The University unveiled a program last week that will provide its diabetic employees with free and reduced-cost drugs, setting a new standard for innovative healthcare plans in institutions of higher education.

Under the MHealthy: Focus on Diabetes two-year pilot program, which begins July 1, diabetic members of the University's prescription drug plan and their dependents will experience a reduction in co-payments for recommended clinical services.

Co-pays will not be charged for generic drugs that control blood sugar, lower blood pressure, reduce the risk of heart and kidney problems or relieve depression.

For M-CARE members, annual eye exams will be provided free of charge in addition to discounted drugs.

The high cost of these medications often hinder University employees and their dependents with all types of diabetes from receiving proper treatment, said William Herman, M-CARE's medical director.

M-CARE is the University's managed care company. The program is available to University employees with any type of health insurance plan.

Herman said the total cost of the program for the University could surpass $800,000, adding that there is no projected return on investment because the program's value is largely intangible.

Although the initial financial burden on the University will be considerable, supporters said that the program could enhance the health and overall quality of life of University employees.

Herman said many diabetics cut back on life-saving medications due to high co-pays. Diabetics may take an average of six to 10 medications, which can add up to hundreds of dollars per month in co-pays.

At the University, 2,100 employees receive diabetes medications.

Currently, the University follows a three-tiered co-pay system. The new program will make generic drugs in the first tier free, preferred brandname drugs in the second tier half-off and non-preferred brand name drugs in the third tier 50 percent off.

The University has also considered reducing co-pays for medications for other chronic diseases, such as asthma and heart disease.

The University is the first college to offer a modified co-pay plan such as MHealthy.

"We hope it will be a model for the nation," said Public Health Prof. Allison Rosen, who will evaluate the program's progress and success.

Proponents want to prove the program's effectiveness to lawmakers in order to encourage the implementation of similar programs in the future.

The road to recognition

University profs. Mark Fendrick and Michael Chernew published an editorial in this January's edition of The American Journal of Managed Care discussing the philosophy behind MHealthy: value-based insurance design.

According to the article, "smarter" healthcare packages would combine disease-management programs with cost sharing.

Cost sharing refers to the sharing of medical costs between employers and employees. It has become standard for health insurance providers to increase cost sharing - requiring healthcare recipients to account for a bigger slice of the pie.

"Cost sharing kills people," Fendrick said. "Ultimately, adverse outcomes are not just abstract. There are real, bad clinical outcomes."

But Fendrick said it is important to understand that cost sharing will always help the bottom line. For this reason, Fendrick and Chernew are not arguing against cost sharing but for a more comprehensive approach to healthcare plans.

Fendrick said there was little reaction to the 2001 article from both the business and academic worlds. It was not until a May 2004 Wall Street Journal Article that the University's research received much attention. The article outlined the results of a simplified version of the University's program used by Pitney Bowes, an international supplier of office and postal equipment. A month after the Pitney Bowes article, the Wall Street Journal published an article on the University's research.

In October 2005, the Center for Value-based Insurance Design was opened to promote, develop, improve and evaluate innovative health plans. V-BID focuses on the tradeoffs between the cost and quality of healthcare, Fendrick said. Fendrick and Chernew are co-directors of V-BID.

MHealthy is only one of the evaluations underway at V-BID.

Research at V-BID

Research at V-BID involves gathering subsets of patients and determining the effects of changing co-pays.

Chernew said that although samples are not randomized, appropriate control groups must be found to serve as a basis of comparison. Research is conducted by evaluating existing healthcare plans.