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Testing the Waters for Medicare Advantage Value-Based Insurance Design Model

On September 1, 2015, the Centers for Medicare & Medicaid Services (CMS) announced the opportunity for plan sponsors to test the Medicare Advantage Value-Based Insurance Design (MA-VBID) model, aimed at improving quality of care while also reducing costs. In this pilot project, health plans will be able to structure benefits so that enrollees with specific conditions can use clinical services that have the greatest impact on their health relative to the cost. The goal of the test is to determine if such a model encourages certain use of healthcare services in a way that reduces costs. As we have seen, CMS has been focusing on programs that will lead to higher quality of care and more cost efficient outcomes.

CMS will host an introductory webinar on September 24, 2015, for the MA-VBID model. Please click on the link to enroll and learn more about the MA-VBID model.

CMS will test the MA-VBID model in seven (7) pilot states: Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee. The pilot project will run over a five-year period, beginning on January 1, 2017.

Medicare Advantage (MA) plans participating in the MA-VBID model test will be required to develop interventions targeting MA enrollees with one (1) or more of the following chronic conditions or combination of these categories:

  • Diabetes
  • Congestive heart failure
  • Chronic obstructive pulmonary disease (COPD)
  • Past stroke
  • Hypertension
  • Coronary artery disease
  • Mood disorders

The value-based model gives Medicare Advantage plans the flexibility to design their plan packages with extra benefits and reduced cost sharing to patients who have these specified chronic conditions. Test MA plans will be promoting lower out-of-pocket costs and premiums with potential for additional services to targeted enrollees. However, targeted enrollees can never receive fewer benefits or be charged higher cost sharing than other MA enrollees as a result of the model.

CMS outlines four (4) general approaches for an MA plan to use in modifying their plan design under this MA-VBID model test:

  1. Reduced cost sharing for high-value services – MA 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. These services must be clearly identified and defined in advance and cost-sharing reductions must be available to all enrollees within the target population.
  2. Reduced cost sharing for high-value providers – Participating MA Plans can choose to reduce or eliminate cost sharing when providers the plan has identified as high-value treats targeted enrollees. The provider would include physicians/practices, hospitals, skilled nursing facilities, home health agencies and ambulatory surgical centers, but must have clinically-based methodology to be identified as high-value providers.
  3. Reduced cost sharing for enrollees participating in disease management or related programs – MA Plans may propose to lower cost-sharing for an enrollee meeting defined participation milestones, contingent on the proposal’s approval by CMS. For example, MA plan may require that enrollees meet with a case manager at regular intervals in order to qualify.
  4. Coverage of additional supplemental benefits – Examples of supplemental benefits include: telemedicine, non-emergency transportation to primary care visits, meals and counseling programs, among other services, that have clinical justifications for a selected population.

CMS is making progress on its vision of changing the healthcare system to one based on value. CMS has been trending towards improving the quality and affordability of care received by beneficiaries, they have been promoting quality over quantity. With the MA-VBID test model, CMS will be measuring whether structuring patient cost sharing and other health plan design elements encourage enrollees to use health care services in a way that reduces costs.

CMS will accept applications for the MA-VBID via a Request for Applications (RFA), to be released shortly. Once released, application materials will be available at:

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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