Two U-M health care initiatives recommended by Institute of Medicine committee

CHAT game, Value-Based Insurance Design referenced in report on national health care policy to U.S. Health and Human Services today

Photo Date: July 21, 2011

Susan Dorr Goold, M.D., M.H.S.A, M.A., professor of Internal Medicine and Health Management and Policy in the U-M’s Medical School and School of Public Health

ANN ARBOR, Mich. — Two University of Michigan developed health-care initiatives were recommended to the U.S. Secretary of Health and Human Services today in an Institute of Medicine report about the future of the nation’s health care.

At the request of the Secretary of Health and Human Services, the Institute of Medicine undertook a study and issued recommendations on the criteria and methods for determining and updating the essential health benefits package that will be required for qualified health plans offered through exchanges created by the patient Protection and Affordable Care Act.

In the report, called the Essential Benefits report, the federal advisory panel recommended two U-M programs:
CHAT, or Choosing Healthplans All Together, a U-M created simulation exercise that engages the public in setting health care priorities.
Value-Based Insurance Design, a concept created at U-M, focuses on removing barriers for health care services that are proven to be effective. The basic premise is to align out-of-pocket costs with the value of medical services.

In the report, the committee recommended engaging the public in deliberations about coverage priorities and specifically highlighted experience around the country with CHAT. The report points out that CHAT’s small group process allows people to make choices among competing health care priorities and that CHAT has been used in at least 10 states to help inform state and community leaders about covered benefits and benefit design.

“We are pleased that CHAT is a part of these important recommendations,” says Susan Dorr Goold, M.D., M.H.S.A, M.A., professor of Internal Medicine and Health Management and Policy in the U-M’s Medical School and School of Public Health.

“Policymakers and families struggle to care for important health needs with limited resources. Should a formulary be expanded or tightened? Are the co-pays too high? How do we balance beneficiaries’ needs with those who would benefit from lower premiums or expanded eligibility? CHAT engages ordinary Americans in deliberative dialogue about health spending priorities,” says Goold.

“Results from research and policy projects in many communities, states and countries suggest that, when groups of citizens deliberate on this issue using the CHAT game, they recognize the need to make tradeoffs between competing needs and can choose benefit packages, within a budget, that nearly all find acceptable.”

In CHAT, groups of non-experts choose from an array of health spending options, as individuals and groups, constrained by a budget (represented as pegs or markers). Options can include types of services, restrictions on access and choice, public program eligibility, premiums or copay levels, and/or public health programs. After they choose coverage, randomly drawn cards representing health problems and crises show players how the health plan they designed would work in the case of an illness or injury to themselves or others.

CHAT continues to evolve. The board game has been transformed into software, which permits easy changes to the options, costs, and “health events” to meet the needs of changing times or different populations. A web-based version is in the works.

In the report, the panel indicated the methods used by HHS should be highly visible and allow for current and future enrollees to help define priorities for coverage. As envisioned by the committee, the public deliberation process would enable individuals — working in small group meetings around the country — to participate in a prioritization process, where different elements of coverage–specific services, types of cost-sharing, degree of provider choice, approval requirements, etc .– are discussed and debated

The importance of Value-Based Insurance Design also was underscored in multiple places in the report. The report strongly endorsed the premise, central to V-BID, that clinical nuance and cost should be central to determining the benefits offered . V-BID, the report says, identifies those services whose benefits relative to their costs represent an efficient use of resources for patients. The use of those services is then incentivized, usually through two mechanisms: 1. Minimal cost barriers and 2. Financial incentives.

The concept was first developed and named by U-M faculty A. Mark Fendrick, M.D., and Dean Smith, Ph.D., along with Michael Chernew, Ph.D., formerly of U-M and now at Harvard Medical School.
“The committee believes that the Essential Health Benefits package should become more fully evidence-based, specific, and value-based over time,” the report states, adding “The Essential Health Benefits must be affordable, maximize the number of people with insurance, protect the most vulnerable individuals, promote better care, ensure stewardship of limited financial resources by focusing on high value services of proven effectiveness promote shared responsibility for improving our health, and address the medical concerns of greatest importance to us all.”

In the panel’s recommendation to establish a framework for obtaining and analyzing data necessary to monitoring implementation and updating of the Essential Health Benefits package, it cites Value-Based Insurance Design as one of the health plan characteristics that should be evaluated.
"Value-Based Insurance Design is an intuitive concept with strong private and public sector support that has potential to improve the health of Americans and slow the rate of medical cost growth,” says Fendrick, co-director of the U-M’s Center for Value-Based Insurance Design, and professor in the Departments of Internal Medicine in the U-M Medical School and Health Management and Policy in U-M’s School of Public Health.

“I am gratified by the inclusion of V-BID in the IOM report and I am hopeful that HHS will continue to use V-BID principles in their recommendations to create clinically nuanced health benefits packages."

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