August 2014, Vol 3, No 5
Value-Based Insurance – Not Such an Easy Sell
The need to design insurance coverage that promotes value in cancer care is no longer a matter of debate, but how to accomplish it remains a huge challenge, according to Lee Newcomer, MD, senior vice president, oncology, genetics, and women’s health, UnitedHealthcare, who discussed value in cancer care from the payer’s perspective at ASCO 2014.
Newcomer was a speaker at the session, “Can We Find Common Ground? Stakeholder Perspectives on Value in Cancer Care.”
He began by reminding attendees “why we are having this discussion.” The average household income is currently about $50,000, and 50% of this goes to pay for insurance premiums and out-of-pocket expenses. Even worse, given the current trend, by 2028 the average household will spend 100% of its income on healthcare expenses, he noted.
“This is a trend that cannot be sustained. We have to start having discussions about value, and we are going to have to say that there are certain things that should not be covered. The issue is how to do this in a way that will be rational and fair,” he said.
Can Patients Understand Value-Based Design?
Insurance benefits are not based on value; most are designed around structures, he noted. The idea behind copayment or coinsurance “is for the patient to pause and ask, ‘Is this worth the money?’ Copays were never intended to be large enough to keep people from getting important, high-value care, but to keep them from selecting lower-value care, if they have to pay the first $50 or a percentage.”
“Unfortunately, this is not discriminatory based on the procedure,” he continued. “It’s simply discriminatory based on price.”
To be successful, a value-based insurance program, “first and foremost,” needs “a nonbiased external reference that will create a fair differential between high-value and low-value services. A high-value service might offer complete coverage, with no requirement for patient participation, while a low-value service would mandate participation – one-third, one-half, even 100% participation if it lacks true value.
“It will be difficult for consumers to understand this for every service they will receive,” he said. These thresholds must be set externally because payers “will always be perceived as making these decisions on a financial basis only,” Newcomer suggested. “It doesn’t matter how high-integrity the process is, the bias is real in the consumer mind.”
He noted that ASCO has started “wrestling with this issue” through the Choosing Wisely campaign. “Having ASCO set references would be a key to getting these in place,” according to Newcomer.
Consumer education will also be critical to the success of value-based design, as the insured population is already unclear about their benefits. “In a value-based program, we are asking consumers to take on an increasingly large amount of information that may be even harder to digest,” he said. “For a consumer to sort out a 2-month versus 4-month survival benefit, or grade 5 versus grade 4 toxicities could be overwhelming.”
“Trying to make this concept easily accessible to consumers, helping them find out the value of a given treatment, is a daunting task and has been a major barrier to getting value-based insurance in place,” he said.
Issues for Payers
Equally overwhelming for systems programmers within a payer system will be sorting out the different diagnoses and treatment regimens and assigning different coinsurance amounts to these. The number of permutations could overwhelm any computer system, Newcomer added.
Furthermore, who decides, and how will it be determined what the patient participation will be for each of these scenarios? “Where do we draw the line where we say one thing should be free, and another should have 30% participation?” Newcomer posed. “No matter where we draw the line, someone will be unhappy.”
On the positive side, once these thresholds are determined, it will be easier for payers to set prices. The more generous the benefit, the higher the overall price of the premium, and this should help consumers begin to understand the concept of value, he predicted.
“The thing that’s the hardest is simply not paying for anything at all,” he continued. For example, in the Choosing Wisely campaign, ASCO has already recommended that metastatic breast cancer patients receive only single-agent chemotherapy (except under certain circumstances), but insurance carriers restricting payment to single agents would elicit strong public reaction, he predicted.
“The immediate perception of value-based insurance is that it’s simply being done to save money,” Newcomer posed. “Putting these programs in place will have to be a gradual process accompanied by education.”
In closing, Newcomer emphasized that, like it or not, in the setting of limited resources, decisions about high- versus low-value services must be made. “Payers need reliable information on value, and so do patients,” he said, “so they can apply their preferences and make smart decisions.”
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