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Charles Smithers Jr. is the chief operating and financial officer for the Washington-based National Business Coalition on Health, as well as its interim chief executive officer. He recently discussed the concept of value-based health insurance design with Business Insurance Associate Editor Matt Dunning. Edited excerpts follow.
Q: For employers unfamiliar with the concept, what are some of the core elements of value-based health insurance design?
A: There are many definitions that are floating around out there, but from our perspective and from an employer's viewpoint, there are a few basic elements that need to be involved in any sort of value-based health insurance design.
The first of those elements is some way in which the performance of the health care providers and the health plan can be measured and reported on a clear and comparative basis. The second is that providers need to be paid on some sort of performance-based methodology ... I think we're still in the process of formulating what works best. The last element is that the VBID health benefit strategy has to include incentives for individual employees to look for high-value services and providers, and to better manage their own health care. To do that, employees have to have access to provider information that allows them to make smarter choices when it comes to making those decisions.
Q: What does an employer stand to gain by incorporating VBID into their health benefits program?
A: I think you end up with a better-informed user of the employer's health benefit plan. If it's managed well, and you can look at the comparative nature of what's going on, there is some real opportunity for cost savings. But I think it really is more about the total value proposition, where you're looking for ways in which your employees can be healthier and for the health outcomes of the care they receive to be of a higher quality, both of which can help you as the employer control costs more effectively.
Q: What are some of the most common barriers to adopting a value-based insurance design?
A: It takes time and knowledge, and health care literacy is something that I think is still a major issue for many employers and employees. There needs to be some additional work done on that front, and it is happening, but it's a little slower than most people thought it would be. The various programs that brokers and consultants are setting up for employers are all over the board, and the focus tends to be on the things that have the biggest impact from a cost and outcomes perspective, but there needs to be a better understanding overall of how an insurance product and a benefits package is designed and coordinated with both the health needs of the employees and the needs of the provider community that's going to be delivering the services.
Q: How can employers be sure they're getting the best value in health care from their medical providers?
A: This is where the reporting and the data analytics come into play. We've got to come up with a surefire method that we can utilize to gather information and to make it useful across all segments of the provider continuum.That's not easy to do.
There's an awful lot that can be skewed when you start talking about diagnoses and procedure codes, so you have to have a system that forces all of that information to conform to a standard set of data that can be analyzed and compared to tell you what's going on among your providers. That's where we're headed in the data arena, where we're trying to focus on those elements that are comparable across all of the different specialty and subspecialty providers, as well as primary care providers, to figure out who's giving us the best value in care. And that's not necessarily the providers that are just giving us the lowest costs, it's something that's much more in tune with this idea of weighing outcomes and the cost of care together.
Swiss insurer Zurich Insurance Group Ltd. announced in early June that its U.S. unit, Zurich North America, has developed an insurance apprenticeship program. Harper College, a Palatine, Illinois, community college located a few miles from the company's U.S. headquarters in Schaumburg, Illinois, will train students interested in pursuing a career in the insurance industry. The U.S. program will be patterned after the successful Swiss program, which touts employment rates of 94% for students that complete it. Al Crook, Chicago-based head of HR Business Partners for Zurich North America, recently spoke with Business Insurance Staff Reporter Donna Mahoney about Zurich's North America's strategy and the effect these types of programs can have on a company's talent pool. Edited excerpts follow.