VBCR - June 2015, Volume 4, No 3 - Health Economics
Rosemary Frei, MSc

How can the high cost of healthcare be spread among all stakeholders to produce the biggest patient-care bang for the buck? That is the question thousands of experts are fixated on, including several who participated in a session on prescription cost shifting from payers to patients at the recent annual meeting of the International Society for Pharmacoeconomics and Outcomes Research.

Elizabeth Hargrave, MPA, principal research scientist, Health Care Research Department, NORC at the University of Chicago, outlined the evolution of government- and private-insurance health plans over the past decade. Deductibles have gone up, there are more drug tiers, cost sharing is now common, prior authorization has increased, and there is greater use of preferred pharmacy networks. While there are some differences between the trends in employer-sponsored plans compared with Part D plans, such as dramatic increases in deductibles in the former compared with the latter, noted Hargrave, the overall thrust has been to put more of patients’ skin in the game. The goal is to lower use of expensive drugs when it is therapeutically appropriate, she told Rheumatology Practice Management.

Elise Gould, PhD, senior economist and health policy research director, Economic Policy Institute, Washington, DC, made the argument that the “more skin in the game” approach is misguided. She said cost sharing is a poorly targeted cost-containment device that can lead to medically and economically inefficient decisions. She cited highly publicized previous research showing higher cost can have unintended consequences such as reduced drug compliance and less use of preventive services. Patients end up being the losers, she said, while insurance companies improve their bottom lines.

“For sure, the Affordable Care Act did not ambitiously take on what we might call the middlemen, the third-party payers—it kept them front and center in the marketplace,” she said in a telephone interview with Rheumatology Practice Management. “What was supposed to restrain insurance companies was the medical loss ratio. But insurance companies, if they’re going to get a share of the total spending, they’re not incentivized to have the total spending go down.”

Mark Fendrick, MD, professor of internal medicine, University of Michigan Health System, Ann Arbor, presented what he believes is a middle path, value-based insurance design (VBID), which moves away from the “one size fits all” cost sharing. Use of VBID in high-deductible health plans creates “smarter deductibles,” with the cost-sharing level based on clinical benefit rather than the acquisition price of the service or product, he explained to attendees. Therefore high-value services would have no more than modest cost sharing.

“There are very, very, very, very few healthcare-reform ideas that have as broad-based support as VBID does,” he said in a telephone interview. “That’s because it makes sense, it’s easy to explain, and no one’s against value.”

Rheumatology Practice Management asked Charles King, MD, senior clinical rheumatologist, North Mississippi Health Services, Tupelo, and a member of the American College of Rheumatology’s board of directors, for a comment.

“America is built and embedded in a capitalist economy where insurance and pharmaceutical companies do not have to lower their profits to meet the healthcare cuts. Instead, profits go up for these companies, and hassle and cost go up for patients—without explanation or recourse in the vast majority of cases. Simultaneously, providers are reimbursed less or inadequately to cover the cost of delivering quality care,” said King. “When we try to reconcile these 2 competing values, the stakeholders are left with a total lack of transparency on where the money is being spent to add to the value of healthcare. I favor a solution where the costs of procedures and treatments are contained and agree with the notion of VBID, where cost is kept to a minimum for high-value services and goods.”


Hargrave E, Gould E. Should the name of the game be more “skin in the game?” The scope and consequence of Rx cost shifting from payers to patients. Panel presentation at: ISPOR 20th International Annual Meeting; May 16-20, 2015; Philadelphia, PA.

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