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.
CMS' update to the Medicare Advantave Value-Based Insurance Design Model, demonstrate CMS’ continued commitment to expanding the demonstration and allowing participating plans more flexibility for customized benefit designs.
CMS announced updates to the Medicare Advantage Value-Based Insurance Design (MA VBID) Model on on November 22, 2017. Most notably, the CMS announcement expands the VBID model test to an additional 15 states in 2019, for a total of 25 states. The updates demonstrate CMS’ continued commitment to expanding the demonstration and allowing participating plans more flexibility for customized benefit designs.
States and Conditions Eligible for MA VBID Model Test, Year 2
In addition to expanding to 25 states in 2019, Chronic Condition Special Needs Plans (C-SNPs) will now be eligible in the MA VBID test. Furthermore, all participants will be allowed to propose their own methods of identifying enrollees eligible for the plans, providing the opportunity to include Medicare enrollees with chronic conditions that were not previously eligible for the demonstration, such as chronic kidney disease and tobacco use. This will give more beneficiaries access to new choices and customized care.
The MA VBID model test aims to assess the utility of structuring consumer cost-sharing and plan elements to encourage the use of high-value clinical services and providers for beneficiaries with specified chronic conditions. VBID approaches have been successful in the commercial market, and there is increasing interest in VBID principles as a tool to improve the quality of care and reduce the cost of care for MA enrollees with chronic diseases.
The model launched on January 1, 2017, with select MA plans in 7 states offering varied benefit designs for enrollees diagnosed with specified clinical conditions. In 2018, the model will expand to 3 new states and 2 additional clinical categories.
What We Know from Year 1
Manatt Health published an article titled “Medicare Advantage Value-Based Insurance Design: The First Year,” which provides an overall analysis on the current progress of the MA VBID model test. Special attention was given to determining which MA organizations (MAOs) are actively participating in the model test, as well as which disease conditions will be affected by a value-based approach.
There are currently 45 plans enrolled in the MA VBID model test, which represent 2% of the Medicare Advantage enrollees nationwide. In 36 of the 45 plans, enrollees with chronic conditions receive reduced cost sharing for medical benefits. Additionally, studies show that MAOs largely focus on patients with diabetes, congestive heart failure, and chronic obstructive pulmonary disease.
Growing Support for VBID in MA
As the number of states included in the MA VBID demonstration continues to expand, bipartisan Congressional interest to include all 50 states in the demo continues. Recently, the Senate unanimously passed S.870, the Creating High-Quality Results and Outcomes Necessary to Improve Chronic Care Act (CHRONIC) of 2017, a bipartisan bill that specifically calls for the expansion of the MA VBID demonstration to all 50 states.
Mirroring the Senate version of the legislation, Representative Diane Black, R-Tennessee, along with cosponsors Earl Blumenauer, D-Oregon, Cathy McMorris Rodgers, R-Washington, and Debbie Dingell, D-Michigan, introduced the V-BID for Better Care Act of 2017 (H.R.1995) in the House, which also seeks to provide national testing of the MA VBID Model.
A growing body of evidence demonstrating that increases in patient cost sharing lead to decreases in the use of both nonessential and essential care has led to increased support for the VBID model. Medicare beneficiaries, many of whom manage multiple chronic conditions, are at particularly high risk of cost-related nonadherence. Due to misaligned incentives, Medicare beneficiaries often receive too much low-value care and too little high-value care.
Applying clinically nuanced VBID strategies presents an enormous opportunity for the Medicare program, particularly MA plans. VBID can encourage the utilization of high-value providers and services and limit the use of services that are of potentially low value, thus helping MA plans improve health and quality, enhance consumer engagement, and reduce costs.
To learn more about how VBID can play a role in MA, view the infographic below, and visit the V-BID Center Medicare and MA initiative page.
Click to enlarge