Current Events Medicare Medicare Advantage P4P

VBID comes to Medicare Advantage

CMS announced last week that they are extending their value-based insurance design (VBID) program to more states and more patients.  I describe VBID and the proposed changes below.

What is VBID?

Value-Based Insurance Design (VBID) generally refers to health insurers’ efforts to structure enrollee cost sharing and other health plan design elements to encourage enrollees to use high-value clinical services – those that have the greatest potential to positively impact enrollee health.

How will VBID be implemented for Medicare Advantage plans?

Eligible MA plans in these states, upon CMS approval, may offer varied plan benefit designs for enrollees who fall into certain clinical categories identified and defined by CMS.  Benefit design changes made through this model may reduce cost sharing and/or offer additional services to targeted enrollees; however, targeted enrollees can never receive fewer benefits or be charged higher cost sharing than other MA enrollees in their plan as a result of the model.

What is changing ?

In its first year, CMS is testing the VBID model in seven states: Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee.  CMS announced last week that beginning on January 1, 2018, CMS will also test the model in Alabama, Michigan, and Texas.  The current list of conditions eligible for VBID are diabetes, chronic obstructive pulmonary disease (COPD), congestive heart failure (CHF), patients with past stroke, hypertension, coronary artery disease and mood disorders.  Starting in 2018, rheumatoid arthritis and dementia will be included in the VBID model.

In addition to developing interventions targeted at all enrollees in one or more of the above categories, participating MA plans will have the flexibility to identify specific combinations of the listed chronic conditions for one or more “multiple co-morbidities” groups and establish tailored VBID interventions for each group.  Participating MA plans are required to provide VBID benefits to all VBID-eligible enrollees in the selected group.  Participating MA plans selecting the Mood Disorders group will also have additional flexibility to focus on specific conditions within that group.

What changes can plans make as part of VBID?

Plans have four options:

  1. Reduce cost sharing for high-value services
  2. Reduced cost sharing for high-value providers
  3. Reduced cost sharing for enrollees participating in disease management or related programs
  4. Coverage of additional supplemental benefits

Whereas many Medicare initiatives (such as ACOs) focus on Part A and B spending, the VBID program allows for different cost sharing levels for Part D drugs as well.

For example, plans could eliminate co-pays for eye exams for patients with diabetes.  In another example, they could reduce copays for high quality or low cost hospitals.

Typically plans must have 2000 members to participate in the program.


  1. I would think public Part C Medicare health plans (of which Medicare Advantage is a type) could already do the four things mentioned. Does this mean they can now drop the annual OOP limit or not cover all the same things as A and B cover or… (make some other change that detours from the 1997 enabling legislation as amended)? Managed Medicare has been value based by definition since 1972

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