Commercial Payers → Reimbursement
Reimbursement Models for Commercial Payers
The Information below about cost and reimbursement for the National Diabetes Prevention Program (National DPP) lifestyle change program can help commercial health insurance plans and employers anticipate the financial impact of covering the program. See the Cost and Value page for more information about analyzing the cost of covering the program. This Reimbursement page also outlines how the National DPP lifestyle change program can be accounted for in insurer’s Medical Loss Ratio calculation.
According to CDC, $500 is the approximate direct delivery cost of administering the National DPP lifestyle change program to a participant who completes all 22 sessions of the year-long program (16 weekly sessions during the first six months and six monthly sessions during the second six months). In addition to the $500 per participant cost of delivering the program, it may cost as much as an additional $500 per participant for program costs related to removing barriers to participation, providing incentives, addressing social determinants of health, etc. Organizations interested in offering the program can use the American Medical Association’s National DPP Lifestyle Change Program Budget Considerations Tool to estimate the cost implications of offering the program.
Activities that drive program costs include marketing and recruitment efforts, facility fees, and direct program delivery costs such as staffing costs. For example, entities may need to hire staff, sign a lease for a facility, and make phone calls or send mailings to potential participants. Online program costs may differ. Online program providers incur significant development costs and then tend to have lower ongoing costs for delivering the program. Ongoing variable or per-participant costs for online program providers include the cost of digital scales that may be issued to participants at the outset for purposes of recording weight, as well as staffing costs.
This Commercial Budget Projection Template and accompanying Workbook (click the icons below to access) have been developed to assist payers in estimating the cost of covering the National DPP lifestyle change program at a basic level (costs associated with participant incentives, marketing or startup costs have not been included). Data will need to be individually gathered on the number of potentially eligible members, program adoption, and reimbursement rates that are expected. Each organization may have different priorities and situations to consider that may affect how the template is used. Please note, the template is to be used as a guide and may not take into consideration all the unique aspects of each payer or how they decide to implement coverage.
Information & Instructions
Budget Projection Workbook
Cost in Practice
Direct medical costs for the original DPP clinical trial were $2,780 per participant over three years. However, this featured an individual (rather than group) coaching model facilitated by case managers.
CMS OACT Report
“The evaluation of their program included results from the first 3 years of the intervention. The carrier spent nearly $200 per person, and the medical spending reductions were nearly that amount over the 3 years evaluated. Therefore, the DPP is expected to break even in program year 4. The spending reductions achieved for the participants aged 55 or older were slightly higher than the average for the entire group. In addition, the carrier noted that the savings were significantly higher for the participants who achieved the 5% weight-loss goal.”
Under certain circumstances, individuals may be able to cover their portion of participation costs with their Health Savings Account (HSA). See the section Using HSA Dollars to Pay for the National DPP Lifestyle Change Program on the Employers page for more information.
To date, payers covering (or proposing coverage) of the National DPP lifestyle change program have provided reimbursement using one or a combination of the following methods:
- Fee-for-service: reimbursement on a per session basis
- Attendance Milestone: variable reimbursement provided after multiple sessions have been completed (e.g., 1st session, 4th session, 9th session, 16th session)
- Performance-based model: offering different reimbursement levels based on outcomes, such as weight loss and weight loss maintenance
- Combination: using a combination of the fee-for-service, attendance milestone, and/or performance-based models.
Reimbursement Models in Practice
Kentucky Employees’ Health Plan
- Tier 1—basic program, reimbursed at $350–$429 per enrollee
- Tier 2—basic program plus a year-long gym membership, reimbursed at $429 (only two CDC-recognized organizations are offering gym memberships)
- Tier 3—basic program plus additional services, reimbursed at a rate higher than $429
MDPP Expanded Model
MDPP services are paid for through a performance-based payment methodology (see table below) that is updated annually for inflation.
- A maximum of $689 per beneficiary will be paid for the set of MDPP services
- MDPP payments will not be risk-adjusted for social risk factors or geography
A one-time bridge payment of $26 is available for the first MDPP core session, core maintenance session, or ongoing maintenance session provided to a beneficiary during months 1–24 when a beneficiary has previously received his/her first core session from a different MDPP supplier.
Medical Loss Ratio
It is anticipated that the National DPP lifestyle change program can be accounted for in the numerator of the Medical Loss Ratio (MLR).
The Medical Loss Ratio is the percentage of an insurer’s premium dollars that is spent on medical care and quality improvement activities. For example, if an insurer spends 85 cents of every premium dollar on medical care and quality improvement activities, its MLR is 85%. It is anticipated that the National DPP lifestyle change program can be accounted for in the medical care and quality improvement activity component of that calculation.
Under the Affordable Care Act, the Centers for Medicare & Medicaid Services (CMS) requires commercial individual and small group products to have at least 80% MLR and large group products to have at least 85% MLR. Self-funded insurance products, however, do not have a minimum MLR requirement. Self-funded products administered by an insurance company are also excluded from a minimum MLR requirement.
Content last updated: March 11, 2020