Since the Affordable Care Act went into effect, Medicare has thrown multiple quality models at the wall, hoping that something will stick. One model that has shown success in the private sector, value-based insurance design (VBID), has not been tested in the Medicare arena. In the interim, other quality models such as accountable care organizations have largely eclipsed VBID.

That will change in 2017, when Medicare Advantage will begin a five-year pilot of the Value-Based Insurance Design Model.

VBID has been implemented at different levels across many states and markets. Since its inception, employers have been on the vanguard of VBID. Few have been studied more than Pitney Bowes, which decreased statin copays and cut copays for blood clot inhibitors. Employers who adopted VBID have remained its strongest proponents. VBID has been most common among mid-sized to large employers, especially in the public sector.
Insurers have embraced the model as well. UnitedHealthcare's Diabetes Health Plan incentivizes generic diabetes control drugs, exercise and identifying pre-diabetic members before they receive a diabetes diagnosis. The plan partners with pharmacists to help members monitor blood sugar and to coordinate with the member's providers.
Some Medicaid programs have implemented touches of VBID, such as decreased copays for diabetic drugs and supplies to improve adherence to treatment.

As VBID has slowly grown, Medicare Advantage has been an outlier. One issue holding back Medicare Advantage from offering VBID is strict regulations on Medicare Advantage plans, premiums and cost-sharing that make variability difficult.

VBID fits in the spectrum of quality initiatives spreading throughout the healthcare system. ACOs incentivize providers to improve costs, care and outcomes through coordination; VBID incentivizes members to better control chronic illnesses through plan design. The member become the front line for lowering cost and improving health outcomes. If offered the choice to get certain maintenance drugs for free, people will usually take them.
If disease-specific Medicare Advantage plans sound familiar, they should? For years, carriers have sold special needs plans options for specific chronic conditions. A quick look at the Medicare Advantage landscape shows those plans never took off. They are still available in many states, but have a small impact on enrollment. Giving insurers more latitude in structuring benefits for high-cost but manageable conditions could be a piece in lowering Medicare costs.

The pilot will be limited to Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee. The states cover a good cross-section of geography and Medicare Advantage penetration rates, from Iowa (12.5 percent) to Arizona (38 percent). Along with Arizona, only Indiana and Tennessee exceed the national average of 31.2 percent (HealthLeaders-InterStudy data). In those states, plans will be allowed to vary benefits for people with qualifying conditions. Members could see lower costs for high-value care or other innovations.

Disease states include the most common chronic conditions and some not typically covered in plan design (mood disorders, people who previously suffered a stroke). Plans can be tailored to incentivize minimally invasive surgeries over open surgeries or to waive copays for preventive procedures. That goes beyond the disease states covered in SNPs and should lead to plan designs more tailored to the individual.

VBID's impact has been far-reaching for some employer pioneers. Since this VBID initiative deals with the 65-and-over population, a pilot program is preferable to see whether Medicare Advantage members grow comfortable with the model and move the healthcare cost needle. The population has higher prevalence of chronic conditions, so it might require more aggressive management and interventions to improve health.  If Medicare sees good trends and improved health outcomes, VBID's islands of success could grow into a larger landscape.

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