Successfully implementing a value-based benefits design may hinge on changing workers' attitudes toward health care quality and cost.

VBBD focuses on lowering or eliminating out-of-pocket costs for medications, medical procedures, services and visits to physicians and hospitals that have a track record of obtaining high-quality outcomes.

The reward for employers comes in the form of healthier workers and lower health care costs. VBBD is gaining momentum among employers, but can run into obstacles built by employee misperceptions about the relationship between health care cost and quality.

The Midwest Business Group on Health, a nonprofit organization comprised of 100 large self-insured employers, assembled nine focus groups to gauge employees' attitudes on cost and quality issues.

Among the groups' revelations:

• Employees want choices in employer-sponsored benefit and wellness programs, and they are skeptical of employer efforts to steer them either toward or away from a particular program or provider.
• Monetary incentives alone won't get employees to participate in value-based benefit designs.
• Programs need to be combined with peer persuasion and management support to encourage both initial and ongoing participation.
• Employee awareness and understanding of existing benefit programs is generally low, and misinformation from the "grapevine" adds to this confusion.
• Employees want to play an active role in managing their health, but motivation to act is hindered by a lack of work-life balance, money, understanding and/or awareness.
• Employees need to see that incentives are in place because employers really do care about their health. They also want to see that the incentives make sense.

"What this tells us is that employers need to better educate employees about differences in quality health care and prepare employees to make quality choices and improve their health," says Larry Boress, president and CEO of MBGH. "Great care must be taken in communicating value-based benefits programs, or employers will not only find a lack of participation, but also mistrust in their intentions to improve the health of their employees."

Developing strategies

VBBD boils down, in part, to designing a comprehensive member-communication program that integrates the goals of the health program with health benefits, Gus Georgiadis, founder and chief executive officer a Triad USA, told attendees last fall at the 54th annual International Foundation of Employee Benefit Plans Conference.

For instance, participants need ongoing reinforcement to increase awareness and promote the use of the program. They also need to know that confidentiality is critical, he explained.

His session was on value-based health strategies. Georgiadis, whose Pennsylvania-based firm focuses on benefits management, urged employers to consider a cost-benefit analysis or predictive modeling to identify the health plan's members with the highest-cost medical conditions.

For employers, the fundamentals of VBBD rest with using the best available data — such as health risk assessments, biometric screening, pharmacy and medical claims data — to target at-risk workers, Georgiadis explained.

This way, companies can pinpoint high-value services, and then waive deductibles and copays for those services. Yet he cautioned employers to leave cost-sharing unchanged where the analysis is ambiguous.

Moreover, to asses use and costs, employers need to gather their health care vendors together, so that they and the vendors can cross-reference integrated medical, pharmacy, lab, disease management, disability and productivity data, he advised.

It's key that employers thoroughly plan ahead before implementing valued-based benefits. This means gauging member participation and satisfaction rates on current health programs.

Touting public-private initiatives

At the Consumer Health World conference last December, representatives from community- and state-run health care organizations presented innovative and value-based wellness models that bridge the private and public sectors.

Ruth E. Clark, executive director of Integrated Health Partners, a physician-hospital organization in Battle Creek, Mich., spoke about a chronic care model designed to decrease the amount of outpatient procedures (currently 100,000 per year) and emergency room admissions (46,000 a year) in Southern Michigan.

With a population of 52,000 and only two major hospitals with less than 200 beds, Battle Creek depends on major corporations such as Kellogg Company and Denzo Manufacturing to provide jobs and health benefits. Dr. Mary Ellen Benzik, a local family physician and member of the Battle Creek Health System medical staff, said, "In our region, patients with multiple chronic conditions represent at least 20% of the population and account for over 60% of the health care costs."

The Battle Creek collaborative model enlists passionate physicians like Dr. Benzik, officers of health care organizations and local companies to work symbiotically in turning the town's health problems around.

The initiative involves intensive coaching on care management and guidelines for targeted-patient treatment with face-to-face meetings. Under the program, multi-disciplinary teams, doctors and nurses rework their perspectives on health care with a greater focus on coaching and fostering an emotional connection between physicians and patients.

Clark said that the model is driven by the payer side, supported by the employer and using metrics to help monitor the plan's success. She further explained that the program extended follow-ups to include in-home visits, and multidisciplinary teams worked especially well to improve clinical outcomes across all settings, yielding substantial savings even in the absence of other interventions.

Blue Cross provided funding for the grassroots effort, which has shown increasing success over the program's lifespan; the organization started with 10 teams of health care and benefits officials in May of 2007 and grew to 28 teams five months later.

Work plans such as Battle Creek are available in 35 states under Medicaid, including Pennsylvania, North Carolina and Indiana.

Early pioneers of value-based benefit design

1997 - Asheville Project, City of Asheville, N.C.: Waived copays for all diabetes medications and supplies. The program yielded five-year outcomes that included lower overall medical costs and a decrease in the mean number of annual sick days used.

2001 - Pitney Bowes: Reduced copays for all asthma, hypertension and diabetes medications and diabetes supplies to the lowest pharmacy-benefit tier; diabetes medications are provided at no cost; program includes reduced copays for seven other medications. As a result, direct medical costs and indirect costs decreased.

EBN Associate Editor Kathleen Koster contributed to this article.

MBGH Report

For a copy of the Midwest Business Group on Health report, "The Employees' Readiness to Adopt Value-Based Benefit Design Strategies," visit www.mbgh.org.