Legislative Actions Encourage Value in Medicare Advantage and High-Deductible Health Plans

This article was collaboratively written by A. Mark Fendrick, MD, director of the Center for Value-Based Insurance Design (V-BID), and several V-BID Center staff.

While many healthcare reform concepts struggle to gain traction on the national stage, value-based insurance design (VBID) continues to experience success in both public and private payer arenas. Broad bipartisan and multi-stakeholder support of VBID’s clinically nuanced cost-sharing has stemmed from its applicability to a wide range of healthcare issues and its potential to reduce overall healthcare expenditures while improving health outcomes.

As highlighted by recent legislative victories in Medicare Advantage (MA) and health savings account-eligible high-deductible health plans (HSA-HDHPs), this support has enabled VBID to become an integral part of various healthcare reform efforts.

Government Funding Bill Expands MA VBID Model Test to All 50 States

Fueled by the desire to improve plan quality and curb rising costs for both patients and payers in the Medicare Advantage program, CMS launched the MA VBID Model Test in January 2017 to assess the utility of structuring consumer cost-sharing and plan elements to encourage the use of high-value clinical services and providers. The model allows MA plans the flexibility to reduce cost-sharing or offer supplemental benefits to enrollees with specified chronic conditions, focusing on the services that are of highest clinical value to them.

Nine MA plans in 3 of the 7 eligible states—Massachusetts, Indiana, and Pennsylvania—were selected to enroll beneficiaries with specified chronic conditions in 2017, followed by the announcement that the MA VBID Model Test would be expanded to 18 additional states in 2018/2019. With growing interest in the benefits of VBID implementation in MA, there was mounting support for the test’s expansion to all 50 states—a logical next step in testing VBID’s potential.

On February 9, 2018, President Donald Trump signed the Bipartisan Budget Act of 2018. The funding bill incorporates the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2017, which includes the expansion of the MA VBID Model Test to all 50 states by 2020. In addition to the expansion, Sec. 50321 of the bill allocates funds “to design, implement, and evaluate” the MA VBID model. The importance of this development cannot be overstated as it provides for unprecedented innovation in the MA program with the goal of improving the plan options available to millions of older Americans.

Chronic Disease Management Act Provides for VBID in HSA-HDHPs

Paralleling VBID’s success in MA, on February 8, 2018, Senators John Thune, R-South Dakota, and Tom Carper, D-Delaware, and Representatives Diane Black, R-Tennessee, and Earl Blumenauer, D-Oregon, introduced the Chronic Disease Management Act of 2018 in both houses of Congress. Current Internal Revenue Service guidelines prevent HDHPs from offering pre-deductible coverage of services used to treat chronic diseases, but this bipartisan bill amends these guidelines to “permit [HDHPs] to provide chronic disease prevention services to plan enrollees prior to satisfying their plan deductible.” Such a clear promotion of VBID concepts is predicted to lead to “improved outcomes via increased medication adherence, reduced complications, and decreased emergency department visits.”

All of these benefits would stem from the implementation of High-Value Health Plans (HVHP), which use the tenets of clinical nuance to select services that should be covered on a pre-deductible basis for enrollees with specified clinical conditions. Adoption of these voluntary, clinically nuanced HVHPs would provide millions of Americans a plan option that better meets their clinical and financial needs.

What’s Next for VBID?

Beyond these legislative successes for MA and HDHP reform, the University of Michigan V-BID Center envisions an expanded role for VBID in an increasing number of healthcare reform efforts. Not only will there be continued need to encourage insurers to innovate with MA VBID plans and HVHPs, but there is also a need for VBID in various other health policy areas. Following the example set in the MA program, VBID has become a key player in the reform of other public payers, including the TRICARE program and state Medicaid plans, as well as broader reform efforts in areas, such as low-value care and precision benefit design.

With its potential to mitigate cost-related nonadherence, enhance patient-centered outcomes, allow for lower premiums, and substantially reduce healthcare expenditures, VBID will continue to play a central role in the shift from a volume-driven to a value-based healthcare system.