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Value-Based Insurance Design is a demand-side approach to health policy reform. V-BID generally refers to health insurers’ efforts to structure enrollee cost-sharing and other health plan design elements to encourage enrollees to consume high-value clinical services – those that have the greatest potential to positively impact enrollee health. V-BID also discourages the use of low-value clinical services – when benefits do not justify the cost. V-BID aims to increase health care quality and decrease costs by using financial incentives to promote cost efficient health care services and consumer choices. V-BID health insurance plans are designed with the tenets of "clinical nuance" in mind. These tenets recognize that medical services differ in the amount of health produced, and the clinical benefit derived from a specific service depends on the consumer using it, as well as when and where the service is provided.
The basic V-BID premise is to align patients’ out-of-pocket costs, such as copayments and premiums, with the value of health services. By reducing barriers to high-value treatments and discouraging low-value treatments , V-BID plans may achieve improved health outcomes at any level of health care expenditure. Studies have shown that when barriers are reduced, significant increases in patient compliance with recommended treatments and potential cost savings result.