Value-Based Insurance Design in Medicare Advantage Demonstration

“The importance of providing MA plans increased flexibility to use V-BID principles to create a benefit package that encourages MA members to become smarter health care consumers.” – Mark Fendrick, MD, Director of the Center for Value-Based Insurance Design at the University of Michigan

On January 1, 2017, CMMI began a Value-Based Insurance Design (V-BID) model demonstration in Medicare Advantage (MA) under which eligible MA plans may implement interventions falling within specified categories (further details below). The model seeks to evaluate whether offering clinically nuanced V-BID benefit designs in MA plans would lead to higher quality and more cost-effective care for the targeted enrollees. Organizationally, the model is open for participation to MA and MA-PD plans at the individual plan benefit package (PBP) level.

In support of the demonstration, CMS and the HHS Secretary (as authorized by Section 1115A of the Social Security Act regarding the testing of innovative health care payment and service delivery models) granted a limited waiver of certain Medicare uniformity requirements to allow MA organizations to offer interventions to clinically targeted enrollee populations within a PBP rather than to their entire membership.

Test States
The following seven states were determined eligible to participate in the demonstration in 2017: Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee. These states were selected by CMS to be nationally representative of the MA population for the purposes of evaluation.

Alabama, Michigan, and Texas were added to the list and selected for participation beginning in 2018.

Clinical Categories
The demonstration limits the benefit design flexibility to enrollees with certain chronic conditions defined by CMS. Plans can alter benefit designs for one or more of the identified clinical categories, or for individuals with a combination of the conditions outlined. The clinical categories in the demonstration include:
• congestive heart failure
• chronic obstructive pulmonary disease (COPD)
• past stroke
• hypertension
• coronary artery disease, and
• mood disorders.

For 2018, the clinical categories have been expanded to include dementia and rheumatoid arthritis.

Eligibility Criteria for Plans
To be eligible to participate, MA plans must meet certain criteria and have their interventions approved by CMS. Qualified participants must be an HMO, HMO-POS, or local PPO and must not be consistently low performing (3-Star). Additionally, eligible plans must not be under sanction, have no past performance outlier rating, operate for 3 years prior to CY 2017, cover a minimum of 2,000 enrollees, and be offered in no more than two states with 50% of their enrollees in a test state. CMS has indicated there may be some flexibility in eligibility criteria and encourages plans to engage CMS as appropriate as part of the application process.

Eligible Intervention Types
While MA organizations have the flexibility to develop their own interventions for the target populations by PBP, benefit changes must be categorized as one of the following:
1. Reduced cost sharing for high-value services. This could include elimination or reduction of co-pays, co-insurance, or exemption of a service from the plan deductible, among other options.
2. Reduced cost sharing for high-value providers. Flexibility around cost sharing can be applied when organizations identify providers (which may be drawn from across all Medicare provider types) as being “high-value.” The methodology for determining high-value providers as they relate to each clinical category must be proposed in detail in the application. Organizations have the flexibility to either adjust cost sharing for an identified high-value provider regardless of the service provided or to adjust cost sharing only when the identified high-value provider provides certain high-value services.
3. Reduced cost sharing for enrollees participating in disease management or related programs. While organizations have the flexibility to adjust cost sharing for targeted enrollees who participate in such programs, cost sharing cannot depend on enrollees achieving any clinical goals.
4. Clinically targeted supplemental benefits. Coverage of additional supplemental benefits can be made available to the targeted populations. However, organizations that propose supplemental benefit interventions must not discriminate within the target population and make these benefits available to every enrollee within the targeted clinical category.
It is important to note that enrollees (including those outside the target population) cannot receive fewer benefits or pay higher cost sharing than other enrollees because of the model. Additionally, any reductions in cost sharing must be available to all enrollees within the target population.

Application Process
The CY 2018 application period is closed, but the Request for Applications for CY 2018 (PDF) and the model test’s CY 2018 Application Actuarial Guidance (PDF) are now available on the CMMI’s website for reference purposes.

Actuarial Guidance
CMA released actuarial guidance to provide clarity on pricing considerations, as well as instructions for completing the Bid Pricing Tools (BPTs) for both Part C and Part D and other supporting documentation related to the application. The guidance discusses a number of important points.
• Looking at savings broadly. Although there is a general rule that these demonstrations must result in net savings to Medicare and cannot increase costs to beneficiaries, the guidance suggests that savings may be looked at broadly over the 5-year course of the demonstration. Thus, even if a plan’s bid pricing tools would reflect a net increase of costs to enrollees and/or Medicare for CY 2017 (for either Part C or Part D), the applicant can provide a 5-year projection that demonstrates net savings over the five-year life of the model.
• Demonstrating impact on each targeted population. The guidance suggests that applicants would provide estimates of expected impact on costs and utilization, both for the entire plan population as a whole, as well as for each of the targeted VBID populations. Similarly, if the applicant intends to use multiple interventions, the applicant should be prepared to quantify the impact of each intervention on a stand-alone basis.

***Issue Update:
On Tuesday, February 7, Reps. Diane Black and Earl Blumenauer led a briefing on V-BID issues. Both Reps. Black and Blumenauer emphasized the importance of expanding awareness of the value of V-BID, and expressed their continued commitment to re-introduce and enact the Access to Better Care Act in 2017.

Reps. Black and Blumenauer were followed by presentations from Dr. Mark Fendrick of the University of Michigan V-BID Center and Dr. Michael Chernew of Harvard Medical School, who discussed innovative approaches to including V-BID into Health Savings Accounts tied to High Deductible Health Plans (HSA-HDHPs), Medicare Advantage, and TRICARE. Drs. Fendrick and Chernew explained how including V-BID into these programs and allowing some services to be covered on a pre-deductible basis could reduce overall costs and optimize outcomes, resulting in high-value health plans. Their presentation was consistent with the Coalition’s work in this area.

Following the bipartisan staff briefing, Coalition staff attended a bipartisan, bicameral meeting with Hill champions on Friday, February 10. The purpose of the meeting was to further discuss the details of the Access to Better Care Act and companion legislation in the Senate. This was a successful meeting and the Coalition will continue the momentum and work with both House and Senate leaders, in bipartisan and bicameral discussions, to introduce legislation to improve HSA-HDHPs and the role of V-BID to help patients better manage chronic conditions.

***Issue Update:
On Wednesday, May 17, the Coalition sent a letter of support on the The V-BID for Better Care Act of 2017 (H.R. 1995). This bill, along with the recently re-introduced CHRONIC Care Act of 2017, would expand the CMS Medicare Advantage V-BID demonstration to all states by January 1, 2019, and represent a major step forward in unleashing the potential for Medicare Advantage to more effectively address the needs of beneficiaries.

The letter, sent to Representatives Black, Blumenauer, McMorris Rodgers, and Dingell, can be viewed below.

***Issue Update:
On Thursday, May 18, the Senate Finance Committee unanimously approved the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2017 (S. 870). The CHRONIC Care Act of 2017 would expand the Value-based Insurance Design (V-BID) Model to all states by 2020. Next, the bill will be considered by the full Senate, but the exact date has not yet been determined. The full text of the bill can found below.

***Issue Update:
On September 27, the U.S. Senate unanimously passed the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2017 (S. 870). The legislation includes an important provision that expands the Medicare Advantage Value-Based Insurance Design (V-BID) Model demonstration program to any state wishing to participate by 2020. The bill will now move on to the House of Representatives for consideration.

***Issue Update:
We wanted to highlight that the CMS Medicare Advantage Proposed Rule, released on November 16, includes a provision that would increase the flexibility in the Medicare Advantage (MA) Uniformity Requirements. CMS believes it has the authority to interpret the uniformity requirement differently, and is proposing to give MA plans the ability “to reduce cost sharing for certain covered benefits, offer specific tailored supplemental benefits, and offer lower deductibles for enrollees that meet specific medical criteria.” Under this flexibility, MA plans would have the ability to tailor the cost sharing and benefits to enrollees based on medical criteria that is “objective and measurable.” CMS indicates that the agency will be reviewing the benefit designs and cost sharing reductions to ensure that they are in compliance with non-discrimination responsibilities and obligations.

It is important to note that while this proposal expands the crux of the currently underway MA V-BID Demonstration, CMS notes that there are features of the MA V-BID Demonstration that are unique to the Demonstration, and that CMS expects the Demonstration to provide it with insights into future V-BID innovations for MA. Nonetheless, application of V-BID concepts across the MA program remains an important priority for our Coalition.

***Issue Update:
CMS posted its Medicare Advantage Value-Based Insurance Design Model CY 2018 Communication Guidelines for Medicare Advantage Organizations participating in the Medicare Advantage Value-Based Insurance Design (MA-VBID) model test.