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March 14, 2010
ASHEVILLE, N.C., SPAWNS A MOVEMENT WHILE IMPROVING THE HEALTH OF RESIDENTS
Pharmacists are qualified to do much more than just fill prescriptions; they can counsel patients and keep them on track. And companies that foot the bill for medical interventions that keep chronic diseases under control can actually save in the long run by avoiding costlier medical treatments.
Such was the thinking behind a 14-year-old health care movement called value-based insurance design, a benefit model that started in Asheville, N.C., to control emergency care costs for diabetics.
While value-based insurance or benefits design has caught on with several large self-insured employers and some insurers are testing such designs for fully insured programs (see story, page 12D), experts say they expect the still-difficult economy to slow adoption of such programs because they do not produce immediate savings for employers.
Employers, however, still are thinking about "how they can influence the decisions their employees make," said Andrew Webber, president of the Washington-based National Business Coalition on Health. "Employers found that employees, especially lower-income employees burdened by the high cost of prescriptions, were not compliant with their care. Employers are finding that it is in the best interest of companies to start removing barriers to care."
Essentially, this benefits strategy calls for companies to provide workers with chronic conditions the tools and extra money, via incentives such as lowered premiums or waived prescription and doctor visit copayments, to remove financial barriers to highly effective treatments. These steps, according to experts and case studies, help avoid even costlier care in the future.
The latest research shows that value-based health care designs can help companies at least break even, according to a January article in the journal Health Affairs that tracked studies at Harvard University, University of Michigan and other research.
Such newer data doesn't surprise people like John Miall, a retired 30-year human resources official with the City of Asheville who later founded his own consulting firm, Miall Consulting. He was one of the original drafters of what became the Asheville Project, which launched the movement in 1996.
Asheville and its local hospital decided to rein in health care spending for diabetic employees by paying for their medicine and health care counseling. The move, they hoped at the time and later realized, would avoid costly care such as emergency room visits, amputations and dialysis that often can be prevented by properly managing diabetes.
"This whole thing was born out of the frustration that paying for sick care wasn't working," Mr. Miall said. “The sick claims add up and that's the problem. We thought and later confirmed that paying for people when they are well and healthy is how you really save in the long run."
Diabetic workers, making up about 8% of Asheville's workforce, were struggling to pay for their prescriptions and treatment, so they devised ways to save, but they cost the city more in the long run, Mr. Miall said.
Mr. Miall told the story of a diabetic firefighter who tested his blood sugar levels only every other day because the test strips were too expensive. Not uncommon were tales of workers who took their medication every other day or split pills in half to save money, he added.
When the city and hospital decided to waive copays for preventative treatments, such as blood sugar monitoring and medications, and pay for regular one-on-one counseling with pharmacists - a group Mr. Miall described as “one of the world's most underutilized professions" - the city eventually saw the savings. Specifically, the city gradually saved between $1,200 and $1,872 per patient per year, according to 2003 research published in the Journal of the American Pharmaceutical Assn.
Anecdotally, Mr. Miall, then the head of human resources and risk management for Asheville, said the city paid for no dialysis treatments between 1998 and 2005, which is when he retired.
"Before that, given our workforce, we always had at least one worker a year in dialysis," he said. “So having no one in dialysis was a big deal for us," Mr. Miall said.
In addition to avoiding expensive interventions, the city also saw a drop in absenteeism and a spike in productivity, he added.
"What's funny is we just called it the "diabetes thing.' We didn't know we were changing health care," Mr. Miall said of value-based insurance design that has since grown to more than 100 employers nationwide.
Asheville's experiment was expanded in 2009 to the Diabetes 10 City Challenge, which involved 30 employers in 10 cities. Everyone eventually realized the savings, said Bill Ellis, executive director and CEO of the Washington-based American Pharmacists Assn. Foundation.
"It was an investment in what we called 'well care' and not "sick care,'" Mr. Ellis said. "More and more employers now are realizing they have to make a better investment. We are seeing a lot of discussion on this in Washington, even."
As a result of the Diabetes 10 City Challenge, employers saved an average of $1,100 in patient health care costs per year and employees saved an average $600 per year, according to 2009 research published in the Journal of the American Pharmacists Assn. But despite the demonstrated savings, the progression of value-based designs in health care could slow, experts say.
"There's some resistance, a reluctance to talk about this because it costs money upfront, especially in a time when employers are scaling back," Mr. Ellis said. "There's emerging data, but there isn't that 25 years worth of data in place for people to make changes. This requires a mind shift - paying for wellness instead of sickness - that employers might not be ready to adopt."