Remove Financial Disincentives and Increase Prescription Compliance

Don't you enjoy reading something and going...."Yes! Of course!"

Besides the 'well, duh' reaction to a study published in the January/February issue of Health Affairs, I think those interested in healthcare reform should examine what exactly is being measured here.

The study was led by researchers at University of Michigan and Harvard University. The study was funded by GlaxoSmithKline and Pfizer, and was conducted in part by ActiveHealth, an Aetna subsidiary that designs the kind of plans discussed.

At the University of Michigan, the Center for Value-Based Insurance Design was established in 2005 "to develop, evaluate, and promote value-based insurance initiatives that achieve improvements in health outcomes and contain health care costs."

Value-based insurance design offers a potential solution to the health care financing crisis. Value – the clinical benefit achieved for the money spent – is absent from the current dialogue on how to solve the health care dilemma. Instead, the dialogue focuses on two trends in benefit design – cost containment and quality improvement – which create a conflict of incentives for patients.

Money is a huge motivator in American society. We work for money, we worry about money, we manage our money, we spend our money, we save our money, we fight over money, we often measure something's importance by it's monetary value. Money, money, money....

Insurance companies and large employers are spending increasing amounts of money in disease management services, in part, to help them limit future costs and ultimately save money.

The study in question sought to measure the impact of offering lower drug co-payments to people with diabetes, high blood pressure and other chronic diseases on the increased use of preventive medicines. Higher co-pays are frequently used by American employers to cope with the rising costs of health insurance and require workers and retirees to pay more out of their own pockets. But does this is ultimately help patients and save money for the employer in the long run?

Proper treatment for a number of chronic illnesses can be very effective at preventing complications of disease and can help patients stay physically active and productive employees. But that treatment is only as good as when the patient stays compliant with therapy. That means the patients needs to take the recommended medication on the recommended dosing schedule.

The study compared two companies, one of which cut employees’ co-payments on a few key drugs, such as statins for cholesterol and beta blockers for high blood pressure. Generics were free to employees, and the co-pays for branded drugs were cut in half. Cutting co-pays reduced non-adherence by 7-14%.

[E]mployers increasingly enroll beneficiaries in expensive disease management programs designed to improve patient self-management, often by intervening to enhance compliance with specific medications. However, at the same time, rising copayments and greater cost-sharing create financial barriers that discourage the use of recommended services. When patients are required to pay more for their health care, it is well known that they buy less – of both essential and excessive therapies alike.

"All research to this point has shown that individuals will not buy important medical services even if there's a small financial barrier: $5 or even $2," senior study author Dr. Mark Fendrick, of the University of Michigan Medical School and School of Public Health, said in a prepared statement. "This study showed that when you remove those barriers, people started using these high-value services significantly more. These results bolster the idea that health insurance benefits should be designed in ways that produce the most health per dollar spent."

Many companies are already paying for disease management programs to help patients with chronic diseases such as diabetes. So why not encourage people to take the medicines they need. You “pay a nurse $65 an hour to call call a diabetic [employee] and say, ‘Take a beta blocker.’ And the employee says ‘I know it’s important, why did you raise my copay from $15 to $30,” Fendrick says. “It’s a classic example of the misalignment of incentives in the U.S. health care system.”

In response to the report on the WSJ Health Blog, I commented:

Lower copays is a nice idea, but how about requiring insurance companies to cover disease-modifying meds under major medical instead of pharmacy benefits. Or not allowing insurance companies, such as the local Carefirst BCBS in DC, to establish an annual $1500 limit for drug benefits in their individual policies. The Carefirst policy I’ve had for over 7 years has maintained the same $1500 cap for drug benefits. However, the initial wording of my policy implied that a 10% coinsurance would apply after the limit was reached, but that has not not been the case. $1500 covers only 3.5 weeks (25 days) of my MS med, much less any other of the meds I take for Rheumatoid Arthritis or Hypothyroidism, each drug which works to limit damage and allow me to stay active. Preventing further damage and staying active seem pretty important to me. It’s just unfortunate that my copays for meds end up being about $25,000 each year after insurance has paid their ’share.’

And reader Tom responded:

Lisa’s case typifies what really needs repairing in the health care system. This incidentally, is why there is public outrage directed at pharmaceutical companies that is totally unjustified. The culprit is and has been insurance companies. Remember, they are the entity that the Federal Government uses to administrate Medicare. Employers and employees pay for their coverage, it is not gratuitous. The companies then “decide” what they will pay for. Does the term “racket” edge to the forefront? Give us all your money, but we really don’t want to pay anything out. THIS is the mantra that needs addressed.

After a lively discussion, reader CR concluded:

…getting back to the actual article to which this exchange is attached… I would simply point out that, while Fendrick’s mother is right about the “duh” factor in his studies, the notion of aligning co-payments to achieve treatment objectives is a benefit design innovation. Further, it’s important to note that it was not an innovation that came out of academia or the government, but large employers. Pitney Bowes took the lead in creating, evaluating and reporting results of this value-driven approach, which was first given wide report in WSJ in May of 2004. Fueled by ongoing additional research efforts by Fendrick and others, the concept continues to be refined. Point is, employers–seeking better value from the health care supply chain–innovate solutions that would never be conceived of by bureaucrats.

The innovative idea of connecting copays to compliance and health outcomes is a smart benefit design. If only patients were valued not by their costs to the system, but by their positive health outcomes contributing to the overall economic system.

And finally Peter Pitts commented on his blog : Treating chronic disease via appropriate pharmaceutical intervention saves both money and lives -- benefiting both the public purse and the public health. And isn't that what health care is all about.

Amen Peter.