Dr Mark Fendrick Testifies on Allowing VBID Flexibility in Medicare Advantage

In testimony before the US House Ways and Means Committee’s Health subcommittee, Mark Fendrick, MD, co-director of the University of Michigan Center for Value-Based Insurance Design (VBID) and co-editor-in-chief of The American Journal of Managed Care^®, discussed the importance of allowing for flexibility and clinical nuance when it comes to encouraging value in Medicare Advantage (MA) plans.

Specifically, Fendrick called for a value-based redesign of policies that would let MA plans set prices according to each individual patient’s clinical need, which would be determined by their comorbid chronic conditions and other risk factors. Currently, MA plans do not allow patients control over their out-of-pocket costs for clinician visits, prescription drug fills, or medical procedures.

Though the MA program was designed to enhance patient choice and flexibility by allowing plans to be offered by private insurers, the rigid payment structure means that enrollees can be overburdened with costs. Healthcare expenditures consumed one-fifth of annual income for 1 in 4 Medicare beneficiaries in 2016.

“The typical Medicare beneficiary does not worry about the total amount that the US spends on health care, but they do care deeply about what it costs them,” Fendrick said in his written testimony.

This consumer interest in keeping costs low could instead be harnessed to save money for the patient and the healthcare system under a value-based design, he explained. The current “one-size-fits-all” structure means that copays and cost-sharing amounts do not take into account clinical nuance, or the complex interplay of medical factors that make some services and therapies a better fit for some patients than others.

Healthcare reforms passed by Congress, such as CMS’ Quality Payment Program, are increasingly aiming to reward payers and providers for offering evidence-based care. Fendrick said this idea could be extended to patients, allowing them to save money when they choose the most appropriate services for their healthcare needs and thus incentivizing wiser healthcare decisions.

“The lack of robust consumer incentives to improve their own health, coupled with illness burden, intense medication needs, and high out-of-pocket costs, often lead to undesired clinical and financial outcomes,” he said.

According to Fendrick, legislators from both parties have voiced support for 2 bills (HR 1995 and S 870) introduced in both houses of Congress that would let MA plans in every state experiment with value-based redesign for cost sharing. Other initiatives include TRICARE’s plans to offer value-based plans to military service members and their dependents as part of a pilot test. Another type of coverage recently joining in the value-based experiments has been commercial plans offered through employers.

VBID is already being implemented in some states’ MA plans, after CMS announced in January it would allow plans in 7 states to try out such a model aimed at beneficiaries with one of several chronic illnesses, such as chronic obstructive pulmonary disease (COPD). In one of the states, Pennsylvania, patients have reported satisfaction with the changes so far, saying the new model has allowed them to control their healthcare expenditures and manage their health with confidence that they can afford the costs of care.

“This program is allowing me to access care again,” according to an enrollee with COPD. Another beneficiary, who also had the condition, reported, “I feel good knowing I can afford a visit when I get sick.”