Blog

August 26, 2016 | Examining Medicare’s Value-Based Insurance Design (VBID) Model: What You Should Know

This year, a majority of U.S. hospitals are facing readmission penalties for often-preventable reasons, simply because of a lack of insight into how patients are performing on the road to recovery. To mitigate this risk, we’ve seen the advent of programs encouraging the monitoring of patients with chronic conditions and services that ultimately improve care while keeping at-risk individuals out of the emergency room. Recently, the CMS announced that its Medicare Advantage Value-Based Insurance Design (VBID) Model would begin January 1, 2017. Once underway, eligible Medicare Advantage (MA) plans in seven states may offer these benefit designs models in hopes of eliminating financial barriers that sick Medicare patients face when receiving prescriptions, procedures, or exams.

These plans will enable patients with chronic conditions to obtain the quality care that they need for free or at a reduced cost, which would result in potentially avoiding more expensive care down the road.

In particular, VBID will allow insurers to reduce out-of-pocket costs for enrollees by encouraging them to use services that will have the greatest impact on their health– part of a larger push to improve care for MA beneficiaries. Insurers have used the concept of the VBID for years, but this model only recently became possible due to the Affordable Care Act allowing the CMS to test new benefit programs. The ultimate goal of Medicare Advantage is to test whether VBID can improve health outcomes and lower costs for these high-cost enrollees.

Starting in 2017, eligible enrollees who fall into the clinical categories of diabetes, congestive heart failure, chronic obstructive pulmonary disease (COPD), past stroke, hypertension, coronary artery disease, mood disorders, and combinations of these categories will be offered a varied plan benefit design, pending approval from CMS. In 2018, the CMS will expand the categories to include benefits for dementia and rheumatoid arthritis. This benefit design hopes to be effective in lowering costs of care and overall improving the quality of care for MA enrollees with chronic conditions.

The CMS states that “the model will test the hypothesis that giving MA plans the 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.”

It’s encouraging to see that the CMS is realizing that expanded and innovative programs are increasingly crucial to help provide continuous care for Medicare patients suffering from chronic conditions. Initiatives like VBID and Medicare’s Chronic Care Management (CCM) are helping to eliminate inefficiencies in our healthcare system while providing the right type of care that Medicare patients need to age more healthily and happily.