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Geisinger study published in The American Journal of Managed Care demonstrates Value-Based Insurance Design


DANVILLE, PA -- The U.S. wastes more than $400 billion each year treating unnecessary medical complications that could have been avoided if patients had adhered to their prescribed medications. Although medications for chronic illness are effective in combating disease, their full benefits are often not realized because approximately 50 percent of patients do not take their medications as prescribed.

A Geisinger study published in the February 2016 issue of The American Journal of Managed Care shows that instituting a zero prescription co-pay for its chronically ill employee population resulted in a positive cost saving and return on investment.

“Recent studies suggest that even low, out-of-pocket costs can be a significant source of patient nonadherence with drug therapies that effectively prevent exacerbations and thus, there’s an increase in the utilization of high-cost care,” explained Daniel D. Maeng, Ph.D., the lead author of the study. “Geisinger’s experience with its value-based insurance design – which effectively makes some of these medications free to targeted, high-risk populations – demonstrates that it not only improves quality of care but also creates cost savings.”

Historically, value-based insurance design (VBID), in the context of prescription drugs, has demonstrated improved medical adherence and certain health-related outcomes, but no obvious cost savings. However, results of the Geisinger study indicate that a zero co-pay drug program for its chronically ill employee population was associated with positive cost savings and a return on investment of 1.8 over five years.

The observed cost savings of the VBID can be attributed to the fact that, rather than implementing the VBID as a stand-alone strategy, it was designed to change patient behavior within the context of a comprehensive employee wellness program called MyHealth Rewards. The intervention group, defined as 2,251 Geisinger employees participating in the wellness program, was also enrolled in the Geisinger Health Plan (GHP).

“Theoretically, investing in high-value benefits would be more than offset by the avoidance of more expensive medical events. In other words, if we could offer employees the help they needed to take their prescribed medication, ie: provide it at no charge, and, therefore, avoid being re-admitted to the hospital, we could reduce our overall cost of healthcare and have healthier employees,” said Maeng.

More than 200 prescription medications were selected to be eligible for the $0 co-pay program; those selected were designated for chronic conditions like high blood pressure, cholesterol and diabetes management and were preventative in nature. Geisinger researchers say that VBID implementation within the context of a wider employee wellness program targeting the appropriate population can potentially lead to further positive cost savings.

“These findings are further evidence that V-BID can produce results that benefit both patients and payers,” said A. Mark Fendrick, MD, co-editor in chief of The American Journal of Managed Care and Director of the Center for Value-Based Insurance Design at the University of Michigan. “The fact that these positive findings occurred within the context of an employee wellness initiative should encourage those employers who have considered moving toward clinically nuanced benefit designs, but have been reluctant to make that leap.”

Co-authors in the study include James M. Pitcavage, MSPH, and Susan R. Snyder, Ph.D., both of Geisinger Health System, Danville, Pa., and Duane E. Davis, M.D., xG Health Solutions, Columbia, Md. 


About Geisinger
Geisinger is an integrated health services organization widely recognized for its innovative use of the electronic health record and the development of innovative care delivery models such as ProvenHealth Navigator®, ProvenCare® and ProvenExperience®. As one of the nation’s largest health service organizations, Geisinger serves more than 3 million residents throughout 45 counties in central, south-central and northeast Pennsylvania, and also in southern New Jersey at AtlantiCare, a Malcolm Baldrige National Quality Award recipient. In 2017, the Geisinger Commonwealth School of Medicine and Geisinger Jersey Shore Hospital became the newest members of the Geisinger Family. The physician-led system is comprised of approximately 30,000 employees, including nearly 1,600 employed physicians, 13 hospital campuses, two research centers, and a 583,000-member health plan, all of which leverage an estimated $12.7 billion positive impact on the Pennsylvania and New Jersey economies. Geisinger has repeatedly garnered national accolades for integration, quality and service. In addition to fulfilling its patient care mission, Geisinger has a long-standing commitment to medical education, research and community service. For more information, visit, or connect with us on Facebook, Instagram, LinkedIn and Twitter.


About the Journals and
The American Journal of Managed Care is the leading peer-reviewed journal dedicated to issues in managed care. distributes healthcare news to leading stakeholders across a variety of platforms. Other titles in the franchise include The American Journal of Accountable Care, which publishes research and commentary on innovative healthcare delivery models facilitated by the 2010 Affordable Care Act. AJMC’s Evidence-Based series brings together stakeholder views from payers, providers, policymakers and pharmaceutical leaders in oncology and diabetes management. To order reprints of articles appearing in AJMC publications, please call (609) 716-7777, x 131.