Using Value-Based Design & Incentives

Diabetes Management in the Workplace

Benefit Plan Design Approaches:
Using Value-Based Design & Incentives

Plan Design Considerations

Just as employers have been using VBBD for years, the University of Michigan Center for Value-Based Insurance Design has been working with health plans and other health care stakeholders to implement VBID strategies. Below is an overview of the perspective design approaches for diabetes and prediabetes that VBID incorporate:13

  • Design by service: Eliminate or lower copayments for certain services or medications (e.g. diabetes medications and/or supplies)
  • Design by condition: For patients with specific clinical diagnoses like diabetes or prediabetes
  • Design by condition severity: For patients who are at higher risk of complications and who could benefit from a disease management program
  • Design by disease management condition: For high risk patients who are actively participating in disease management programs

Coverage of these diabetes care components at 100% is ideal and it is recommended that none are excluded:

  • Medical visits for diabetes management
  • Lab tests for diabetes management
  • Generic drugs for diabetes medication
  • Insulin, syringes and testing supplies
  • Medication for high blood pressure and hyperlipidemia
  • Periodic coaching calls

Designing Incentives

Value-based design incentives are most often based on participation in or compliance with recommended services, but they can also be conditional on achieving certain outcomes. The following is an overview of plan types and general incentive mechanisms.14

For all plans:

  • Incentive payment for receiving recommended preventive services (e.g., contribution to Flexible Spending Account (FSA))
  • Reduced medical premium for using recommended preventive services

For plans with copayment or coinsurance cost-sharing:

  • Waived or reduced copayment or coinsurance for using recommended preventive services and drugs

Health Reimbursement Account-eligible (HRA) High Deductible Health Plan:

  • Contribution to HRA for using recommended preventive services and adherence to treatment with diabetes medications
  • Exclusion of recommended preventive services and diabetes related drugs from application of deductible

Health Savings Account-eligible (HSA) High Deductible Health Plan:

  • Contribution to HSA for using recommended preventive services and adherence to treatment with diabetes medications
  • Exclusion of recommended preventive services and diabetes related drugs from application of deductible

Challenges to prepare for:

1. Cost: Incentivizing patients to adhere to diabetes medications may cause an initial, temporary increase in pharmaceutical costs; medical visits may increase as well. Remember, the goal is to have a healthier and productive employee and the additional costs will translate into cost savings in the future.

2. Regulatory issues: There may be employee privacy concerns and costs associated with HIPAA compliance (e.g. getting the data, communication)

3. Data: To identify high-risk individuals, you will need claims data from your health plan and PBM (if carved out). Make sure to include language in your contracts to ensure there are no barriers to accessing this data. Click here for more information

4. Defining high-value services, providers and medications: This can be challenging across all stakeholders as research to-date has focused mainly on prescription drugs, adherence, utilization and patient experience versus treatment outcomes and cost.

Actions to take:

1. Set realistic expectations for related outcomes: Provide senior leadership with a clear definition of strategy goals and timeline. Although an ROI may take a few years to realize, other success measures, such as increased medication compliance, may only take months.

2. Educate your covered population: Using value-based designs may be new to many employees. Work with your vendors to provide accessible and objective information and tools focusing on new plan design options, cost-sharing requirements and decision support.

3. Educate and incentivize providers: Work with your medical carrier to provide information about the clinical evidence that supports the new benefit plan design policies and incentivize providers to use high value treatment options or evidence-based clinical guidelines.

4. Evaluate your program: Did it affect health care costs? Did patients use high value providers/services? Were there changes in medication adherence? How was the patient/employee experience? Have you allowed the program to continue long enough for potential outcomes to become apparent? Click here for more information about evaluation and measurement


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