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Health exchange to assess ‘value-based insurance’

State officials are considering whether to require that some insurance plans sold on the health exchange be designed to encourage the use of certain “high-value” medical services while discouraging “low-value” services.

This so-called “value-based insurance design” has become increasingly popular as a way to rein in medical costs while encouraging people to seek preventive care and other proven-effective services. But opponents slam the concept because they say it gives insurance companies too much control over clinical decision-making.

A number of companies in Maryland do offer value-based insurance plans to their employees. But there is no statewide standard or requirement in place — at least not yet.

The Maryland Health Quality and Cost Council, a group convened several years ago by Gov. Martin O’Malley, has taken up the issue. The council has been working to establish common guidelines for value-based insurance plans in the state, starting with the health exchange.

The Maryland Health Benefit Exchange board heard a presentation at its Wednesday meeting about how value-based insurance works and potential ways of incorporating the concept into the exchange.

Dr. Joshua M. Sharfstein, board chair of the exchange and secretary of the state health department, said he wants board members to consider requiring that value-based insurance plans be available to people who buy coverage on the exchange.

The health exchange is only for people buying individual or family health coverage. Any decisions about the exchange do not apply to people with employer-sponsored coverage.

Sharfstein said value-based insurance could make high-deductible health plans, which have also become much more common in recent years, less burdensome for consumers. High-deductible plans require consumers to pay for all their medical care until they meet their deductible — perhaps up to $3,000 to $6,000. Then their insurance kicks in.

The concern is that people forgo important medical care — like check-ups, prescription drugs and other preventive services — because they haven’t met their deductible and don’t want to pay out of pocket.

In a value-based insurance plan, the co-pays would be lowered or eliminated for services deemed “high-value” to encourage consumers to use them. Co-pays would be raised for expensive “low-value” procedures that don’t provide substantial health benefits, such as an MRI or certain lower back surgeries.

“We are aware that high-deductible plans are a challenge for people, and there are options that can reduce costs,” Sharfstein said Wednesday. “And I think that as the exchanges moves forward, we have the opportunity to consider some of this.”

Value-based insurance requires consumers to be more vigilant about their medical care. If a patient with such a plan insisted on receiving an MRI, but a physician said it wasn’t really necessary, the patient would bear the brunt of the cost.

But patients wouldn’t always be penalized for selecting a so-called “low-value” service. If a physician determines such a procedure is truly necessary for a given patient, the insurance company would pay the usual rate; the patient wouldn’t be on the hook for extra cash.

Sharfstein said he thinks consumers would benefit from having the option to choose a value-based insurance plan from the exchange. Some plans on the exchange already have elements of value-based insurance, he said, but there’s no clear way to identify them.

Sharfstein would like the exchange board to consider denoting which plans are value-based so that consumers can easily identify them when shopping for coverage. Over the next several weeks, the board will evaluate possible options.

The presentation to the exchange board was given by Dr. Roger Merrill, the former chief medical officer for Salisbury-based Perdue Farms, which set up a value-based insurance plan five years ago. Merrill said the plan has resulted in measurable improvements in employee health and reduced costs.

“Then why are low-value services done? Economics is why they’re done,” Merrill said at the Wednesday health exchange meeting. “It’s the greatest evil in medicine. We attack patients for our own pocketbooks’ benefit and do procedures on them that we know [won’t improve] their health.”

But there are other reasons, too, several people said.

“A physician often orders a test because the patient twisted their arm, even if the physician doesn’t really think something is going on,” said Barbara Brocato, a lobbyist who represents several medical groups in the state.

Brocato said her clients are very concerned that value-based insurance oversimplifies the decision about which services are worthwhile, and takes control away from physicians.

“I think we have to be very careful,” Brocato said. “The physician and the patient together need to make the decision on the best care plan, not the payer. We don’t want a health insurer to make clinical decisions about life and death for a patient.”


About Alissa Gulin

Alissa Gulin covers health care, education and general business at The Daily Record.