The Centers for Medicare & Medicaid Services (CMS) is discontinuing the Medicare Advantage (MA) Value-Based Insurance Design model at the end of 2025.
The CMS said the model was too costly because of “increased risk score growth and Part D expenditures” among participating plans.
In calendar years 2021 and 2022, the model cost the Medicare Trust Fund a combined $4.5 billion. That level of costs was “unprecedented,” and there were no “viable policy modifications” to make the model more sustainable.
The VBID allowed MA plans to offer supplemental benefits, often targeting members with chronic conditions. The CMS does not expect the model’s termination to impact MA plans, because its interventions are more widely available than when the program launched in 2017.
“This model was the mechanism by which DSNP plans offered $0 Rx copays (amongst many other non-Part D benefits),” said Brooks Conway, principal for Oliver Wyman, in a LinkedIn post. “In the absence of the model, it is very likely that we will see Rx cost sharing added back to most DSNPs in 2026.”
To counteract this problem, CMS said a voluntary model, which caps out-of-pocket drugs at $2 a month, will help soften the blow. The model doesn’t begin until January 2027 and could face an uncertain future under President-elect Donald Trump.
Drugs included in this model are not subject to prior authorization or step therapy unless meeting safety requirements. In October, the CMS said drugs like bupropion, metformin, penicillin and prednisone will be capped first.
The CMS also found plan participation in the VBID was associated with an increase in Hierarchical Condition Category diagnoses for some enrollees, but there was no association between increased costs and health-related social needs offerings.