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The Centers for Medicare and Medicaid Services is terminating the Medicare Advantage Value-Based Insurance Design (VBID) model at the end of 2025 due to what it called the model’s “substantial and unmitigable costs to the Medicare Trust Funds.”
These excess costs totaled $2.3 billion in calendar year 2021 and $2.2 billion in CY 2022. These costs were associated with the VBID model, based on the prior and forthcoming evaluation reports, and CMS described them as “unprecedented” in CMS Innovation Center models.
Performance analyses of the model, according to CMS, showed the costs were driven in part by increased risk score growth and Part D expenditures, adding that “no viable policy modifications could address these excess costs.”
The agency said it therefore has to terminate the model at the end of next year to meet the Innovation Center’s statutory requirements.
Since many of the VBID model’s interventions are now widely available in the MA program, CMS said the model’s termination won’t impact the ability of MA plans to continue offering most of the interventions featured in the model.
WHAT’S THE IMPACT
The VBID model launched in 2017, and its interventions were intended to lower Medicare spending and improve the quality of care for MA enrollees. Through the model, participating MA plans have had the added flexibility to target potentially high-value services and cost-sharing assistance for prescription drugs to chronically ill and underserved populations.
The goal was to increase access to and uptake of those services, and to decrease avoidable medical spending for enrollees.
Initial findings from the 2023 evaluation of the VBID model indicated that the model incurred substantial costs in part due to the fact that risk scores of enrollees in MA plans participating in VBID increased substantially more than those of similar enrollees in other MA plans. Plans participating in VBID were also associated with increased rebates and increased Part D expenditures.
Together, this increase in risk scores, combined with rebates to MA plans and higher Part D expenditures, drove significantly higher Medicare costs, said CMS.
Based on the 2023 evaluation report, the model’s cost to the Medicare Trust Funds is estimated to be $2.3 billion in CY 2021.
The law authorizing CMS to test innovative payment and service delivery models requires the agency to either terminate or make changes to models that are expected to increase costs to the Medicare program.
CMS said it is committed to a smooth transition. Even with VBID’s termination, enrollees may be able to remain in their MA plan based on their plan’s decision in CY 2026, or will be able to choose a different MA plan or Traditional Medicare, depending on what best meets their needs during the 2026 Open Enrollment Period.
Additionally, enrollees who choose to remain in MA will likely be able to access many of the same benefits, including transportation to medical appointments and healthy food assistance, because many elements of the VBID model have become incorporated into MA.
THE LARGER TREND
CMS acknowledged that some beneficiaries may experience disruption to Part D cost sharing in CY 2026 due to the end of the VBID model.
Lessons learned during the life of the VBID model, CMS said, lay the groundwork for continued improvement within the MA and Part D programs.
“Informed by this model experience, CMS will explore innovations that not only advance whole-person health, enhance transparency, and promote drug affordability but also address rising costs and protect the Medicare Trust Funds,” the agency said.
Jeff Lagasse is editor of Healthcare Finance News.
Email: [email protected]
Healthcare Finance News is a HIMSS Media publication.
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