Health IT Vendors Push Value Based Insurance Design - InformationWeek

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9/27/2010
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Health IT Vendors Push Value Based Insurance Design

Passage of legislation supporting a Medicare test of VBID, which lowers patients' costs for medical care to encourage them to take care of their chronic illnesses, could boost investment in healthcare software, hardware and services.




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If Congress passes legislation to create a demonstration project that will test value-based insurance design (VBID) methodologies for Medicare beneficiaries, then we can expect to see further technology investment in VBID, IDC analyst Janice Young predicts.

The Seniors' Medication Copayment Reduction Act of 2009, S. 1040, is a bipartisan bill that was introduced last year by Senator Kay Bailey Hutchison (R-TX) and Debbie Stabenow (D-MI) in May. The bill was referred to the finance committee, which has not yet scheduled a hearing on it. However, as the bill moves through Congress, analysts and stakeholders note that, if enacted, the legislation -- which calls for establishing a model to test whether lowering copayments in Medicare can improve health while reducing costs for chronically ill patients -- could significantly increase technology investments to support VBID.

VBID is a way to reduce chronically ill patients' out-of-pocket costs for medicines and medical services. By doing this, patients with chronic diseases are better able to afford doctor visits, medications, and other health and wellness activities, which can help prevent a worsening of their medical condition, as well as result in a reduction in hospital visits.

This approach to healthcare, Young said, will require that health plans make additional technology investments to implement personalized value-based benefits for members and to upgrade older IT infrastructures.

"VBID requires a more flexible functionality at the member level than is currently available in legacy architectures. Furthermore, the value-based benefit design information for the member or group must be linked to information available to physicians," Young said.

Young also noted that by introducing VBID into Medicare, the model can be tied to other efforts in health IT, such as better information delivery, investment in electronic health records (EHRs), and the movement toward administrative simplification.

"We now have the following: we have an information technology infrastructure emerging, we know best practices for chronic disease management, and we know that the senior population has extraordinarily high incidence of these chronic diseases. We're in a perfect position to test the VBID model," Young added.

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