We went live with our self-funded plan on January 1st.
Week one, we hit our first wall.
And honestly? It’s the perfect example of why the traditional benefits system is broken.
What We Asked For
We want to implement Value-Based Insurance Design (V-BID) — a benefits structure that eliminates cost-sharing for medications that prevent expensive hospitalizations.
The logic is simple: If we remove the copay barrier on a diabetes medication, adherence is easier, complications decrease, and we avoid a $25,000 hospitalization.
One prevented hospitalization funds years of $0 copays..
But here’s where it gets interesting.
The same medication can have completely different clinical value depending on whom is taking it.
Take metformin — one of the most common diabetes medications:
- Patient with Type 2 Diabetes → First-line therapy. Prevents complications. Reduces hospitalization risk. Should be $0.
- Patient with PCOS (Polycystic Ovary Syndrome) → Legitimate use for insulin resistance and fertility, but no diabetes complication prevention. Standard copay.
- Patient with pre-diabetes or metabolic syndrome → Prevents progression but not treating an active ACSC condition. Standard copay.
Same drug. Different patient. Different diagnosis. Different clinical value.
This is clinical nuance — and it’s how medicine actually works.
What Our PBM Said
We sent our PBM a detailed request covering eight Ambulatory Care Sensitive Conditions (ACSCs) — diabetes, asthma, COPD, heart failure, hypertension, and others.
For each condition, we listed:
- The qualifying diagnosis codes
- The medications that should be $0
- The clinical rationale
The response?
“We can’t adjust cost-sharing by diagnosis. We can only do it at the drug level.”
Translation: Everyone gets metformin for $0 or everyone pays the copay.
No clinical nuance. No diagnosis-based logic. No ability to match cost-sharing to clinical value.
Why This Matters
This isn’t just a technical limitation.
This is the entire problem with traditional benefits administration.
Healthcare is not one-size-fits-all. A medication that prevents a $25,000 hospitalization for one patient might be a legitimate but lower-value choice for another.
But the system can’t tell the difference.
So employers are stuck with two bad options:
- Make expensive medications $0 for everyone (including lower-value use)
- Apply copays to everyone (including people who desperately need barrier-free access)
Neither option is good.
Option 1 drives unnecessary cost. Option 2 drives preventable complications.
What we need is option 3: Clinical nuance. Diagnosis-based benefits. Cost-sharing that matches clinical value.
The Real-World Impact
Let me make this concrete.
Metformin is a generic. It is not expensive.
If we have team members with Type 2 Diabetes who need metformin as their first-line therapy. Even at $10-20/month, cost creates adherence barriers — especially for families managing multiple chronic conditions or tight budgets.
What happens when someone skips doses to stretch their prescription?
- Blood sugar control deteriorates
- A1C creeps up
- Risk of complications increases
- Eventually: hospitalization at $15,000-$25,000
The math is simple:
Removing a $120-240 annual barrier prevents a $25,000 hospitalization.
But our PBM can’t execute this logic selectively. They can only remove the barrier for everyone — including people taking metformin for PCOS or pre-diabetes, where the hospitalization prevention value doesn’t exist.
So we’re forced to choose between:
- Clinical precision with barriers (some people skip meds, complications happen)
- Barrier removal without precision (everyone gets $0, including lower-value use)
And here’s what makes it even more absurd:
If the system can’t handle clinical nuance for a $10 generic, how could it possibly handle it for a $300 inhaler or a $1,000 specialty medication?
The problem isn’t the drug. It’s the infrastructure.
The Question I’m Asking
I refuse to believe we’re the only employer who’s hit this wall.
So here’s what I need from this community:
Has anyone successfully implemented diagnosis-based copay elimination?
Not just “we made diabetes meds $0 for everyone” — but actual clinical nuance where the same medication gets different cost-sharing based on the diagnosis?
What We’re Considering
Right now, we’re evaluating three paths:
Path 1: Diagnosis-Based Credit Card Issue members with qualifying ACSC diagnoses a healthcare credit card that covers all medication copays for their condition-specific medications. Bypass the PBM’s limitations entirely by handling reimbursement outside the traditional adjudication system.
Pros: Clinical precision, removes barriers only where appropriate.
Cons: Requires diagnosis verification, additional infrastructure, member education on two-system approach.
Path 2: Drug-Level Copay Elimination Make the entire ACSC medication list $0 for all members, accept some off-label utilization, track savings vs. cost.
Pros: Simple to execute, removes all barriers immediately.
Cons: Pays for some lower-value utilization, harder to control cost, no clinical nuance.
Path 3: Manual Prior Authorization Keep copays in place, require diagnosis verification, approve $0 copay manually. Labor-intensive but clinically accurate.
Pros: Clinical precision, appropriate utilization.
Cons: Adds friction exactly where we’re trying to remove it, doesn’t scale, defeats the purpose.
None of these are perfect.
This Is Why We’re Doing This Publicly
We don’t want to just “work within the system.”
The system is the problem.
If diagnosis-based benefits are clinically sound, evidence-based, and economically rational — but impossible to execute — then we need different infrastructure.
And the only way to figure that out is to ask the question out loud, see who’s solved it, and build collective intelligence around what actually works.
So: Have you done this? Do you know someone who has?
Comment here. DM me. Forward this to your CHRO, your broker, your PBM contact, or anyone who might have cracked this.
