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CMS Announces Transformative Updates to the MA VBID Model

Since its inception in 2005, the University of Michigan Center for Value-Based Insurance Design (V-BID) has led efforts to promote the development, implementation, and evaluation of innovative health benefit designs balancing cost and quality. A multidisciplinary team of faculty, including A. Mark Fendrick, MD and Michael E. Chernew, PhD, who first published and named the VBID concept, have guided this approach from early principles to widespread adoption in the private and public sectors. The Center has played a key role in the inclusion of VBID in national healthcare reform legislation, as well as in numerous state initiatives. The basic VBID premise is to align patients' out-of-pocket costs, such as copayments, with the value obtained from health services and providers.
This article was collaboratively written by A. Mark Fendrick, MD, director of the Center for Value-Based Insurance Design (V-BID), and several V-BID Center staff. 

In January, CMS released major changes to the current Medicare Advantage (MA) Value-Based Insurance Design (VBID) model. Starting in 2020, and running through 2024, these updates are intended to lower costs while increasing the quality and coverage of care for Medicare beneficiaries.

The original MA VBID model, launched in 2017, was designed to allow MA plans the opportunity to offer supplemental benefits or reduced cost-sharing for enrollees with certain chronic conditions who engage with services/providers that are of highest clinical value to them.

The updated model, coined “VBID 2.0,” broadens the scope of the existing model by testing a wide range of MA service delivery and/or payment approaches including:
  • Allowing customization of cost-sharing based on chronic condition, socioeconomic status, or both, including some nonhealth related benefits, such as transportation;
  • Expanding eligibility to include chronic condition special needs plans (SNPs), dual eligible SNPs, institutional SNPs, and regional preferred provider organizations;
  • Bolstering the rewards and incentives programs that plans can offer beneficiaries to take steps to improving their health; and
  • Increasing access to telehealth services.
Additionally, CMS will allow for testing of the inclusion of Medicare’s hospice benefits into MA beginning in 2021. More details on the hospice carve-in are to be released.

The VBID 2.0 updates reflect President Trump’s HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs and demonstrate the growing support for structuring benefit designs to encourage the use of high-value evidence-based services and providers.

“Today’s announcement draws on successes we have already seen in Medicare and advances our priority of using HHS programs to build a value-driven healthcare system,” said HHS Secretary Alex Azar.

Through increased testing of clinically nuanced strategies in MA plan benefit designs, the MA VBID model continues to evaluate the effectiveness of aligning out-of-pocket costs with the clinical value of services, with the goals of improving health outcomes and lowering expenditures for MA enrollees.

We invite you to visit the V-BID Center website or view the resources below to learn more about the MA VBID model.

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