Importance of Value-Based Benefit Designs in the New Healthcare Environment

Las Vegas—With the passing of the Patient Protection and Affordable Care Act (HR 3590) in March and the introduction of accountable care organizations (ACOs) coming in the next few years, value-based benefit designs (VBDs) are becoming more important as the healthcare industry aims to cut costs, measure results, and improve outcomes. Robert Kritzler, MD, deputy chief medical officer for Johns Hopkins HealthCare LLC, discussed VBDs at the Fall Managed Care Forum in a session titled Review and Update of the State of the Art of Value Based Healthcare. Johns Hopkins HealthCare LLC is 50% owned by the Johns Hopkins Health System and 50% owned by the Johns Hopkins University School of Medicine. Dr. Kritzler is also the chairman-elect of the board of directors for the Center for Health Value Innovation, a nonprofit organization that aims to educate the market on improved health quality through the use of VBDs. Dr. Kritzler said the Center for Health Value Innovation represents 50 million to 60 million lives, accounting for $100 billion in healthcare spending. Dr. Kritzler said it is important to define value to all stakeholders in the healthcare industry. However, whereas employers and health plans have focused on value for a long time, providers have not been as interested in defining value, according to Dr. Kritzler. “Providers think everything they do is of high value,” he said. “If you’re a provider and thinking of starting an ACO, you need to care about value and benefit design.” Although the frameworks and definitions of ACOs are not yet known, Dr. Kritzler said that VBDs will be a major component. VBDs use data and quantifiable evidence to drive decisions, change behaviors, and improve quality, health, productivity, and financial outcomes. According to Dr. Kritzler, the Center for Health Value Innovation’s goal is to identify and link innovators and innovation that broaden the boundaries of health value. The organization focuses on evidence-based design and identifying, analyzing, and sharing best practices. It also focuses on health information technology initiatives as well as emerging industry trends. To succeed, a VBD must primarily focus on prevention and wellness, according to Dr. Kritzler. He also said plan leaders must effectively communicate about the VBD and align the incentives among its constituencies by utilizing techniques such as patient-centered coordinated care, using community-based assets, and communicating at least every quarter to reiterate the importance of VBDs. “There’s a lot of interesting things to come [in terms of VBDs],” Dr. Kritzler said. “There’s going to be a lot of boldness needed in the next few years [to adapt to the new healthcare laws].”