CMS Expands VBID in Medicare Advantage, Increases Risk Sharing in Part D

The Center for Medicare and Medicaid Innovation (CMMI) under CMS expanded its value-based insurance design (VBID) model for Medicare Advantage (MA), as well as created more risk sharing in Part D payment models for plan sponsors. Both plans are voluntary, CMS said.

CMS said the new MA model updates the VBID model that first launched in 2017, beginning in 7 states. With Friday’s announcement, the VBID model will be available in all 50 states, as required by the Bipartisan Budget Act of 2018. Interventions may encompass 1 or more areas:

• VBID by condition, socioeconomic status, or both, including social determinants of health
• Programs for MA and Part D rewards and incentives
• Increasing access to telehealth
• More coordination of wellness and healthcare planning

Beginning in 2021, the VBID model will also pilot the Medicare hospice benefit in MA plans. In addition, CMS said it is extending the performance period of the VBID model by an additional 3 years, through 2024.

CMMI was created by the Obama administration with the notion that it could pilot new ways for Medicare and Medicaid to pay for care to save money and make the healthcare system more efficient. It is headed by Adam Boehler, the former CEO of Landmark Health.

On a call with reporters explaining the changes, a CMS official said the changes would save the government more than $2 billion per year.

The model for Part D plans is called the Part D Payment Modernization model and is linked to the president’s plan to lower drug prices, CMS Administrator Seema Verma said.

Currently, once a patient’s prescription drug spending is high enough for the patient to enter the final phase of the benefit, known as the “catastrophic phase,” Medicare is responsible for 80% of drug costs. Verma said this creates “perverse incentives” and leaves plans with little reason to negotiate lower costs for the highest-spending patients.

From 2008 to 2017, she said, federal spending in the Part D catastrophic phase nearly quadrupled from $9.4 billion to $37.4 billion, about an average increase of 17% per year. In 2016, 3.2 million beneficiaries reached the Part D catastrophic phase, and the beneficiaries in catastrophic who did not qualify for the low-income subsidy faced average annual out-of-pocket drug costs of more than $3000.

Under the new model, which takes effect in 2020, participating plans will take on greater risk for spending in the catastrophic phase of Part D, creating new incentives for plans, patients, and providers to choose drugs with lower list prices. Also, the model introduces a Part D rewards and incentives program to align this model with the changes to VBID, and to provide Part D plans with additional tools to control drug costs and help enrollees in choosing drugs with lower list prices.

Based on plan-year performance, CMS will calculate a spending target for what governmental spending would have been without plans taking on this additional risk.

CMS also released the first year VBID model evaluation report. In 2017, 9 out of 23 eligible organizations within 3 of 7 eligible states chose to participate in the model, targeting chronic obstructive pulmonary disease, congestive heart failure, diabetes, and hypertension. More than 96,000 beneficiaries with specified target conditions were eligible for the VBID model; across all participating organizations, 61% of eligible beneficiaries actually received VBID benefits.