CMS pitches new MA and Part D voluntary payment models

By | January 18, 2019

Dive Brief:

  • The Center for Medicare and Medicaid Innovation announced two new voluntary models Friday for Medicare Advantage and prescription drug Part D plans that will begin in 2020 and run through 2024.

  • The Medicare Advantage Value Based Design Model builds on the current Value Based Insurance Design (VIBD) and will test new service delivery approaches for these private Medicare plan beneficiaries for the 2020 plan year, including expanding access to telehealth, increasing incentives linked to healthy behaviors for beneficiaries and allowing reduced cost sharing and targeted benefits for beneficiaries.

  • Under the second model, called Part D Payment Modernization, participating insurers will assume greater risk for Part D catastrophic spending to encourage better management of spending on drugs with high list prices. 

Dive Insight:

Current versions of both MA and Part D are more than a decade old and CMS argued they need a revamp.

When the value based insurance effort launched in 2017, only seven states were eligible to take part. With this update, MA plans in 50 states and D.C. are eligible starting in the 2020 plan year.

The new MA model includes benefit designs to provide reduced cost-sharing for activities insurers want to encourage the patients to use. For example, for chronic conditions such as diabetes, a payer could reward the diabetic for regularly testing blood sugar.

More customization of plans offered under the new MA model will increase benefits not traditionally thought of as health-related, such as those related to social determinants of health and transportation, an arena CMMI hinted it was looking into late 2018.

CMS has also been intrigued by expanding telehealth access for a while now. This newest iteration of VBID will allow telehealth to stand in for in-person visits, as long as the latter option remains an alternative.

Previously, MA beneficiaries who wanted to use hospice services had to pay original fee-for-service Medicare to cover the benefit. But the new VBID model will test allowing MA plans to offer Medicare’s hospice benefit starting in the 2021 plan year, removing a silo to care coordination between providers.

The Part D model builds off of the Trump administration’s effort to lower drug prices by tackling the so-called catastrophic phase of drug spending, the final phase of the benefit where Medicare is responsible for 80% of drug costs. Federal spending in the catastrophic phase has nearly quadrupled over the past 10 years, from $ 9.4 billion to $ 37.4 billion.

Participating plans in the new model will take on greater risk for spending in the catastrophic phase, to incentivize them (along with patients and providers) to choose drugs with lower list prices, according to CMS.

The agency will calculate a spending target for what government spend would have been without the additional risk based on plan performance over the year, then reissue those savings to participating Part D plans who stayed below the threshold.

Insurers can apply to opt into both models starting Jan. 21, 2019 for the 2020 plan year. Though both models are voluntary, meaning Medicare Advantage and Part D plans can elect whether or not to participate, CMS Administrator Verma predicts a lot of engagement.

“There’s a lot of interest in this,” she noted in a Friday call with reporters, although CMS has no specific projections just yet.

A CMMI official suggested the model could save taxpayers and the government hundreds of millions if not billions of dollars. Actuarial projections on the Part D plan project over $ 2 billion in savings alone.

CMS will monitor the models moving forward and will be expanded if they meet certain benchmarks for success. The industry can expect more from CMMI in 2019: “We’re on the cusp of launching many new models,” Verma teased Friday.

The proposals come on the heels of more controversial plans released by CMS Thursday, that some say is aimed at weakening the Affordable Care Act.

That notice would reduce the user fee for offering plans on the ACA exchanges, among other changes that critics say will increase premiums and out-of-pocket costs for consumers, along with cutting coverage for millions of Americans.

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