What is the MA Value-Based Insurance Model?

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In its efforts to improve the nation’s healthcare system, the Centers for Medicare & Medicaid Services (CMS) has introduced its Health Plan Innovation Initiatives. These programs are designed to test changes in health plan design. The Medicare Advantage (MA) Value-Based Insurance Design (MA-VBID) Model focuses on methods to encourage enrollees to consume high-value clinical services.

The MA-VBID Model utilizes cost-sharing and other health plan measures. Researchers have found that it may benefit health insurance design and improve the quality of care. In particular, the MA-VBID program may reduce healthcare costs for MA enrollees with one of seven CMS-defined, chronic diseases: diabetes, chronic obstructive pulmonary disease, congestive heart failure, coronary artery disease, past stroke, hypertension and mood disorders.

The MA-VBID Model in action

The MA-VBID Model represents the CMS’s first VBID-related effort. It allows the agency to propose specific interventions to participating MA Plans. These include reduced cost sharing for high-value services, providers and enrollees participating in disease management or related programs. It also involves coverage of additional supplemental benefits.

The CMS seeks to align patients’ financial interests (i.e., copays, deductibles) with the clinical value of the services received. As such, the MA-VBID Model will determine whether these approaches: 1.) increase enrollee satisfaction; 2.) improve enrollee clinical outcomes; 3.) reduce plan expenditures; and 4.) lower plan bids. But under the MA-VBID Model, targeted enrollees can never receive fewer benefits or have to pay higher cost sharing than other enrollees.

The CMS plans on kicking off the five-year MA-VBID Model on January 1, 2017. It will be tested in seven states: Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania and Tennessee. Once approved by the CMS, these states’ eligible MA Plans will be better able to fine-tune plan benefits for enrollees. To participate, MA Plans must meet the following qualifications:

  • Be a health maintenance organization (HMO), HMO-point-of service (HMO-POS) or local preferred provider organization (PPO) plan
  • Have all or a portion of its service area within one of the model test states
  • Have at least 2,000 enrollees and at least 50 percent of its total enrollment in the model test states
  • Not be offered in more than two states total
  • Have been offered in at least three annual Open Enrollment Periods (OEPs) prior to the 2017 OEP
  • Have least a three-star overall quality rating for 2015

Overcoming Medicare’s legal barriers

The CMS has set up the MA-VBID Model to help enrollees navigate through the MA regulations. But so far, the VBID approach hasn’t had much traction with Medicare, due to various legal barriers. Through cost sharing, the MA-VBID Model reduces obstacles to high-value treatments, while discouraging low-value treatments.

Medicare fee-for-service (FFS) Plans are typically unable to lower cost-sharing levels for clinically recommended services and across provider types. And, about 85 percent of Medicare FFS beneficiaries have some form of supplemental coverage that already reduces or eliminates their cost sharing.

However, Medicare Advantage Plans may offer a better format for VBID. That’s because they provide tools that help MA Organizations promote evidence-based care. But certain MA requirements are currently interfering with VBID measures. By law, all members enrolled in the same MA Plan must receive the same benefits, with the same cost-sharing at the same premium. But under the MA-VBID Model, the CMS would waive some requirements. This would enable the plans to focus on different enrollees in the same MA Plan. And, the agency could then tailor benefits to specific enrollee segments, based on their health status.

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