CMS to Test New Insurance Model in Medicare Advantage

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By Brian Broderick

Sept. 1 — The CMS announced Sept. 1 a new value-based insurance design model that will be tested in the Medicare managed care program in seven states.

The Centers for Medicare & Medicaid Services said the new model is called Medicare Advantage Value-Based Insurance Design, or MA-VBID. The agency said the new model would allow managed care plans to offer benefit packages that aim to improve quality of care and reduce costs for patients with certain conditions.

Only some types of managed care plans, including health maintenance organizations, HMO point-of-service (HMO-POS) plans and local preferred provider organizations, will be eligible to participate, the agency said in a fact sheet. Other plans, including special needs plans, regional PPOs and Medicare-Medicaid plans, will be ineligible.

The MA-VBID model will begin Jan. 1, 2017, and run for five years, the CMS said. The agency will test the model in seven states—Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania and Tennessee—that were selected “in order to be generally representative of the national Medicare Advantage market.”

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On its website, the Medicare agency said value-based insurance design, or VBID, generally refers to health insurers’ efforts “to structure enrollee cost-sharing and other health plan design elements to encourage enrollees to consume high-value clinical services—those that have the greatest potential to positively impact on enrollee health.”

These VBID approaches are increasingly used in the commercial market, the CMS said, adding that “evidence suggests that the inclusion of clinically-nuanced VBID elements in health insurance benefit design may be an effective tool to improve the quality of care and reduce the cost of care for Medicare Advantage enrollees with chronic diseases.”

In a Sept. 1 memo to MA plans from the CMS, the agency said eligible plans in the seven states, upon approval from CMS, can offer varied plan benefit design for enrollees who fall into certain clinical categories identified and defined by CMS. These categories are

• diabetes;

• congestive heart failure;

• chronic obstructive pulmonary disease;

• past stroke;

• hypertension;

• coronary artery disease;

• mood disorders; and

• combinations of these categories.


The CMS memo said the agency selected these conditions based on “their relatively high prevalence within the Medicare Advantage population,” their potential for “high-cost complications” and the existence of known low-cost, high-value interventions that may improve the disease course and/or reduce complications.

The CMS memo said other chronic conditions that might benefit from a “clinically nuanced VBID benefit design may be added in subsequent model years.” The CMS memo is from Sheila Hanley, the director of the Policy and Programs Group, at the CMS's Center for Medicare & Medicaid Innovation.

The CMS said it wants feedback on this design model. To receive full consideration, the feedback should be submitted by Sept. 15 and sent to The CMS also said it will hold a webinar Sept. 24 on the MA-VBID model test.

In a Sept. 1 statement, Rep. Diane Black (R-Tenn.) praised the CMS's announcement on value-based design. Black is the author of H.R. 2570, the Strengthening Medicare Advantage through Innovation and Transparency for Seniors Act, which she said aims to achieve this same outcome. The House passed the bill in June by voice vote, but Black said the Senate hasn't acted on it.

“I commend CMS’ decision to implement a VBID model, which will further strengthen the Medicare Advantage program that 16 million seniors rely on for health coverage,” Black said. She added that VBID “holds the potential to vastly improve delivery of care and will allow providers to lower costs for certain high value services and treatments that are clinically proven to promote better health outcomes.”

To contact the reporter on this story: Brian Broderick in Washington at

To contact the editor responsible for this story: Kendra Casey Plank at