Medicare Advantage plans to test value-based insurance design model

Medicare Advantage (MA) plans will test a new insurance design model for beneficiaries with certain chronic conditions in order to reduce costs and improve enrollee health, the Centers for Medicare & Medicaid Services (CMS) announced Tuesday.

The Medicare Advantage Value-Based Insurance Design Model will focus on enrollees who have diabetes, congestive heart failure, chronic obstructive pulmonary disease, hypertension, coronary artery disease, mood disorders or a past stroke.

It gives MA plans the flexibility to offer these beneficiaries supplemental benefits that are designed to meet their specific needs, such as a plan that gives diabetes patients eye exams without a copay. The goal is to encourage these enrollees to use "high-value clinical services" that are the most likely to improve their health, and consequently, keep costs down.

A Health Affairs blog post in April hinted that CMS was seeking input on solutions to keep costs down in MA plans, noting that current laws did not allow variation in beneficiary cost-sharing for recommended treatment for certain chronic conditions.

The model "fills an immediate need for testing ways to improve care and reduce cost in Medicare Advantage Plans and offers the prospect of lower out-of-pocket costs and premiums along with better benefits for enrollees in Medicare Advantage," Patrick Conway, CMS deputy administrator and chief medical officer, said in the announcement.

CMS will test the model in seven states--Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania and Tennessee--in a five-year program beginning Jan. 1, 2017.

As CMS notes in its announcement, the concept of value-based insurance design is not new to the commercial health insurance market. Earlier this year, the Department of Health and Human Services announced plans to fundamentally reform how it pays providers for treating Medicare patients in the coming years. And research seems to support these models, as a 2014 study suggested that insurers can apply value-based design to high-deductible plans in order to improve care and lower costs for enrollees with chronic conditions. Similarly, value-based insurance design can help insurers cope with the high costs of specialty medications.

To learn more:
- here's the CMS announcement

Related Articles:
For alternative payment models to work, align provider and consumer strategies
Apply value-based design to reduce specialty med costs
Redefine prevention to reduce chronic condition costs
Fed speed plans for value-based payments