Medicare Advantage Value-Based Insurance Design Model

CMS News

FOR IMMEDIATE RELEASE
August 10, 2016

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Medicare Advantage Value-Based Insurance Design Model

The Centers for Medicare & Medicaid Services (CMS) Center for Medicare and Medicaid Innovation is announcing refinements to the design of the second year of the Medicare Advantage Value-Based Insurance Design (MA-VBID) model.  The MA-VBID model is an opportunity for Medicare Advantage plans (MA plans), including Medicare Advantage plans offering Part D benefits (MA-PD plans), to offer clinically nuanced benefit packages aimed at improving quality of care while also reducing costs.

In the second year of the model, beginning January 1, 2018, CMS will: open the model test to new applicants; conduct the model test in three new states - Alabama, Michigan, and Texas; add rheumatoid arthritis and dementia to the clinical categories for which participants may offer benefits; make adjustments to existing clinical categories; and change the minimum enrollment size for some MA and MA-PD plan participants. 

Value-Based Insurance Design (VBID) generally refers to health insurers’ efforts to structure enrollee cost sharing and other health plan design elements to encourage enrollees to use high-value clinical services – those that have the greatest potential to positively impact enrollee health.  VBID approaches are increasingly used in the commercial market, and evidence suggests that the inclusion of clinically-nuanced VBID elements in health insurance benefit design may be an effective tool to improve the quality of care while reducing its cost for Medicare Advantage enrollees with chronic diseases.  As part of the “better care, smarter spending, healthier people” approach to improving health care delivery, CMS will test VBID in Medicare Advantage and measure whether structuring patient cost sharing and other health plan design elements encourages enrollees to use health care services in a way that improved their health and reduces costs.

The first year of the MA-VBID model will begin January 1, 2017 and run for five years.  CMS will announce the MA plans participating in the test’s first year in September 2016.  CMS expects to release a Request for Applications for the second year of the model test in the fall of 2016, and will accept proposals from MA and MA-PD plans to offer VBID benefits in 2018.

In its first year, CMS will test the model in seven states: Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee.  Beginning January 1, 2018, CMS will also test the model in Alabama, Michigan, and Texas.  These states have been selected in order to be generally representative of the national Medicare Advantage market, including urban and rural areas, areas with both high and low average Medicare expenditures, areas with high and low prevalence of Low-Income Subsidies, and areas with varying levels of penetration of and competition within Medicare Advantage.  Test states have also been selected based on the availability of appropriate paired comparison areas for the purposes of evaluation.  Eligible MA plans in these states, upon CMS approval, may offer varied plan benefit designs for enrollees who fall into certain clinical categories identified and defined by CMS.  Benefit design changes made through this model may reduce cost sharing and/or offer additional services to targeted enrollees; however, targeted enrollees can never receive fewer benefits or be charged higher cost sharing than other MA enrollees in their plan as a result of the model.

Background

The existing Medicare Advantage “uniformity” requirement generally requires that an MA plan’s benefits and cost sharing be the same for all plan enrollees.  Because of this, clinically-nuanced VBID approaches have generally not been incorporated into MA or MA-PD plans.

The model will test the hypothesis that giving MA plans flexibility to offer supplemental benefits or reduced cost sharing to targeted groups of enrollees with CMS-specified chronic conditions in order to encourage the use of services that are of highest value to them, will lead to higher-quality and more cost-efficient care.  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.  The model is also intended to improve outcomes and reduce costs by encouraging targeted enrollees to obtain care from high-value providers and by providing new supplemental benefits specifically tailored to targeted enrollees’ clinical needs.

The MA-VBID model is authorized under Section 1115A of the Social Security Act (added by section 3021 of the Affordable Care Act) (42 U.S.C. § 1315a), which authorizes the Center for Medicare and Medicaid Innovation to test innovative health care payment and service delivery models that have the potential to reduce Medicare, Medicaid, and Children’s Health Insurance Program expenditures while preserving or enhancing the quality of beneficiaries’ care.  CMS will test this model in the Medicare program through a limited waiver of the Medicare Advantage and Part D uniformity requirements. 

Description

The MA-VBID model supports improved health outcomes and health care cost savings or cost neutrality through the use of structured patient cost sharing and other health plan design elements that encourage enrollees to use high-value clinical services.  The MA-VBID model will provide flexibility for MA and MA-PD plans accepted into the model to develop clinically-nuanced benefit designs for enrollee populations that fall within certain clinical categories.

The conditions are:

• Diabetes
• Chronic Obstructive Pulmonary Disease (COPD)                                                
• Congestive Heart Failure (CHF)
• Patient with Past Stroke                                    
• Hypertension
• Coronary Artery Disease                                   
• Mood disorders
• Rheumatoid Arthritis (starting in 2018)
• Dementia (starting in 2018)                                                                  

In addition to developing interventions targeted at all enrollees in one or more of the above categories, participating MA plans will have the flexibility to identify specific combinations of the listed chronic conditions for one or more “multiple co-morbidities” groups and establish tailored VBID interventions for each group.  Participating MA plans are required to provide VBID benefits to all VBID-eligible enrollees in the selected group.  Participating MA plans selecting the Mood Disorders group will also have additional flexibility to focus on specific conditions within that group. 

For each of the selected enrollee groups, participating plans may select one or more plan design modifications from a menu of four general approaches.  Within each approach, plans have flexibility on how (and to what extent) to implement that approach.  Plans may vary their proposed interventions from one target population to another, and from one participating plan to another.  CMS will also consider proposals for related variants of these interventions offered to targeted groups of enrollees, such as supplemental benefits conditional on participation in a disease management program.

The four approaches are:

1. Reduced Cost Sharing for High-Value Services

Plans can choose to reduce or eliminate cost sharing for items or services, including covered Part D drugs, that they have identified as high-value for a given target population.  Participating plans have flexibility to choose which items or services are eligible for cost-sharing reductions; however, these services must be clearly identified and defined in advance, and cost-sharing reductions must be available to all enrollees within the target population.

Examples of interventions within this category include eliminating co-pays for eye exams for diabetics and eliminating co-pays for angiotensin converting enzymeinhibitors for enrollees who have previously experienced an acute myocardial infarction.

      2. Reduced Cost Sharing for High-Value Providers

Plans can choose to reduce or eliminate cost sharing when providers that the plan has identified as high-value treat targeted enrollees.  Plans may identify high-value providers based on their quality and  not solely based on cost, across all Medicare provider types, including physicians/practices, hospitals, skilled-nursing facilities, home health agencies, ambulatory surgical centers, etc.

Examples of interventions within this category include reducing cost sharing for diabetics who see a physician who has historically achieved strong results in controlling patients’ HbA1c levels and eliminating cost sharing for heart disease patients who elect to receive non-emergency surgeries at high-performing cardiac centers.

      3. Reduced Cost Sharing for Enrollees Participating in Disease Management or Related Programs

Participating plans can reduce cost sharing for an item or service, including covered Part D drugs, for enrollees who choose to participate in a plan-sponsored disease management or similar program.  This could include an enhanced disease management program, offered by the plan as a supplemental benefit, or it could refer to specific activities that are offered or recommended as part of a plan’s basic care coordination activities.  Plans using this approach can condition enrollee eligibility for cost-sharing reductions on meeting certain participation milestones.  For instance, a plan may require that enrollees meet with a case manager at regular intervals in order to qualify.  However, plans cannot make cost-sharing reductions conditional on achieving any specific clinical goals (e.g., a plan cannot condition cost-sharing reductions on enrollees achieving certain thresholds in HbA1c levels or body-mass index).

Examples of interventions within this category include elimination of primary care co-pays for diabetes patients who meet regularly with a case manager and reduction of drug co-pays for patients with heart disease who regularly monitor and report their blood pressure.

     4. Coverage of Additional Supplemental Benefits

Under this approach, participating plans can make coverage for supplemental benefits available only to targeted populations.  Such benefits may include any service currently permitted under existing Medicare Advantage rules for supplemental benefits.

Examples of interventions within this category include physician consultations via real-time interactive audio and video technologies for diabetics, or supplemental tobacco cessation assistance for enrollees with COPD.

Eligible Applicants

The MA-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 certain MA and MA-PD plan types are eligible and certain restrictions apply to multi-state plans. 

CMS will generally restrict the model test to plans with a minimum enrollment in the test states of 2,000 enrollees. However, beginning in 2018, a MA organization participating in the model test with at least one plan with enrollment over 2,000 enrollees may have additional Plan Benefit Packages (PBPs) participate with a minimum enrollee requirement of 500 enrollees; an additional plan benefit package using this lower enrollment requirement may be from that MA organization or other organizations with the same parent organization.  CMS may also grant an exception upon request. 

Additionally, Plans must meet minimum quality thresholds, including: being rated by CMS at three stars or higher, not consistently low-performing, not an outlier in the CMS past performance analysis, not under sanction, and able to pass a program integrity screening.

The plan must have been offered in at least three annual coordinated election (open enrollment) periods prior to the open enrollment period for the year for which the plan is applying to participate. There is no cap on the total number of participating plans.

More information and Application Process

More information about the MA-VBID model test can be found in the model’s announcements and other documents, available at http://innovation.cms.gov/initiatives/VBID. The announcement includes instructions for providing CMS with feedback on this model test’s design.  Please also save the date for a webinar on the MA-VBID model test, to be held on August 25, 2016. Registration information is available on the same site.

CMS will accept applications for the second year of the MA-VBID model via a Request for Applications (RFA), to be released shortly.  Once released, application materials will be available at: http://innovation.cms.gov/initiatives/VBID.

For more information on the Center for Medicare and Medicaid Innovation’s division of Health Plan Innovation, please visit: http://innovation.cms.gov/initatives/HPI.