https://www.ajmc.com/journals/issue/2019/2019-vol25-n7/insurers-perspectives-on-ma-valuebased-insurance-design-model
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

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.
Data Analysis

Four experienced qualitative researchers used MaxQDA (VERBI Software; Berlin, Germany) to code each transcript and identify key themes, using a code book with codes derived deductively from the interview guides (eg, reasons for [not] joining the model test) and generated inductively based on unanticipated themes emerging from interviews (eg, information technology [IT] challenges).24 The coding team blindly double-coded 2 interviews with VBID nonparticipants and 4 interviews with VBID participants and discussed and resolved any discrepancies. All other interviews were coded by one person and reviewed by another. A few coding discrepancies, primarily related to the nuances of VBID model implementation, were resolved during team meetings.

We identified the most frequently mentioned reasons for either not joining or joining the model test and described strategies that participants used to overcome perceived barriers to joining MA VBID. eAppendix B provides additional quotations illustrating the main themes we present in the following Results section. To protect the confidentiality of our study participants, we deidentified insurer names (we use “NPInsurer” for VBID nonparticipants and “PInsurer” for participants) and refrained from providing individual-level characteristics of our study participants.

RESULTS

Differences Between Participants and Nonparticipants

Only 10 insurers (<30%) participated in VBID during the first 2 years of the model test. Five participants were from Pennsylvania, 3 from Massachusetts, and 1 each from Indiana and Michigan. Nine participants were state-based insurers; 1 was a national insurer. Four were BCBS affiliates. Participants chose to enter plans primarily in their health maintenance organization contracts. (Of 12 contracts, only 3 were preferred provider organization contracts.) Compared with participants, nonparticipants were less likely to be not-for-profit and state-level (as opposed to regional or national) insurers. Participants were no more likely to be BCBS affiliates than were nonparticipants.

The MA market is dynamic and, in many geographic areas, very competitive. Because participants did not know who would apply and be accepted for VBID, it is difficult to know whether competitive pressures affected their decisions. Nonetheless, none of our study participants believed that the level of market competition or their market share had an impact on their decisions. Model test participants, however, stated that Pennsylvania and Massachusetts, the states where most participants were from, are “in [fore]front of healthcare [reform] in general” (PInsurer03) and are full of “forward-thinking” insurers (PInsurer07).

Reasons for Not Joining VBID

The nonparticipants we interviewed identified 4 main reasons for not joining the model test. First, 8 nonparticipating insurers felt that they did not have enough information to structure their VBID offerings. As part of the application process, insurers had to demonstrate that their designs would achieve savings over a 5-year period. To estimate savings, insurers needed better actuarial information on the likely changes in utilization that could be expected in the Medicare population. Many insurers did not feel comfortable estimating these impacts using data from the employed population younger than 65 years. Insurers wanted more information to develop realistic assumptions, particularly about changes in utilization and savings. VBID nonparticipants wanted to see how VBID participants “structure their VBID benefit” (NPInsurer10), “how the intervention works” (NPInsurer04), and what outcomes it would achieve (see eAppendix B for additional quotations describing all thematic findings reported here).

Second, 7 VBID nonparticipants cited potential lack of return on investment (ROI): “We just could not come to a positive ROI to where the program would at least cover its own costs in year 1,” said one representative (NPInsurer01). They felt that the implementation and administrative costs of VBID were too high, and they viewed potential returns as relatively low, because many stated that they were already offering high-quality care.

Third, representatives of 7 nonparticipating insurers worried about administering 2 sets of benefits to beneficiaries within the same plan based on the presence of an eligible health condition. In MA, all beneficiaries in a plan, which they select during the annual open enrollment period, get the same benefits regardless of their medical conditions. Under VBID, beneficiaries in the same plan may get different benefits, depending on their diagnoses. Being diagnosed with an eligible condition midyear could trigger a change in benefits. Nonparticipants worried about their IT capabilities and the ability of internal systems to identify, track, and administer VBID benefits. As NPInsurer08 put it, “How do you identify those [VBID-eligible] members and be able to administer those benefits to them specifically and not to the general population or vice versa? [How do you] make sure that we are able to track the claims? [How do we] make sure [the benefits] are administered exactly the way that we submitted in the bid, no more, no less?”

Finally, nonparticipating insurers raised concerns about the model test parameters. For example, some wanted to implement VBID in Chronic Care Special Needs Plans (C-SNPs). Others wanted to offer VBID to beneficiaries with conditions not allowed by the model test or to target a subset of beneficiaries, such as those with early- or late-stage diabetes. Five nonparticipants also worried that VBID marketing restrictions would not allow them to mention their participation in the model or specific VBID benefits in their pre-enrollment materials and outreach activities. As NPInsurer04 explained, “VBID almost looks like something you have to keep a secret for a while and…you can’t really use that to try to attract new members.” Some would have preferred to advertise their participation in VBID to further distinguish themselves from competitors.
Reasons for Joining VBID and Ways to Address Participation Barriers

Participating insurers tended to be willing to take risk and implement interventions that have not been tried before in MA. Five participants considered themselves innovators, willing to experiment with benefit design. Four participants stated that they joined the model test because VBID’s goals were consistent with their own organizational priorities of reducing spending and improving care quality. Finally, 3 participants commented on VBID’s potential to improve beneficiary outcomes by addressing structural barriers to care and increasing beneficiary engagement.

Participants did encounter the barriers described by nonparticipants. Their greater appetite for risk affected the way participants addressed these barriers. To illustrate, VBID participants handled the lack of evidence by reviewing literature on VBID in commercial plans and relying on their best clinical judgment. Many participants wanted to innovate: “We’re very innovative in a lot of the things we do. We try things. Anytime something new comes up, we tend to get involved in those things just because it’s an opportunity one way or another” (PInsurer03). Others considered VBID a useful benefit design experiment: “We’re certainly willing to go down the road of a demonstration to figure out if our hypothesis that by sending members to their specialists more we can reduce their inpatient hospitalization and their high-cost care is true or not” (PInsurer05).

Most VBID participants agreed that VBID cost savings would be minimal and focused on maximizing long-term outcomes, such as decreased hospitalizations and emergency department use, while reducing implementation costs. According to PInsurer03, VBID would yield benefits “if you can really do something that is going to help the population longer term, [such as] better quality of life [or] lower long-term costs, those are all good things.” To increase the chance of a positive ROI, several participants noted that they had designed their interventions to minimize implementation costs: “We needed to come up with something that would not add additional resources and cost to the actual program that we have now” (PInsurer03). Participants relied on existing programs and processes when possible, which helped them design interventions that were easier and less costly to implement.

VBID participants agreed that managing 2 sets of benefits within a plan, or what they called “a plan within a plan” (PInsurer06), was a serious implementation challenge. Managing VBID-eligible beneficiaries required substantial IT investments and extensive coordination across departments because multiple systems, such as claims processing or care management tracking systems, had to interact with each other. A representative of PInsurer07 noted that it had to modify about 15 applications before VBID rollout.

Insurers developed different approaches to tracking eligibility, participation status, and the correct payment amounts for beneficiaries eligible for reduced cost sharing. Some VBID participants “separated” beneficiaries or created different internal groups in their IT systems to flag VBID participants. As PInsurer06 explained, “We duplicated the existing structure of our benefits and made a separate benefit structure…a dedicated line for these members.” PInsurer07 created flags within internal IT systems to identify VBID-eligible and VBID-enrolled beneficiaries.

VBID-participating insurers also considered VBID marketing restrictions to be problematic, citing potential confusion among beneficiaries, many of whom were not notified about their VBID benefits until January 2017, months after receiving Annual Notice of Change and Evidence of Coverage documents that detailed all benefit changes. To address beneficiaries’ confusion, some MA insurers called eligible enrollees in addition to sending them letters describing new VBID benefits in January.

Although VBID participants understood CMS’ rationale for restricting advertising, they still noted that these restrictions may negatively affect beneficiaries’ awareness of and participation in VBID: “I understand the CMS’ concern around selection or cherry-picking…but [if we could market VBID,] we probably would have had more people say, ‘Hey, let me see if I’m eligible’ as opposed for us having to wait for things to hit the system” (PInsurer04).

DISCUSSION

VBID nonparticipants cited a perceived lack of information on VBID in MA, expectations of low ROI, potential administrative and IT hurdles, and concerns about the test’s design as the main reasons for not joining the MA VBID model. By contrast, participating insurers were interested in experimenting with benefit design, even if the ROI was uncertain; implementing interventions consistent with their organizational priorities; and improving beneficiary outcomes by addressing structural barriers to care and increasing beneficiary engagement. Risk tolerance among upper management and an entrepreneurial organizational culture that encourages innovation seem to differentiate VBID participants and nonparticipants. During the initial implementation period in 2017, most VBID participants encountered the administrative and IT hurdles feared by the nonparticipating insurers but overcame them. They also agreed that certain model test characteristics, such as marketing restrictions, may have limited their abilities to design their preferred interventions or made the implementation challenging.

Based on the feedback from both groups, CMS changed the model parameters for 2018 and 201925,26 and relaxed some of the marketing restrictions.27 In particular, CMS added rheumatoid arthritis and dementia to the list of eligible conditions, allowed insurers to propose their own methods for identifying eligible beneficiaries, and made C-SNPs eligible to participate.
The VBID model test is occurring in a rapidly changing policy environment in which CMS is allowing more flexibility in benefit design through changes to the uniformity rule and the nationwide VBID model expansion. Our results point to 4 important considerations that may affect insurers’ willingness to adopt VBID in or outside the model test:

Evidence is important. Many insurers cited uncertainty about ROI as a key reason for nonparticipation. Generating evidence on VBID’s effects in the MA population may help insurers estimate the impact to their bottom lines and make an informed decision about MA VBID.

Insurers’ philosophy, rather than market characteristics, may influence participation. Our study participants did not believe that market characteristics affected their decisions to join VBID. Instead, VBID participants welcomed the opportunity to experiment with benefit design to improve beneficiary health outcomes and care quality and viewed ROI as a secondary concern. Willingness to innovate with benefit design and be considered a leader in the MA space were more important for model participants than potential concerns about ROI. Nonparticipants, however, took a “wait-and-see” approach and wanted to avoid the unknown outcomes of VBID in the MA population. In some cases, they felt that they were already providing high-quality care and were reluctant to experiment given uncertainties.

Technological barriers can be significant. Many participants had to invest in IT systems to enroll beneficiaries in VBID, track their benefits, and pay the correct amounts to providers. Participants, especially those requiring beneficiaries to engage in care management, also needed to coordinate multiple internal departments that did not previously communicate or work together. Although such issues are not insurmountable, they may deter some insurers from offering VBID benefits until appropriate changes to their IT systems are implemented and tested.

Model test parameters matter. Nonparticipants indicated that they would be more likely to join the model test if they had even more flexibility to design and target benefits, and both participants and nonparticipants cited CMS’ marketing restrictions as an impediment to participation. CMS has already lowered participation barriers by allowing insurers to target additional conditions, extending eligibility to C-SNPs, and relaxing marketing restrictions. Additional flexibility will be permitted in 2020.28

Limitations

Our qualitative study has 3 limitations. First, insurers not responding to our interview requests may have had different perspectives on VBID than those who responded. This may be a particular concern for nonparticipants, given that only about one-third of nonparticipating insurers responded. To address this issue, we analyzed written comments from MA insurers who responded to CMS’ request for comments on the model test, but we did not see major differences in perspectives with those we interviewed. Second, we conducted interviews 6 to 8 months after the start of the model test, when MA insurers were still working toward finding solutions to some implementation challenges. Subsequent data collection may reveal additional implementation challenges and facilitators. Third, our study relied on self-reported data collected from model participants either by phone or in person and from model nonparticipants only by phone. Some participants may not have disclosed all implementation challenges they might have experienced, and, although unlikely, the mode of data collection might have affected responses.

CONCLUSIONS

Currently, MA VBID uptake is low. To address perceived participation barriers, we suggest 3 potential solutions. First, CMS could provide additional in-kind assistance to model participants, including approved templates for beneficiary communication materials, to facilitate model implementation. Moreover, CMS could consider ways to disseminate findings widely and encourage participants to share their implementation experiences with other model participants through collaborative learning sessions.

Second, insurers considering joining the model test may benefit from learning about the implementation experiences of current model participants, including ways to overcome IT challenges. Reviewing the results of the first year of the model test evaluation21 may help alleviate some concerns that current nonparticipants may have.

Finally, once insurers decide to implement VBID, they should engage their IT departments or external IT vendors early on to ensure that they can develop a strategy for managing 2 sets of benefits within the same plan.
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