President Barack Obama approved a insurance design developed by University of Michigan researchers as a provision of the 2017 National Defense Authorization Act on Dec. 23. The defense bill, which authorized a $619 billion defense budget, also approved the testing of Value-Based Insurance Design — a health care reform plan that reduces the financial barriers to essential, high-value clinical services — for a pilot in TRICARE, a health care program for active and retired military members and their dependents.
Originally created by faculty at the UM Center for V-BID in 2005, V-BID prioritizes the medications and services that are of highest priority to the consumer. V-BID represents an effort to shift the health care system from a fee-for-service system with high co-pays and deductibles to one with clinical nuance that considers the needs and health conditions of individuals.
The University’s V-BID Center Director A. Mark Fendrick said V-BID aims to change the national conversation on health care, from how much money is spent to how well it is spent.
“The fact that you pay the same amount out of pocket for every drug — whether it be a life-saving drug or a drug that makes your toenail fungus go away — makes no sense to me,” Fendrick said.
In a study conducted by V-BID Health and the American Health Policy Health Institute which reviewed the spending of 35 health insurance companies, the results showed that $2 billion of the $10 billion in net funds were allocated for wasteful and unnecessary health care spending. The United States spends more per capita than any other developed nation in the Organization for Economic Co-operation and Development Countries, yet there are inefficiencies and disparities that V-BID aims to address.
Fendrick has been on the forefront of this effort, working to bring reform to the U.S. health care system. In February, Fendrick testified before the U.S. Senate Committee on Armed Services Subcommittee on Personnel, explaining the principles and benefits of implementing V-BID.
Fendrick said it is rare for legislation, especially health care legislation, to receive bipartisan support.
“I brought an idea to the Senate Armed Services Committee that ultimately, with no lobbying or arguing, became law, which hardly ever happens,” Fendrick said. “We feel incredibly fortunate that we are one of the very few health care reform ideas with bipartisan political support.”
The pilot of V-BID will involve military individuals and families who are enrolled in the TRICARE program. The NDAA states the TRICARE program will provide high-quality medications and providers to covered beneficiaries while reducing the price of care.
Since the creation of the V-BID Center, a number of initiatives that are not limited to health care reform for military members and their families have been developed. The center also works to increase V-BID outreach to state Medicaid or Medicare plans, state employee health plans and specialty pharmaceuticals.
The future of V-BID is unknown, as the success of value-based insurance will be seen in the results of V-BID in the TRICARE and Medicare Advantage plans. V-BID has received bipartisan support in the United States Senate and House of Representatives, as insurance companies shift from delivering and financing fee-for-service care to value-based care.
Already, value-based insurance design has been tested in a number of health care plans and is included in section 2713 of the Affordable Care Act. The Centers for Medicare and Medicaid Services report there are 11 Medicare Advantage plans participating in the Medicare Advantage V-BID Model.
Individuals who are enrolled in Medicare Advantage plans with specific chronic diseases receive reduced cost-sharing and may be able to receive additional supplemental services.
Fendrick said both the TRICARE pilot and Medicare pilot will provide information about the potential of value-based insurance design.
“The goods news about both the TRICARE pilot and Medicare pilot is that if both evaluations are shown to improve quality of care, improve the patient experience and temper health care cost growth,” Fendrick said. “The V-BID principles can be expanded to all 50 states for Medicare and throughout the TRICARE program without any further regulatory intervention”.
LSA senior Madeleine Peters works at the University’s Center for V-BID and hopes to pursue a career in health care policy. Peters said her time at the center has been invaluable to her and provided her with a greater understanding of the U.S. health care system.
“My time at the V-BID Center has opened my eyes to the world of health care policy and how there is so much that can be changed,” Peters said.
Peters traveled to Washington, D.C. to sit in on briefings at the U.S. House of Representatives and Senate that discussed the importance of value-based insurance and proposed legislation. Peters said that her experience with V-BID has fostered her interest and passion in working to reform health care.
“During my time working at V-BID, I have expanded my knowledge of the health care system and the opportunities for improvement,” Peters said. “Working at the V-BID Center has also taught me the importance of educating others, advocating for a change, upholding connections and meeting deadlines.”
The participants of TRICARE make up just one population V-BID can reach as the center strives to increase access to millions of Americans. Almost 10 million active and retired military personnel and their dependents on TRICARE will now be able to opt for value-based insurance.
Fendrick said it is the Center for V-BID’s mission to give people the option to enroll in a health plan with V-BID principles and that expansion to TRICARE is a major achievement for the center.
“I am honored to have any role in making the health care for the folks who serve our country better and more efficient from a financial standpoint,” Fendrick said.