On Friday, January 18, the Centers for Medicare and Medicaid Services (CMS) announced two new model programs that will be available to Medicare Part D and Medicare Advantage plans in 2020:

• Part D Modernization Model. The model, which would run for five years, and would be voluntary, would require plan sponsors to take on additional risk for costs once beneficiaries hit the catastrophic coverage portion of the benefit. In exchange, plans would gain “flexibilities” in benefit design, including a greater ability to steer beneficiaries towards products with lower list prices and permission to establish rewards and incentives programs for beneficiaries and clinicians.
• Medicare Advantage Value-Based Insurance Design Model. The VBID Model, which has been running in three states since 2017, will be expanded nationwide in 2020. The model allows MA plans to offer tailored, condition-specific benefits to beneficiaries participating in the model.

Part D Modernization Model Would Give Plans Additional Flexibility in Exchange for Taking on More Risk

The Centers for Medicare and Medicaid Services (CMS) will launch a new Part D Modernization Model in 2020 through the Center for Medicare and Medicaid Innovation (CMMI). The model will run for five years and will require Part D plan sponsors to take on additional risk in the catastrophic coverage portion of the benefit in exchange for flexibility to offer additional benefits, such as rewards and incentives, and “promote” preferred products over clinical therapeutic equivalents. The goal would be to align risk-sharing between CMS and plan sponsors, increase competition between plans, decrease beneficiary out-of-pocket and premium costs, preserve or enhance quality of care for beneficiaries, maintain and ensure affordable access to prescription drugs, and decrease overall Part D program spending.

The risk-sharing portion of the model would create a spending target benchmark for the Medicare portion of the catastrophic coverage benefit (80% of drug costs) based on expected costs were the plan not participating in the model. If Medicare spending is lower than the spending target, the plan would be eligible for a percentage of the savings. If Medicare spending is higher than the spending target, the plan will have to repay 10% of the difference.

Model participants will also be able to steer beneficiaries towards drugs with lower list prices by using “clinically-based drug utilization management techniques.” This may include a Rewards and Incentive program to strengthen the “clinical relationship” between enrollees, providers, and the Part D plan. The announcement says that additional “flexibilities” will be outlined in future communications.

Medicare Advantage Value-Based Insurance Design Model Expands Nationwide in 2020

CMMI also announced an expansion of the existing Medicare Advantage (MA) Value-Based Insurance Design (VBID) model. The expansion will begin January 1, 2020, and applications from interested plans will be due March 1, 2019. MA plans in all 50 states will now be eligible to apply for participation and an expanded number of plan types (including all Special Needs Plan types) will be eligible to apply. Previous participation had been limited to specific plans within seven states. Starting in 2021, VBID participants will be able to include the Medicare hospice benefit in Medicare Advantage. CMMI also announced that the performance period for the model will be extended from 2021 to 2024.

MA plans will be able to test one or more of the following new interventions:

 

VBID Intervention	Description
Value-Based Insurance Design by Condition, Socioeconomic Status, or both	MA plans will be allowed to offer reduced cost-sharing or additional supplemental benefits for enrollees based on condition and/or certain socioeconomic (i.e. low-income subsidy eligibility or dual-eligible) status
Medicare Advantage and Part D Rewards and Incentives Program	MA and Part D plans may offer “meaningful and focused” rewards and incentives programs
Telehealth Networks	Increased access to telehealth services by allowing plans to propose using access to telehealth services instead of in-person visits, as long as an in-person option remains, to meet certain requirements for the provider network
Wellness and Health Care Planning	Timely, coordinated approaches to wellness and health care planning, including advance care planning [REQUIRED FOR ALL VBID PARTICIPANTS]

CMMI also released an evaluation report on the first year of the VBID model (2017). In 2017, nine plans in three states (Indiana, Massachusetts, and Pennsylvania) offered a total of 45 VBID plan options. More than 58,600 beneficiaries participated. Participating insurers targeted beneficiaries with chronic obstructive pulmonary disorder (COPD), congestive heart failure (CHF), diabetes and hypertension. Seven of the nine insurers required participants to complete requirements, such as participating in care management, in order to receive VBID benefits. Approximately 30% of targeted beneficiaries completed the requirements. There was no impact on overall enrollment or plan bids. Utilization, beneficiary health status, and quality metrics cannot be assessment until complete data from 2017 become available.

CMMI will release additional information and guidance on the expanded model in the coming months.