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Insurers’ Perspectives on MA Value-Based Insurance Design Model

Dmitry Khodyakov, PhD; Christine Buttorff, PhD; Kathryn Bouskill, PhD; Courtney Armstrong, MPH; Sai Ma, PhD; Erin Audrey Taylor, PhD; and Christine Eibner, PhD
This article describes perspectives of Medicare Advantage (MA) insurers about participating in the CMS value-based insurance design model test launched in 2017.
ABSTRACT

Objectives: Value-based insurance design (VBID) lowers cost sharing for high-value healthcare services that are clinically beneficial to patients with certain conditions. In 2017, the Center for Medicare and Medicaid Innovation began a voluntary VBID model test in Medicare Advantage (MA). This article describes insurers’ perspectives on the MA VBID model, explores perceived barriers to joining this model, and describes ways to address participation barriers.

Study Design: A descriptive, qualitative study.

Methods: In spring/summer 2017, we conducted semistructured interviews with 24 representatives of 10 nonparticipating MA insurers to learn why they did not join the model test. We interviewed 73 representatives of 8 VBID-participating insurers about their participation decisions and implementation experiences. All interview data were analyzed thematically.

Results: Fewer than 30% of eligible insurers participated in the first 2 years of the model test. The main barriers to entry were a perceived lack of information on VBID in MA, an expectation of low return on investment, concerns over administrative and information technology (IT) hurdles, and model design parameters. Most VBID participants encountered administrative and IT hurdles but overcame them. CMS made changes to the model parameters to increase the uptake.

Conclusions: The model uptake was low, and implementation challenges and concerns over VBID effectiveness in the Medicare population were important factors in participation decisions. To increase uptake, CMS could consider providing in-kind implementation assistance to model participants. Nonparticipants may want to incorporate lessons learned from current participants, and insurers should engage their IT departments/vendors early on.

Am J Manag Care. 2019;25(7):e198-e203
Takeaway Points
  • This is the first empirical study of value-based insurance design (VBID) in the Medicare population.
  • Fewer than 30% of eligible insurers participated in the Medicare Advantage (MA) VBID model test.
  • Nonparticipating insurers cited a lack of information about VBID performance in MA, an expectation of low return on investment, potential implementation challenges, and model design parameters as barriers to participation.
  • Participants highlighted the appeal of the VBID test as an opportunity to innovate and explained how they overcame implementation challenges.
  • CMS and insurers could use study insights to facilitate adoption of VBID as its use expands.
Increasing cost sharing (eg, deductibles, co-payments, coinsurance) can reduce utilization of healthcare services.1,2 However, some services, such as chronic disease medications and preventive monitoring and screening tests, are both clinically beneficial and of high value. Value-based insurance design (VBID) reduces cost sharing for high-value services to increase their use and ultimately improve patient health and reduce healthcare spending; cost-sharing reductions, however, are offered only to the patients most likely to benefit—such as those with chronic diseases.3-5

VBID initiatives have most recently been implemented in employer-based populations,6-15 where they have increased service utilization but shown limited impact on spending or patient health.16-18 VBID has not been tested in the Medicare population; it is not known how older beneficiaries would react to reduced cost sharing for targeted services.

In 2015, CMS introduced a voluntary VBID model test for Medicare Advantage (MA) insurers. MA VBID waived a uniformity requirement that precluded insurers from offering different benefits and cost sharing to enrollees in the same plan.19 Starting in 2017, participating insurers in eligible states (Figure20) could offer reduced cost sharing for high-value services or providers and/or offer supplemental benefits to beneficiaries with specific chronic conditions. Insurers could require that beneficiaries participate in care management activities before becoming eligible for VBID benefits. CMS did not provide extra financial incentives to participating insurers.21 (eAppendix A [eAppendices available at ajmc.com] describes the MA VBID model test.)

In parallel to the model test, CMS recently reinterpreted the uniformity requirement, giving MA insurers more flexibility to tailor benefits based on beneficiaries’ clinical needs.22 The change allows all MA insurers to adopt VBID approaches for Part C benefits beginning in 2019. Moreover, the Bipartisan Budget Act of 2018 expands the MA VBID model test to all 50 states in 2020.23

Despite the dramatic increases in MA insurers’ ability to design more tailored benefits, VBID model uptake has been lower than expected: Only 10 (<30%) eligible MA insurers participated in the first 2 years of the VBID model test. In this study, we explored insurers’ perspectives on MA VBID, identified perceived barriers to joining the model test, and described ways to overcome them. Our findings suggest that implementation barriers and reservations about VBID in the Medicare population may hamper insurers’ enthusiasm about this type of flexible benefit design in the short term. Our findings may be useful for both CMS and MA insurers to facilitate the adoption of VBID as its use expands via both the model test and, more broadly, the uniformity requirement reinterpretation.

METHODS

Data Collection

Nonparticipating insurers. We identified MA insurers eligible to participate in VBID in 2017 and 2018 by applying model eligibility criteria to publicly available MA insurer and enrollment data available as of December 2016. We also included 5 insurers interested in VBID but not meeting model eligibility criteria that contacted CMS during the first VBID application period. From this group, we contacted the largest 29 nonparticipating insurers, starting with national insurers, then reached out to larger regional or state-based insurers, aiming to speak with organizations from all eligible states. Of the 29 insurers contacted, 10 agreed to be interviewed, 14 did not respond to our invitation, and 5 declined to be interviewed. There were no significant differences in for-profit status or Blue Cross and/or Blue Shield (BCBS) affiliation between those nonparticipants who we interviewed and those we did not. However, the sample of nonparticipants we interviewed had more regional than national insurers, and there were more national than regional insurers among those we did not interview. The proportion of state-level insurers did not vary across the 2 groups.

Between February and March 2017, 2 researchers conducted 45-minute telephone interviews with each of the 10 nonparticipating insurers who agreed to be interviewed. We interviewed 24 representatives of 2 large national and 8 small regional insurers, including chief compliance officers, vice presidents for Medicare products, and medical directors for government programs, among others. We used a semistructured protocol to learn about the main reasons for not participating in VBID, barriers to participation, and VBID model changes that might make it more attractive. We also analyzed written comments that nonparticipating insurers had sent to CMS.

Participating insurers. Between June and September 2017, 2 researchers conducted individual or small-group interviews with 73 representatives from 8 of the 9 VBID-participating MA insurers. One participating insurer declined to be interviewed, stating a delay in its implementation. Each interview lasted 60 to 90 minutes. We interviewed representatives of 4 MA insurers during in-person site visits; the other 4 interviews were by telephone. Interviews followed a semistructured format covering topics such as the decision to participate, early implementation experiences, implementation barriers and facilitators, and feedback to CMS. We supplemented these semistructured interviews by reviewing the insurers’ VBID application materials.

Interviewees held a variety of positions in their organizations, including Medicare product specialists, Medicare compliance officers, actuarial directors, directors of regulatory affairs, care management directors and staff, informatics specialists, and/or medical directors of government programs.

All interviews were audio-recorded and transcribed. The RAND Institutional Review Board exempted the study from review.


 
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