While few would argue with employers' desires to contain healthcare costs and get the greatest value for their dollars, just how to achieve those results is a matter of debate. And given recent evidence showing that across-the-board increases in prescription drug co-payments can actually lead to a decrease in employees using essential medication, it is becoming clear that some efforts to hold down healthcare costs paradoxically have the effect of leading to a sicker–and, in the long term, costlier–workforce. Now Hewitt Associates has launched a tool designed to help employers assess and quantify the cost impact of implementing a value-based healthcare design, beginning with prescription drugs. Hewitt's Value-Based Design Model allows companies to analyze the compliance effects and financial impact of cutting employee cost-sharing for some healthcare services while increasing cost-sharing in other services. By using an employer's data of drug utilization and costs, the tool allows them to make clinically desirable plan design changes without increasing company costs.

In collaboration with value-based healthcare experts A. Mark Fendrick of the University of Michigan and Michael E. Chernew of Harvard Medical School, Hewitt is developing a clinically oriented actuarial model that lets employers quantify the cost impact of implementing a value-based healthcare program. "There's a range of services that we know are very important for patients with certain diseases," explains Chernew, who notes that the common response of employers to rising healthcare costs is to shift the expense to employees.

"What we've been doing with Hewitt is developing a model to explore the financial consequences of a more clinically sophisticated design package, which would favor certain high value [health] products and perhaps even target them to patients for whom they are important, thereby allowing the employer to achieve different cost targets while still maintaining quality of care," says Chernew. The Hewitt tool would allow them to be more selective in how employers set their benefit design package. "It's taking the dollars that an employer has and allocating them in the right places–places that have the greatest value," says Sara Teppema, a lead development actuary at Hewitt. Moreover, she adds, value-based design needs to be looked at in terms of the client's overall healthcare strategy and total health-risk management strategy: "What [is the company] doing to incent healthy behavior, wellness, lifestyle changes?"

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