CMS signals tight controls in first class of value-based Medicare Advantage participants

The Centers for Medicare and Medicaid on Thursday unveiled new details of its new Medicare Advantage value-based insurance design model that aims to trim costs in the treatment of certain chronic conditions.

The five-year model will be tested in seven states starting in January 2017: Arizona, Indiana, Iowa, Mass., Pennsylvania Tennessee and Oregon.

The test model could be opened up to more applicants in year two, but there is no guarantee, according to Adam Finkelstein, health insurance specialist for CMS.

Value-based insurance design is an insurance benefit and cost sharing model that encourages enrollees to use the services that have the greatest potential to positively impact their health, according to Finkelstein.

[Also: CMS rolls out new value-based Medicare Advantage program]

The new model offers flexibility in extra supplemental benefits for enrollees with diabetes, congestive heart failure, chronic obstructive pulmonary disease, past stroke, hypertension, coronary artery disease, mood disorders and combinations of these categories.

Under the new model, Medicare Advantage and Medicare Advantage Prescription Drug plans select one or more of the CMS-defined groups to receive the benefits.

Flexibility may be offered in four ways:

Reduced cost sharing for high value services, supplies, and Part D drugs. As an example, a person with diabetes could have a copay of $5 for eye exams, or a zero copay for ACE inhibitors;

Reduced cost sharing for high-value providers could include zero copays for diabetics who visit PCPs who have a track record of controlling blood sugar levels;

Reduced cost sharing for disease management participation, which could eliminate primary care copays for diabetes patients who meet with a case manager;

Coverage of extra supplemental, non-covered high value benefits, such as extra coverage of smoking cessation for COPD patients.

All eligible enrollees participate, Finkelstein said.

For beneficiaries, "this is a carrot, not a stick model," Finkelstein said. There is no reduction in targeted enrollee benefits or increases in cost-sharing amounts under the new model.

To qualify for the new model, participants must meet certain conditions, such as not being consistently low performing, operating for at least three years prior to 2017 and having a minimum of 2,000 enrollees.

Multiple state plans are not allowed.

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However, CMS is willing to entertain written requests for exceptions, Finkelstein said.

Application responses are due by December, with the potential for an extended application period. There is no maximum number of plans that can test the model in the designated states.

The request for application requires actuarial projections. As stakeholders have said there is an uncertainty over financial projections so far out, 2016 may be used as a reference, he said.

CMS will be publishing further actuarial guidance.

The new model was developed by the CMS Innovation Center, which was created by the Affordable Care Act.

This is CMS's latest launch of innovative payment models, which in the past have included bundled payments and Pioneer and Medicare Shared Savings ACOs.

Twitter: @SusanMorseHFN