A new federal rule was issued by the U.S. Department of the Treasury that could allow millions of Americans with chronic conditions to save money on the medicines and services they need if their health insurance plans decide to use it. The idea was born at the University of Michigan in Ann Arbor and allows health insurers more flexibility to cover the cost of certain medications and tests.
The added flexibility is designed to help people with common chronic conditions who are enrolled in high-deductible health plans. The rule change came about in part because of research and more than a decade of policy engagement by A. Mark Fendrick, a U-M professor and director of the U-M Center for Value-Based Insurance Design, and his colleagues. He is also founding partner of V-BID Health, a company that assists employers, health insurance plans, and health systems design health care benefits packages.
About 43 percent of adults who get health insurance through their jobs have a high-deductible plan, which requires them to spend at least $1,300 ($2,600 if their family members are covered) out of their own pockets before their insurance kicks in.
People with high-deductible health plans usually have to pay the entire cost for services used to manage chronic conditions.
More than half of them have access to a tax-advantaged health savings account, and some employers contribute to those accounts.
Until Wednesday, when the rule was implemented, the federal tax code specifically barred high-deductible plans with health savings accounts from covering drugs and services for common chronic conditions until those enrolled met their deductibles. Such coverage could reduce the chance that people with chronic conditions would skip preventative care because of cost.
The bipartisan Chronic Disease Management Act of 2019 was introduced in the U.S. Senate and House of Representatives last month.
“As more and more Americans are facing high deductibles, they are struggling to pay for their essential medical care,” says Fendrick. “Our research has shown that this policy has the potential to lower out-of-pocket costs, reduce federal health care spending, and ultimately improve the health of millions diagnosed with chronic medical conditions. We have actively advocated for this policy change for over a decade.”
Fendrick is also a professor at the U-M Medical School and School of Public Health, an internal medicine physician at Michigan Medicine, and a member of the U-M Institute for Healthcare Policy and Innovation.
The rule designates 14 services for people with conditions that high-deductible health plans can now cover on a pre-deductible basis:
- ACE inhibitor drugs for heart failure, diabetes, or coronary artery disease;
- bone-strengthening medications for osteoporosis or osteopenia;
- beta-blocker drugs for heart failure or coronary artery disease;
- blood pressure monitors for hypertension;
- inhalers and peak flow meters for asthma;
- insulin and other medicines to lower blood sugar for diabetes;
- eye screening, blood sugar monitors, and long-term blood sugar testing for diabetes;
- tests for blood clotting ability in people with liver disease or bleeding disorders;
- tests for LDL cholesterol levels for heart disease;
- antidepressants called SSRIs;
- and statin medications for heart disease or diabetes.
The list closely aligns with the one laid out by the U-M Center for Value-Based Insurance Design in a 2014 report that showed that based on clinical evidence, these tests and treatments could help those with chronic diseases manage their health and detect or prevent worsening conditions.
The new guidance also leaves the door open to allow high-deductible plans more flexibility in the future for coverage of other preventive services for people with these and other chronic conditions.
Fendrick and Michael Chernew of Harvard University outlined a need for change in 2007 in the Journal of General Internal Medicine. Value-based insurance design principles (V-BID), or the idea that the highest-value clinical services should cost the least to those who need them most, have been introduced in other health insurance plans.
Medicare Advantage plans, offered by private insurers to people over age 65 and those with disabilities, are now able to offer plans with value-based co-pays. So are plans offered under TRICARE, the insurance program for military families, and private employer-sponsored plans without high deductibles.
The V-BID team recently introduced V-BID X, a benefit designed to expand options in the individual market by enhancing coverage of essential medical services and drugs without increasing premiums or deductibles.