New value-based insurance model aims to turn high-deductible plans on their heads

stethoscope, coins and calculator
A new type of health insurance model called MESA makes use of reference pricing to encourage consumers to choose service providers that offer high-quality care at a lower price. (Getty/mckare)

Though insurers and employers increasingly turn to high-deductible health plans to control costs, their effect on consumers is an ongoing concern.

Altarum, a nonprofit consulting firm, believes it has a better idea.

With a grant from the Robert Wood Johnson Foundation, the firm has developed a model called the Medical Episode Spending Allowance (MESA) plan, which it describes as a “a new value-based insurance design with more finely calibrated incentives for consumers and providers.”

The problem with high-deductible health plans (HDHPs) is that they sometimes keep costs down by reducing the actuarial value of health plans—meaning more of the cost burden is shifted to individuals, noted François de Brantes, vice president and director of Altarum’s Center for Payment Innovation.

“For those who need care the most, out-of-pocket expenses are really creating a hardship,” he said during a call Monday to discuss the new model. 

In addition, HDHPs can encourage consumer behavior that is counterproductive, such as avoiding necessary medical care out of concern about costs—or conversely, not worrying about costs after meeting a deductible.

MESA, on the other hand, is based on a reference-pricing model, which encourages consumers to choose service providers that offer high-quality care at a lower price. To aid that decision-making process, the model proposes a data analysis tool that will allow consumers to select providers based on quality and cost of care. 

“This plan really will and should attract those who need healthcare services the most,” de Brantes said. That includes individuals with chronic conditions, those facing ongoing treatments and those who are scheduled for elective procedures. 

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Unlike a typical HDHP, members in a MESA plan pay out of pocket only when the cost of care extends above the specified allowance for a given episode of care. Plan members can avoid out-of-pocket expenses entirely if they select in-network providers that have accepted financial risk, such as through a bundled payment or episode-of-care program. 

“In essence, what we’re really doing is we’re changing the way consumers purchase healthcare,” de Brantes said.

The model will also feature a wellness plan that creates specific rewards for those who comply with its terms. Part of the idea is to not only encourage healthy behaviors but also to increase patients’ compliance with their care plans, which can reduce costs by lessening the risk of avoidable complications.

Altarum is currently working to identify up to three pilot sites across the country to test its new model, de Brantes said, noting that a third-party administrator is needed to operationalize it, but that doesn’t necessarily have to be a health plan. 

“There is a lot of interest in this particular program from employers,” he said.

Editor's note: This article has been updated to clarify that HDHPs do not always have reduced actuarial values compared to other types of plans.