In December 2016, members of the Senate Finance Committee introduced S. 3504, the “Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2016,” a bipartisan bill to strengthen and improve health outcomes for Medicare beneficiaries living with chronic conditions.  Among the recommendations is the expansion of the Medicare Advantage V-BID demonstration to plans in any state.

On August 10, 2016, the Center for Medicare and Medicaid Innovation announced changes to the Medicare Advantage Value-Based Insurance Design (MA-VBID) model.

Updated MA Map

The MA-VBID model test is set to begin in January 1, 2017, at which time selected MA plans in designated states will be permitted to offer varied benefit designs for enrollees diagnosed with specified clinical conditions.  In 2018, the model will expand to Alabama, Michigan, and Texas, and will add two clinical categories:  rheumatoid arthritis and dementia.

growing body of evidence demonstrates that increases in patient cost-sharing lead to decreases in the use of both non-essential and essential care.  Medicare beneficiaries, many of whom manage multiple chronic conditions, are not removed from this phenomenon.  Due to misaligned incentives, Medicare beneficiaries receive too little high-value care and too much low-value care.  Although the Medicare statute provides for coverage of certain preventive services identified by the U.S. Preventive Services Task Force (USPSTF), cost-sharing for all clinician visits, diagnostic tests, and prescription drugs is typically implemented in a “one-size-fits-all” way, regardless of the differences in clinical value produced by specific services.  

Applying clinically nuanced V-BID strategies presents an enormous opportunity for the Medicare program–particularly Medicare Advantage (MA) plans.  A new V-BID Center White Paper, “Incorporating Value-Based Insurance Design to Improve Chronic Disease Management in the Medicare Advantage Program” concludes that V-BID programs that reduce consumer cost-sharing for high-value services and providers are a fiscally feasible option for the Medicare program.  Supported by the Gary and Mary West Policy Center, a review of the peer-reviewed literature reveals how increases in Medicare beneficiary cost-sharing are adversely affecting our most vulnerable beneficiaries, contributing to poor patient-centered outcomes, and, in some instances, increasing Medicare expenditures.  Actuarial modeling of MA-V-BID programs for diabetes mellitus (DM), chronic obstructive pulmonary disease (COPD), and congestive heart failure (CHF) demonstrates that consumer out-of-pocket costs are reduced in all 3 conditions, plan costs increase slightly in the short term for certain conditions (Diabetes and COPD);  and plan savings result for CHF.  From the societal perspective, the DM program was close to cost neutral;  net savings resulted in the COPD and CHF programs.

V-BID can encourage the utilization of high-value providers and services and limit the use of services that are of potentially low-value, thus helping Medicare Advantage plans improve health and quality, enhance consumer engagement, and reduce costs.

Inclusion of V-BID concepts throughout Medicare Advantage has strong bipartisan political support. Notably, in the Report from the Health Care Reform Task Force, House Republicans recommend allowing the implementation of V-BID in MA plans in all 50 states as a potential solution to ‘one-size-fits-all’ deductibles, copayments, and coinsurance. Read the press release.  

Read more about implementing V-BID in Medicare Advantage including Dr. Fendrick’s 2014 testimony to the House Ways and Means Subcommittee on Health.


Medicare Advantage 1-Pager     V-BID Medicare Advantage Brief     Medicare Advantage Summary

Medicare Advantage Infographic     Medicare Advantage White Paper     History of V-BID in Medicare Timeline

Additional Resources