Aligning Incentives & Systems

In recent years, public and private employers have experimented with numerous strategies to achieve dual objectives of controlling costs and improving employee health. Two widely discussed innovations are value-based insurance design (VBID) and the patient-centered medical home (medical home). Both approaches have been written about extensively, and research is emerging on their effectiveness at optimizing clinical outcomes and restraining cost growth. Despite growing momentum on both fronts, the approaches are usually examined separately and, therefore, obvious synergies go largely unnoticed. VBID is an employer-driven benefit design strategy to optimize use of higher-value health care services and reduce use of lower-value services. The goal is to generate better results from employer health care expenditures. The underlying premise of VBID is getting more out of the health care dollar by removing barriers for essential, effective services. VBID is a demand-side initiative that focuses on patient incentives to enhance use of medical services of proven value.

The medical home is a supply-side mechanism to enable clinicians to deliver better-quality care more efficiently. The medical home fosters relationships between patients and providers, improves access and increases quality and consistency of care. medical home incorporates re-created office processes and payment systems to reward an ongoing physician-patient relationship and high-quality, coordinated care. The medical home requires an investment in financing, through either up-front payments or redesigned reimbursement, to help providers implement and sustain the model. Through better information management, use of guidelines and coordinated care, the medical home theoretically may contribute to better quality, which in turn drives cost reductions through avoided hospitalizations and emergency department visits. In this white paper, authors from the National Business Coalition on Health, the Primary Care Collaborative (PCPCC) and the University of Michigan Center for VBID present the conceptual foundation, review the available clinical and economic evidence, and explore how the integration of these innovative health care strategies impact quality of care and health care costs.