CMS releases Medicare Advantage value-based insurance design model

Health and Human Services

A new model for Medicare Advantage value-based insurance design will begin January 1, 2017 and run for five years, according to the Centers for Medicare and Medicaid Services. 

In the first year, CMS will test the model in seven states: Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee. 

Eligible MA plans in these states, with CMS approval, may offer varied plan benefit designs for targeted enrollees, such as reduced cost sharing or additional services. The stipulation is that enrollees  never receive fewer benefits or are charged higher cost sharing than other MA enrollees, CMS said.

[Also: Hospitals hiring chief clinical officers to steer toward value-based care]

The model will test the hypothesis that giving MA plans flexibility to offer supplemental benefits or reduced cost sharing to targeted groups of enrollees with CMS-specified chronic conditions will encourage them to use of services that are of highest value to them, and will lead to higher-quality and more cost-efficient care. 

The chronic conditions outlined by CMS for the test model are diabetes, chronic obstructive pulmonary disease, congestive heart failure, patient with past stroke, hypertension, coronary artery disease, mood disorders, rheumatoid arthritis (starting in 2018), and dementia (starting in 2018).

CMS said it would announce the Medicare Advantage plans that are participating in the test's first year this September.

For the second year, CMS has announced some refinements and tweaks to the design model.

Beginning January 1, 2018, CMS will also test the model in Alabama, Michigan, and Texas. These states are considered generally representative of the national Medicare Advantage market. They include urban and rural areas; areas of high and low average Medicare expenditures; areas with a high and low prevalence of low-income subsidies; and areas with varying levels of competition within Medicare Advantage. 

In the second year, the agency will add rheumatoid arthritis and dementia to the clinical categories for which participants may offer benefits.

It will make adjustments to existing clinical categories.

And it will change the minimum enrollment size for some Medicare Advantage and and Medicare Advantage, Part D plan participants.

CMS expects to release a request for applications for the second year of the model test in the fall of 2016.

Value-based insurance design is aimed at encouraging enrollees to use high-value clinical services – those that have the greatest potential to positively impact health. 

These approaches are being increasingly used in the commercial market, and evidence suggests that the inclusion of value-based  elements in health insurance benefit design may be effective in improving the quality of care while reducing the cost for Medicare Advantage enrollees with chronic diseases, CMS said. 

The existing Medicare Advantage plan has a "uniformity" requirement that generally requires an MA plan's benefits and cost sharing to be the same for all plan enrollees. Because of this, clinically-nuanced approaches have generally not been incorporated, CMS said.                                                                 

Twitter: @SusanJMorse