Healthcare costs are higher than ever and rising fast. Medicare is bankrupting the country. Concerns about the quality of the care we deliver have arisen as well, with research consistently demonstrating wide variations in the use of many (frequently high cost) services - often without better outcomes. The Institute of Medicine has identified waste as a major cause of our out of control healthcare costs and has defined cost and quality issues in terms of overuse, underuse and misuse of medical services. Overuse and misuse lead to waste, preventable complications and unnecessary morbidity. Underuse of known effective care for things like chronic disease, prevention and screening lead to preventable adverse outcomes. Physicians and others have known for a long time that these problems sometimes reflect inappropriate demand for services. We also know that services and medications known to be effective are frequently missed because of their cost to patients.

As efforts are underway to encourage providers to deliver cost efficient, high quality care through payment reform, it is reasonable to provide incentives to patients to pursue these same goals. When providers and patients are rowing in the same direction, good things can happen to both cost and quality. Insurance benefit design creates an opportunity to integrate these incentives into the care decision-making process. It also provides an opportunity to encourage patients to learn about and understand the risks, benefits and alternatives to specific preference sensitive[1] and supply sensitive services[2].

Engaged Benefit Design (EBD) represents a strategy to increase the value of health insurance benefits through provision of incentives to patients to seek and receive high value, evidence-based care and to consider whether frequently overused services are right for them. When applied to a typical insurance package, EBD removes cost sharing for specific, evidence-based services like prevention and screening as well as for evidence-based care for chronic diseases. To cover the cost of providing these benefits, EBD raises the cost-sharing (co-payments) for preference sensitive or supply sensitive care like coronary angioplasty and stenting for stable angina. For most services that require a higher co-payment, the insurance benefits include a small financial incentive for patients to learn more about the service in order to make a fully informed decision with their provider. To accomplish this, EBD uses Patient Decision Aids developed by Health Dialog and the Foundation for Informed Medical Decision-Making, co-founded by Jack Wennberg, MD at the Dartmouth Medical School[3].

By encouraging use of high value but underused services and decreasing the use of preference sensitive and supply sensitive care that is expensive and frequently overused, EBD has potential to improve both care quality and cost by engaging patients in decision-making that favors high value choices. By engaging consumers in a learning process so that care decisions reflect their goals and values, treatment choices are more appropriate for them and often favor less invasive and less expensive care. When coupled with payment reform that rewards providers for delivering care that is cost effective and of high quality rather than simply providing more services, there is a powerful synergy of aligned incentives to increase value in health care.

Engaged Benefit Design is the product of an iterative process that brought together many physician leaders and other experts from Colorado. All were free of financial interests in the outcome of the project, which is funded by a federal grant administered by the Colorado Department of Health Care Policy and Finance and a grant from the Robert Wood Johnson Foundation. Building from a simple structure developed by the Oregon Health Leadership Council, the Engaged Benefit Medical Advisory Council reviewed structure and benefits over several meetings from October 2010 through June 2011. Multiple sources for evidence were used in the selection process for affected services. Once specific benefits were selected, and with the help of several policy and insurance experts, the final design was completed. Early in the process, Shared Decision-Making (SDM) was identified as a valuable tool for implementing this strategy. Working with the Foundation for Informed Medical Decision Making, SDM is now integrated into the EBD structure. EBD will be available in the coming months for application to current insurance benefits to increase their value. It is currently being piloted for employees of the San Luis Valley Regional Medical Center and will be evaluated by the Colorado Health Institute.