data. Once this data is analyzed, a decision should be made as to what employee segment should be targeted by the VBBD program. This is so that incentives can be targeted to specific providers and employees, and ensures that only employees with specific conditions are motivated to seek specific services. To benefit from this targeting effort, the plan sponsor must partner with a clinical decision support organization that can provide support in identifying optimum target population.
  2. VBBD plan development: Once this data is collected, the plan sponsor can proceed in developing the plan’s initiative. The program that is developed flows directly from the data collected in the previous step. For example, a sponsor may have a large group of diabetic employees who do not follow proper healthy lifestyle guidelines or are noncompliant with regard to their drug regimens. A VBBD program for this sponsor should be geared to increasing positive outcomes related to diabetes. In connection with this example, note that strict adherence to a drug regimen directly reduces healthcare costs.
    The first element for a strategy in this step is to provide financial restraints on high-value services and to provide positive incentives for lifestyle changes. As discussed previously, high-value services are those that are proven to be closely correlated to improving an individual’s health or wellbeing.
    Features of a VBBD plan that help to reduce copayment amounts for prescription drugs and equipment include the following:
    a. A reduction in copayment amounts for specific drugs or equipment when used to treat a specific condition an employee engages in a disease management program
    b. A reduction in copayment amounts for office visits, billed as wellness visits
    c. Modifying deductibles for completing a personal health assessment (PHA)
    d. Modifying deductibles for participating in a disease-management or a wellness program
    e. A reduction in copayment amounts for using high-quality services
    The most common approaches to providing positive incentives are as follows:
    a. A reduction in premium contributions for completing a PHA
    b. A reduction in premium contributions for quitting smoking
    c. A reduction in premium contributions for participating in a disease-management or wellness program
    d. A contribution to an employee’s HSA for completing a PHA
    e. A contribution to an employee’s HSA for participating in a disease-management or wellness program
    An important aspect of a VBBD program is to provide solid support and education. The plan sponsor must work with vendors and develop a system of support for employees; the vendors must work with noncompliant employees. The vendors should be able to offer these employees disease management, case management, and health coaching if necessary. Due to the complexity of VBBD programs, it is usually prudent for an employee to start off with a pilot program before moving into wide-scale implementation.
  3. Developing a communication program: An effective communication program should be designed to last up to a year, due to the relative freshness of the concept. Based on this, it will take time for an employee to grasp the true dimensions of the program. For example, plan participants usually have trouble grasping the concept that high-quality services may be less expensive. Senior management support for this system is essential and should be used regularly.
  4. Vendor management: Effective vendor management is another essential component. Considering the fact that a VBBD program utilizes the services of a number of vendors, it becomes imperative that the sponsor implements an effective method of vendor management. All vendors should understand the program’s objectives and solutions. Procedures should be established for vendor communication and for effective problem identification and resolution. A system of vendor evaluation should be established with clear-cut performance standards established.

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