Check Your Alignment

Check Your Alignment | Risk & Insurance | Misaligning rewards and behaviors is the surest way to have a value-based plan backfire.

By GRAE YOHE, a freelance writer who lives in Ohio

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Another State, Wisconsin, Considers Adding High-Deductible Health Plans to the Menu (07/25/11)

The University of Michigan's A. Mark Fendrick says that, because of the complexity of value-based insurance design, it's easy to overlook the fact that parts of a plan may directly contradict other parts of the same plan. If a company or insurer isn't diligent, it's quite possible to encourage a patient behavior on one hand and punish it on the other.

"There is a Fortune 50 company that decided to pay their employees a lot of money--hundreds of dollars--to quit smoking," says Fendrick. "Turns out their copays on drugs for smoking cessation and their copays to see behavioral therapists to help them quit smoking actually went up markedly in the same year they launched this program--not to intentionally or even consciously penalize use of those drugs and services, but because of the ridiculousness of one-size-fits-all benefit design."

As soon as the company realized that the high copays were actually discouraging employees from quitting smoking, it lowered the copays on smoking cessation drugs and behavioral therapists so that they were sending a consistent message: "We want you to quit smoking ... period."

"It's easy to lose track of the loose ends," says Fendrick. The best way to avoid misalignment is to consciously think about behaviors instead of copays and deductibles.

Ask: What are we trying to get people to do? Then think through the process as a patient trying to comply, and see if there are any obstacles in the way.If you run into obstacles (payments, difficulties associated with coverage), lower or eliminate those obstacles, says Fendrick.

Either plan in a value-based way and shoot completely for certain behaviors, or plan in a traditional way and base everything on flat copays and percentages, he says. Doing both is just spinning wheels.

June 1, 2009

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