Medicare Your Coverage Options

Value-based insurance design coming to Medicare

Written by Diane Archer

In January 2017, the Centers for Medicare and Medicaid Services, CMS, will launch a new initiative for some older adults and people with disabilities enrolled in Medicare Advantage plans. People in some states with certain chronic conditions will be able to choose a Medicare Advantage plan–a commercial insurance plan that contracts with the government to offer Medicare benefits–that has “value-based insurance design,” with the goal of providing them better care at lower cost. How good the care will be is still a big question mark.

Just to say it, the vast majority of people with Medicare are enrolled in traditional Medicare because it gives them easy access to care and predictable costs almost anywhere in the country. Medicare Advantage plans appear less costly, but they generally come with very little choice of doctors and hospitals and high out-of-pocket costs, particularly for people with costly and complex conditions. While there is a limit of $6850 on out-of-pocket costs in 2016, on top of that you usually must pay the full cost of your care, or a large chunk of the cost, if you use doctors or hospitals outside the health plan’s network. And, your copays and deductibles may not be included in the out-of-pocket limit.

Medicare Advantage health plans are supposed to provide the same benefits as traditional Medicare, but they often have a narrower view than traditional Medicare of when those benefits are reasonable and necessary, further limiting people’s access to care. The Medicare Advantage Value-Based Insurance Design Model (VBID), launching in 2017 is intended to benefit people with diabetesChronic Obstructive Pulmonary Disease (COPD), Congestive Heart Failure (CHF), past stroke, hypertension, coronary artery disease, mood disorders, rheumatoid arthritis (starting in 2018) and dementia (starting in 2018).

How does VBID work? The goal is to make out-of-pocket costs for people with these chronic conditions low enough to encourage them to take advantage of Medicare Advantage plan “high-value clinical services” that help manage and improve their care.  CMS is encouraging plans to help members with these chronic conditions. Health plans have the flexibility to lower their members’ out-of-pocket costs if they use particular doctors, services or disease management programs; health plans can also offer extra benefits to meet their needs.

Historically, Medicare Advantage plans have tried to avoid enrolling members with costly and complex conditions in order to maximize their profits, so presumably CMS is giving them a financial incentive to participate in this pilot. That said, CMS says that another goal of this pilot is to reduce Medicare spending.

Medicare Advantage plans in seven states–Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee–may be able to test the VBID model. CMS will announce in September which plans will be offering VBID.  In January, 2018, CMS will expand the model to three more states–Alabama, Michigan, and Texas.

Here’s more from Just Care:


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