Purchasers and Employers are Joining the Trend: Aligning Provider and Consumer Incentives Pays Off

The Maine Health Management Coalition, a long-time, successful business coalition focused on healthcare cost and quality transparency, recently changed its name to the Healthcare Purchaser Alliance of Maine. The re-branded organization will provide a collective voice and buying power for purchasers to lower costs and drive better outcomes. Their transition reflects a growing trend in healthcare: purchasers actively joining the movement to improve care value.

How can employers get in the game? Here’s one strategy: align provider and consumer incentives. Essentially, pay physicians, hospitals and other providers to provide high value care and avoid low value care. Then, use plan design and communications to encourage consumers to use high value care and avoid low value care. You might know this concept as Value Based Insurance Design or VBID. VBID co-founder and Director of University of Michigan’s VBID Center, Dr. Mark Fendrick uses a peanut butter and jelly sandwich analogy to explain that strategies that address provider and consumer behaviors work better together:

Who doesn’t prefer a peanut butter and jelly sandwich?

Through the Connecticut State Innovation Model’s VBID initiative, Freedman HealthCare and VBID Health are providing employers technical assistance to create plan designs that encourage use of high value providers. Strategies include:

• Tiered or narrow networks with lower copays for high value physicians and hospitals
• Bonus payments for visiting Centers of Excellence for certain services or surgeries
• Reference-based pricing

The State of Connecticut Health Enhancement Program (HEP) is already working towards these goals. Enrollees in HEP pay lower premiums if they participate in gender and age-appropriate preventive screenings and visits and disease education for certain chronic conditions. According to the CT Office of the State Comptroller, HEP has shown success in improving use of preventive services and disease management while controlling costs. In 2018, HEP will offer new benefits related to high value providers, including:

• Waived copays for Preferred Providers, in-network PCPs and specialists
• Waived co-insurance for preferred in-network imaging and lab facilities
• Bonus payment for using Centers of Excellence for certain procedures (like joint replacement) using State of Connecticut Smart Shopper

Learn more about the Connecticut VBID initiative and how employers can get involved.