Designed for Value: Smarter Benefits. Better Outcomes.
Designed for Value: Smarter Benefits. Better Outcomes.
Why Value Based Plan Design Is the Future of Employer Health Benefits
Healthcare costs are no longer just rising—they are reshaping how employees access care.
Today, more than 50% of U.S. consumers report delaying or avoiding medical care because of out of pocket costs, including preventive visits and essential medications¹. While higher cost sharing may reduce short term utilization, it often drives avoidable complications, emergency department visits, and downstream claims costs.
For employers—especially those with self funded health plans—this creates an unsustainable cycle.
Value Based Insurance Design (VBID) is transforming employer health benefits by aligning member cost sharing with clinical value rather than service price alone. When implemented thoughtfully, VBID improves care access, supports chronic condition management, and delivers more predictable claims outcomes over time²³.
At Planned Administrators, Inc. (PAI)—we see firsthand how benefit design drives member behavior and claims performance—because smarter benefits don’t happen by accident. They’re designed⁹.
What Does “Designed for Value” Mean in Employer Health Plans?
Traditional health plans typically apply uniform deductibles, copays, and coinsurance across services—regardless of whether that care is preventive, evidence based, or essential for long term health outcomes.
Value Based Insurance Design takes a more intentional approach.
VBID reduces financial barriers for high value care while discouraging low value or unnecessary services. Multiple peer reviewed studies show VBID programs improve medication adherence by approximately 3% to 14% without increasing total healthcare spending²³.
VBID in practice means making it easier—and more affordable—for members to access care that prevents complications, stabilizes chronic conditions, and reduces downstream medical spend through flexible self funded health benefit administration⁹.
Smarter Cost Sharing: A Better Way to Control Healthcare Costs
Raising deductibles has long been a go to cost containment strategy. But higher out of pocket costs don’t distinguish between low value and high value care—they suppress all utilization, including preventive services and essential medications.
VBID uses cost sharing as a guide rather than a barrier—supported by real time claims and utilization insight through PAI Analytics®⁹.
Large commercial population studies show VBID programs are associated with:
- Increased primary care engagement
- Fewer inpatient admissions and surgical procedures
- No increase in total plan spending⁴
Examples of smarter cost sharing strategies include:
- Reduced or waived copays for medications treating diabetes, asthma, and cardiovascular disease
- First dollar coverage for preventive and preventive adjacent services
- Incentives for using high quality, in network providers
These design decisions encourage earlier, more appropriate care—preventing higher cost claims later.
How Value Based Insurance Design Improves Claims Performance
Research consistently shows that higher cost sharing reduces adherence to essential medications, which in turn increases emergency department visits, hospitalizations, and total medical spend².
VBID helps reverse this pattern by:
- Improving adherence to high value medications
- Encouraging earlier, lower cost interventions
- Reducing avoidable high cost claims
- Supporting greater claims stability over time
PAI evaluates benefit design based on real world outcomes, using integrated medical, pharmacy, eligibility, and stop loss data rather than theoretical savings models¹⁰.
Why High Value Care Is Critical for Chronic Conditions
A relatively small portion of members typically accounts for an unbalanced share of total claims spend—most often due to chronic conditions.
A regular review of VBID programs in chronic disease populations found consistent medication adherence improvements of 2–5 percent, particularly for cardiovascular disease and diabetes⁵. Additional research shows VBID programs offering full or near full coverage for high value medications more than doubled adherence gains compared to partial copay reductions⁶.
Using advanced analytics to identify emerging risk before high cost claims occur helps translate better adherence into better condition control—and fewer catastrophic claims¹¹.
Recommendations: How Employers Can Apply VBID Effectively
VBID is not an all or nothing model. Employers see the greatest impact when value based principles are implemented strategically and supported by data.
Evidence based recommendations include:
- Start with chronic conditions - Identify conditions driving the highest claims (e.g., diabetes, cardiovascular disease, asthma) and lower cost sharing for high value medications and services that improve outcomes.
- Prioritize preventive and preventive adjacent care - Ensure first dollar coverage for services that reduce downstream utilization, including primary care visits, diagnostics, and care management touchpoints.
- Apply VBID where behavior matters most - Use cost sharing to steer members toward high quality providers, evidence based treatments, and coordinated care models.
- Use claims data to guide design - VBID is most effective when informed by claims, pharmacy, and utilization data—not assumptions—especially as outlined in PAI’s 2026 outlook for self funded health plans¹⁰.
Monitor outcomes—not just utilization - Measure adherence, condition control, admissions, and trend stability over time to evaluate success.
A Smarter Benefits Conversation for Brokers and HR Leaders
VBID helps shift benefits conversations away from cost cutting and toward benefit performance.
Instead of asking:
“How do we reduce healthcare spend?”
VBID reframes the question as:
“How do we direct healthcare dollars toward care that delivers better outcomes?”
VBID is actively used by large private employers, public purchasing groups, and Medicare Advantage plans nationwide⁷⁸—with implementation support and tools available for brokers¹¹.
How PAI Supports Smarter, Value Based Benefit Design
VBID does not require changing carriers—and it is not one size fits all.
PAI supports value based plan design through flexible administration, claims expertise, and data driven insight that helps employers:
- Identify where benefit barriers drive avoidable costs
- Align cost sharing with high value services
- Support condition specific and population specific strategies
- Translate plan design into measurable outcomes
Smarter Plan Design Starts with Better Data
PAI Analytics® integrates medical, pharmacy, eligibility, and stop loss data into a single analytics platform—providing actionable insight into utilization patterns, chronic condition trends, and cost drivers⁹¹⁰.
Through customizable dashboards and benchmarking, PAI Analytics enables:
- Real time plan performance monitoring
- Risk segmentation and chronic condition tracking
- Utilization and medical trend analysis
- Clear visibility into where healthcare dollars are spent⁹
Predictive Insight with MARA® Alongside PAI Analytics®
PAI enhances its analytics approach by leveraging Milliman Advanced Risk Adjusters (MARA®) alongside PAI Analytics®, helping identify emerging risks earlier—before high cost claims occur¹¹.
Learn more about PAI Analytics® + MARA®.
Pharmacy Strategy as a VBID Foundation
Pharmacy benefits are one of the most effective entry points for VBID. Through our partnership with OptumRx®, PAI supports clinically focused pharmacy benefit management strategies centered on safety, effectiveness, outcomes, and cost efficiency¹².
Learn more about Pharmacy Benefit Management at PAI.
Direct Primary Care as a High Value Strategy
PAI also supports value based design through its partnership with Proactive MD, delivering Direct Primary Care aligned plan options that emphasize preventive care, access, and coordination¹³.
Read more:
Planned Administrators, Inc. Partners with Proactive MD
Designed for Value. Built for Better Outcomes.
Value Based Insurance Design is not about spending more on healthcare.
It’s about spending smarter—directing benefit dollars where they deliver the greatest return.
When benefits are designed for value, employers achieve:
- Improved employee health outcomes
- Greater trust and engagement
- More stable claims performance
- A stronger return on benefits investment
Ready to see how smarter plan design can improve outcomes and control claims costs?
PAI helps employers and brokers turn benefit strategy into measurable results.
Outcomes may vary based on plan design, population characteristics, vendor configuration, and utilization patterns.
Sources & Resources
1. Elevance Health. Improving Consumer Experience with Value Based Insurance Design.
2. Agarwal R, Gupta A, Fendrick AM. Value Based Insurance Design Improves Medication Adherence Without Increasing Total Healthcare Spending. Health Affairs.
https://www.healthaffairs.org/doi/10.1377/hlthaff.2017.1633
3. Lee JL et al. Value Based Insurance Design: Quality Improvement but No Cost Savings. Health Affairs.
https://pubmed.ncbi.nlm.nih.gov/23836741/
4. Zhang H et al. Association of Participation in a VBID Program With Health Care Spending and Utilization. JAMA Network Open.
https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2802353
5. Tang KL et al. A Systematic Review of Value Based Insurance Design in Chronic Diseases. American Journal of Managed Care.
https://pubmed.ncbi.nlm.nih.gov/25326932/
6. Krack G. How to Make Value Based Insurance Designs More Effective? European Journal of Health Economics.
https://link.springer.com/article/10.1007/s10198-019-01046-1
7. RAND Corporation. Medicare Advantage VBID Model Evaluation (2020–2023).
https://www.cms.gov/priorities/innovation/data-and-reports/2024/vbid-preview-eval-findings-2020-2023
8. CMS/RAND. Evaluation of the Medicare Advantage VBID Model: 2020–2024.
https://www.cms.gov/priorities/innovation/data-and-reports/2026/vbid-report-2020-2024
9. PAI Analytics® | Planned Administrators Inc.
https://www.paisc.com/employers/pai-analytics
10. Medical Claims + Rx Claims + Stop Loss Contracts = PAI Analytics® | Planned Administrators Inc.
https://www.paisc.com/self-funding/medical-claims-rx-claims-stop-loss-contracts-pai-analyticsr
11. PAI Analytics® + MARA® | Planned Administrators Inc.
https://www.paisc.com/employers/insights
12. Pharmacy Benefit Management | Planned Administrators Inc.
13. Direct Primary Care Partnership (Proactive MD) | Planned Administrators Inc.
Planned Administrators, Inc. Partners with Proactive MD to Provide New Direct Primary Care Plan Design