Diabetes TK Benefit Plan Design Approaches

Diabetes Management in the Workplace

Benefit Plan Design Approaches:
Value-Based Benefit Plan Design

Employee benefits are among the primary tools used to attract and retain the best employees so it’s important that the benefit plan design works to balance the goals of the organization and its employees. This requires a thorough analysis and review of the various benefit design approaches.

An important benefit design strategy used by employers focuses on aligning health care costs to the value of the service being provided. These value-based benefit designs can increase health care quality and decrease costs by using financial incentives to promote cost efficient health care services and consumer choices. In this cost-sharing model, patients pay less for health care services and/or medications deemed to be of higher value. Although employers have been using these designs for years, significant work has been conducted by the University of Michigan’s Center for Value-Based Insurance Design (VBID).

Value-based designs that focus on diabetes can be used to help manage and control the impact of diabetes and support employer efforts to drive individuals to select evidenced-based care and/or high quality providers and can:

  • Positively impact an organization's culture
  • Engage those who are at risk
  • Reduce barriers to staying healthy
  • Provide positive health outcomes

According to a CDC issue brief, research shows that using this type of benefit design also significantly increases treatment and medication adherence for chronic diseases such as diabetes, resulting in improved outcomes without additional costs.

Using VBBD focuses financial incentives on the patient rather than the provider. This type of strategy aligns out-of-pocket costs with value, encouraging individuals to take a more active role in their health care decisions. By eliminating or decreasing related out-of-pocket costs VBBD encourages an individual’s use of:

  • High value clinical services, such as A1C lab test, eye and foot exams
  • Medications that are of greatest value for a particular condition
  • Providers with a history of positive outcomes with diabetes
  • Disease management programs and/or coaching
  • Preventive care services

VBBD approaches can include:

  • Removing or reducing copayments: Removing pharmacy co-payments for medications to treat diabetes and related comorbid conditions and medical co-payments for lab tests such as HbA1C and glucose. This can occur with or without a requirement that the individual receiving the benefit perform certain activities. The removal of the cost barrier by itself may be sufficient to motivate behavior change, depending on the level of the cost burden and the value of the required activity to the individual.
  • Increasing cost-share: For lower value services or medications that may be ineffective or of uncertain value, or for providers who are underperforming based on a set of quality measures. Increased cost-sharing gives the individual the choice to opt for the lower-value service, medication or provider, but they will bear an added cost.

Although employers started using VBBD long before the Affordable Care Act (ACA) came into existence, the ACA currently promotes the concept of Value-Based Benefit Design which requires health plans to cover evidence-based preventive services without cost sharing, including those rated "A" or "B" by the U.S. Preventive Services Task Force. 12

Using Value-Based Designs & Incentives

Employer Case Studies

Tools & Resources