Value-based cost sharing: Mine field, fiscal hari-kari or panacea?

Value-based cost sharing, which encourages patients to use treatments, services and providers that deliver value, offers a pathway to high-value care, according to a review in the April issue of Health Affairs. The authors delved into the rationale for and types of value-based cost sharing before listing a few cautions.

Sarah Thomson, senior lecturer in health policy at London School of Economics, and colleagues outlined two key principles undergirding value-based cost sharing. First, it may be fiscal hari-kari to discourage patients from seeking care that improves health in a cost-effective fashion. “The second principle is that value should be clearly signaled.” Patients are often unable to differentiate high-value and low-value care; cost sharing can curb both appropriate and inappropriate care.

Thomson and colleagues detailed programs in the U.S. and selected western European countries to summarize the types of cost sharing. These are:

  • Use of preferred providers, which incentivizes patients via lower cost sharing for these providers;
  • Economic evaluation of prescriptions, which reduces or removes cost sharing for cost-effective medications or raises costs for less effective prescriptions;
  • Therapeutic value of prescriptions, which reduces or removes cost sharing for highly effective drugs and raises it for less effective alternatives;
  • Clinical indication, which differentiates cost sharing according to the severity of disease or the patient meeting specified clinical criteria;
  • Reference pricing or lower costs for generics, which reimburses generics at a higher rate;
  • Participation, which incentivizes participation in wellness programs; and
  • Measurable clinical standard, which provides incentives for patients who meet a specific outcome.

Value may be defined by the national government, health insurers or private purchasers, such as employers, according to the researchers. Programs derive value differently, with some focused on cutting costs and maintaining quality and others focused on upping quality. “However, many policies do not explicitly consider both dimensions.”

Thomson et al shared limited evidence of effectiveness. That is, reference pricing appears to decrease drug prices without increasing other costs, but data may not account for transaction costs. Targeted cost sharing among patients with chronic conditions also seems to be cost-effective, the researchers noted.

However, “the costs of determining value and operating value-based policies can be high,” they wrote, which has led some countries to abandon efforts.  

The researchers added two final cautions, noting that value-based cost sharing could worsen inequalities in access and undermine the doctor-patient relationship by forcing the physician to play the part of a watchdog.

Given the challenges, “A key aim for policy should be to uphold the principles highlighted above—namely, to encourage patients to use high-value care and clearly signal what that is,” advised Thomson et al.