CMS, through the Center for Medicare and Medicaid Innovation, announced on September 1, 2015, the introduction of the Medicare Advantage Value-Based Insurance Design (VBID) Model as part of the Health Plan Innovations Initiatives, which are intended to test innovations in health plan design. The VBID Model will test whether the offering of supplemental benefits or reduced cost sharing to enrollees for specified chronic conditions can improve health outcomes and lower expenditures for Medicare Advantage (MA) enrollees.

The VBID Model will be tested in the following seven (7) states: Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania and Tennessee. These states were selected because on an overall basis they are viewed as generally representative of the national MA market. The VBID Model will begin January 1, 2017 and run for five years. Eligible Medicare Advantage plans in the test states, upon approval from CMS, will be able to offer varied plan benefit design for enrollees who fall into certain clinical categories identified and defined by CMS. The clinical categories are diabetes, chronic obstructive pulmonary disease, congestive heart failure, past stokes, hypertension, coronary artery disease and mood disorders. Participating MA plans will have flexibility to identify specific combinations of these conditions for one or more comorbidity groups and establish tailored VBID interventions for each group, though VBID benefits must be provided to all enrollees in each such group. Eligible MA plans participating may reduce cost-sharing and/or offer additional services to targeted enrollees; however, the targeted enrollees can never receive fewer benefits or be required to pay higher cost-sharing amounts than other enrollees as a result of the model.

VBID 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. Under existing requirements MA plans are generally required to have the same benefits and cost sharing for all plan enrollees. The VBID Model relaxes that uniformity requirement for participating MA Plans. VBID approaches are increasingly used in the commercial market and initial evidence has suggested that they may be an effective tool to improving quality of care while reducing the cost for patients with certain chronic diseases. The VBID Model will test the hypothesis that giving MA plans flexibility to offer supplemental benefits or reduced cost sharing to enrollees with the specified chronic conditions will encourage the use of services that are of highest value to them or the use of higher quality providers, and thus lead to higher-quality and more cost-efficient care. According to CMS, the increase in high-quality, cost-efficient care is expected to improve beneficiary health, reduce utilization of avoidable high-cost care, and reduce costs for plans, beneficiaries, and the Medicare program.

Participating MA plans will be able to select from the following four approaches in redesigning benefits:

1. Reduced or Eliminated Cost Sharing for High-Value Services (e.g., eliminating co-pays for eye exams for diabetics)
2. Reduced or Eliminated Cost Sharing for High-Value Providers (e.g., elimination of cost-sharing for heart disease patients who elect surgeries at high-performing cardiac centers)
3. Reduced or Eliminated Cost Sharing for Enrollees Participating in Disease Management or Related Programs (e.g., elimination of cost-sharing for diabetics who meet regularly with a case manager)
4. Coverage of Additional Supplemental Benefits for Targeted Populations (e.g., benefits for physician consultations through interactive audio and video technologies for diabetics)

Eligible Applicants

The VBID Model test is open to all qualifying MA and MA-PD plans in the test states that submit acceptable programmatic proposals to CMS. Only HMO, HMO-POS or local PPO plan types are eligible to participate. Special Needs Plans (SNP), Regional PPO plans, Medicare-Medicaid Plans (MMP) or other demonstration plans, cost plans, Medical Savings Account Plans (MSA), Private Fee-For-Service Plans, and Employer Group Waiver Plans (EGWP)) are ineligible. CMS will restrict the model test to plans with a minimum enrollment in the test states of 2,000 enrollees, with at least 50% of the total plan enrollment within target states and all or part of the plan’s service area lying within one of the model test states identified. The plan must not be offered in more than two states total. Plans must meet minimum quality thresholds and the plan must have been offered in at least three annual coordinated election (open enrollment) periods prior to the open enrollment period for CY 2017. All applicants who meet these criteria and who submit proposals that meet CMS minimum criteria will be accepted into the model – there is no cap on the total number of participating MA plans.

Request for Comment

The VBID Model has just been announced, and CMS is seeking feedback on this model by September 15, 2015. CMS expects to release a request for applications soon. Additional information can be found on the CMS website.