New Value-Based Insurance Design Model Aims to Make Medicare Advantage Even Better

By Patrick Conway, M.D., MSc, CMS deputy administrator and chief medical officer

As part of its ongoing work to identify more effective ways to serve Medicare beneficiaries, the Center for Medicare and Medicaid Innovation in the Centers for Medicare & Medicaid Services (CMS) announced today the Medicare Advantage Value-Based Insurance Design Model, which will test whether providing flexibility to Medicare Advantage plans (including Medicare Advantage-Part D plans) to reduce cost sharing or offer extra benefits available to enrollees with certain conditions will improve the quality of enrollees’ care while also reducing overall costs. Reduced cost sharing or extra benefits are increasingly available in some employer-sponsored plans to enrollees with special health needs, to encourage them to make better and increased use of high-value items and services – those that have the greatest potential to positively impact their health. Medicare Advantage plans generally have not used these “Value-Based Insurance Design” (VBID) approaches because of existing regulations that require uniformity in plan premiums, benefits, and cost-sharing responsibilities for plan enrollees. Under this model, however, CMS will give Medicare Advantage plans that meet selection criteria in a set of states the flexibility to offer VBID benefits – such as extra coverage or reduced cost sharing for high value services – to enrollees with CMS-specified chronic conditions. This new flexibility could support Medicare Advantage plans in helping enrollees improve their health, and subsequently reduce the use of avoidable high-cost care, while reducing costs for plans, beneficiaries, and the Medicare program. The model test will begin January 1, 2017 and run for five years in Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee. Eligible plans in these states can have varied plan benefit design for enrollees who fall into certain clinical categories defined by CMS: diabetes, congestive heart failure, chronic obstructive pulmonary disease (COPD), past stroke, hypertension, coronary artery disease, mood disorders, and combinations of these categories. Plans have the flexibility to choose amongst the eligible categories, and design separate interventions for each one. Changes to benefit design made through this model may only reduce cost sharing for services, and/or offer additional services; enrollees will never receive fewer benefits or have to pay higher cost sharing as a result of the model. The Medicare Advantage Value-Based Insurance Design Model fills an immediate need for testing ways to improve care and reduce cost in Medicare Advantage Plans, offering the prospect of lower out-of-pocket costs and premiums for Medicare Advantage enrollees.

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