The annual defense bill signed last week by President Barack Obama included a pilot program to test value-based insurance coverage in Tricare, the U.S. Defense Department's health benefits program.
A provision in the defense bill calls for a program that will reduce or eliminate co-pays and other cost sharing for certain drugs and services considered high quality because they offer proven results.
Providers considered high-value would be reimbursed at higher rates as well.
The Secretary of Defense must submit a report within the next six months detailing which providers, services and medications will be considered high value. The Secretary must also identify the co-pays or cost share amounts that will be reduced or eliminated when Tricare patients opt for high-value care.
If the pilot results in people with certain conditions, such as heart disease and diabetes, having better outcomes, reduced emergency room visits or hospitalizations, and enhanced care, it may be rolled out to the entire Tricare population, according to a press release.
Tricare provides healthcare coverage to 9.4 million people in the armed services, retirees and their families. In 2015, the Defense Department spent $48.7 billion on healthcare services through Tricare, according to a May report to Congress.
The military health system's pilot follows in the footsteps of value-based insurance programs being implemented in Medicare Advantage and employer health benefit plans.
In 2015, the federal government announced a new program to test value-based insurance design in Medicare Advantage plans in seven states. That test is scheduled to start next month and will go on for five years. Efforts to reduce healthcare costs and improve quality has been one of the few bipartisan issues in Congress.
Private insurers that use value-based plans with their under-65 population have reported reduced overall costs on chronic-disease patients as early as three years after implementation.
Studies have shown most consumers use low-value services because they are cheap or they've been recommended by a specialty provider who may be driven by fee-for-service incentives. They also too often ignore high-value preventive services that might keep them from incurring larger hospital bills later on.
Employers are using value-based plans to reduce their health spending as well. According to the latest data from the National Business Group on Health, nearly half of large employers have incorporated some type of value-based insurance design into their plans.