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In MA VBID Model, CMS Would Let Plans Vary Benefit Design Based on Health Status

Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and business strategies about Medicare Advantage plans, product design, marketing, enrollment, market expansions, CMS audits, and countless federal initiatives in MA and Medicaid managed care. Subscribe today!

September 17, 2015Volume 21Issue 18

In an experiment it unveiled Sept. 1 to test value-based insurance design (VBID) in Medicare Advantage as a means of improving quality and lowering costs in seven states, CMS will take the unusual step in MA of granting a limited waiver to the federal uniformity requirement for benefit design. MA plans chosen to participate in the five-year test period that begins in 2017 would be allowed to vary benefit design based on an enrollee’s health status and certain other characteristics as long as the targeted enrollees don’t get fewer benefits or higher cost sharing than other enrollees (MAN 9/3/15, p. 8).

Based on this kind of a waiver, CMS explained in an 18-page-plus-appendices memo it sent to MA sponsors via the electronic Health Plan Management System (HPMS), participating sponsors could do such things as offer “reduced cost sharing for high value services” or “high value providers.” They also could offer that for enrollees participating in disease management (DM) or related programs and could cover for eligible members additional supplemental benefits not covered for other enrollees.

The application process, CMS said in the memo, “will not be competitive,” so that “all qualified applicants with acceptable proposals within a geographic region will be accepted.” But the agency also cautioned that it will reject plan proposals based on several criteria, including discrimination “against non-targeted populations” and having the potential “to impose excessive costs on the Medicare program.” Indeed, one objective CMS listed in the memo for the VBID approach is that it “reduce overall plan expenditures, and result in lower plan bids, leading to savings for Medicare and beneficiaries.”

CMS added that as part of the application process, which will be conducted via a Request for Applications (RFA) the agency will send out on HPMS early this fall and want responses on by late fall, plans need to include projections of the impact their participation in the program will have on “plan medical utilization, cost, and premiums.” The model is open only to MA HMO, HMO-point of service and local PPO plans, with Special Needs Plans, regional PPOs, private-fee-for-service plans and Employer Group Waiver Plans among those specifically ruled out in an effort to aid evaluation and implementation of the VBID test.

Medicare Advantage News

There are other criteria regarding both the markets served and the plan’s performance record. To participate, the plan’s service area must include either Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania or Tennessee, states that CMS said it chose “in order to be generally representative of the national Medicare Advantage market” and on the basis of their having “appropriate paired comparison areas for the purposes of evaluation.” Gregory Woods, director of the Division of Health Plan Improvement in CMS’s Center for Medicare and Medicaid Innovation (CMMI), which is running the VBID test, said at CMS’s fall MA and Part D conference Sept. 10 that the criteria included the state’s MA penetration rate.

Eligible plans must have at least 2,000 enrollees in a test state, with at least 50% of the plan contract’s enrollment residing in that portion of its service area. They also must have gone through at least three prior open-enrollment periods, not be under current CMS sanctions, and have at least a three-star CMS quality rating for 2015.

The model’s timeline is built around the MA bid cycle, so CMS would evaluate RFA responses and negotiate with the plans as needed by March 2016, and the plans would include the VBID demo in their bids for 2017 that are due next June.

Similar to efforts the Obama administration is making in other portions of health care to lessen the grip of the fee-for-service culture that has prevailed in it for decades, the MA VBID initiative aims to find ways to encourage plan members to use clinical services “that have the greatest potential to positively impact enrollee health,” according to CMS. Its CMMI developed the MA VBID model, and CMS will hold a webinar introducing the model on Sept. 24. “This is a test of flexibility,” Woods said at the CMS conference.

Uniformity Regs Are Blamed for Lack of VBID

It is the current regulations regarding uniformity of benefits that are largely responsible for VBID approaches not yet generally being incorporated into MA, asserted Sheila Hanley, director of the Policy and Programs Group at CMMI, in the Sept. 1 memo she authored.

The structure for the MA VBID model that CMS outlined restricts its use to members who have one or more of seven clinical conditions. They are diabetes, chronic obstructive pulmonary disease, congestive heart failure, “past stroke,” hypertension, coronary artery disease and “mood disorders.” Participating MA plans would have to furnish VBID benefits to all eligible enrollees in the selected condition group.

The CMS memo noted that the agency might add other chronic conditions that could benefit from a VBID approach “in subsequent model years” or even in the initial three-year period, when it hopes to limit changes on model design to “minor modifications.” In years four and five, the memo added, CMS might make bigger changes, such as modifying target conditions, the permissible plan interventions, and restrictions on plan marketing and communication regarding the VBID model. Other possible changes then, according to the agency, could include setting more stringent financial requirements for plans (if it found savings from the model “were not being reflected in lower plan bids”) and adding or eliminating requirements for plan participation.

While CMS might waive certain fraud and abuse provisions of the Social Security Act as part of the model test, the agency stressed that it doesn’t intend to waive the law’s “anti-discrimination provisions, and does not believe such waiver is necessary for the model test.”

The agency said it selected the conditions targeted in the MA VBID model based partly on “the existence of known low-cost, high-value interventions that may improve the disease course and/or reduce complications.”

Parent MA organizations “may vary their selected conditions from one participating plan to another,” CMS noted. For each of the target populations, the agency said, the participating organization may select one or more plan-design modifications from the following four general approaches:

  • Reduced cost sharing for high-value services. This could include covered Part D drugs and may be done via such means as eliminating or reducing copayments and/or coinsurance and exempting a given service from a plan deductible.

  • Lower cost sharing for high-value providers. That could include reduced cost sharing “only when a high-value provider delivers a specific high-value service.” CMS cautioned that participating plans “cannot identify high-value providers based on cost alone” or “based on coding accuracy or intensity.”

  • Reduced cost sharing for enrollees participating in DM or related programs. This could include an enhanced DM program offered by the plan as a supplemental benefit or specific activities offered or recommended as part of the plan’s basic care-coordination activities. While plans using this can condition cost-sharing cuts on enrollees meeting “certain participation milestones,” they can’t condition it “on achieving any specific clinical goals,” CMS pointed out.

  • Coverage of additional supplemental benefits. This could include non-emergency transportation to primary care visits for enrollees with multiple comorbidities, along with meals, additional counseling, or additional rehabilitation or other post-acute care. Such services would have to be funded by rebate and/or premium dollars from all plan enrollees, CMS said.

Asked by MAN if offering such extra benefits might lead to adverse selection of enrollees, a CMS spokesperson said “we expect that the concentration of VBID eligible plans within the same markets, and the likelihood that those plans will overlap in their disease category focus, should mean few beneficiaries will be drawn to a single specific plan. The model’s limitations on pre-enrollment marketing of VBID benefits, which are primarily intended as a measure for beneficiary protection, should also serve to mitigate the possibility of adverse selection.” With this in mind, the spokesperson added, “CMS is not establishing any risk corridors for participating plans.”

The agency is planning to keep a tight leash on plan marketing and enrollee communications regarding the program. “Organizations cannot cite their participation in this model or specific benefits available under the model in pre-enrollment marketing materials targeted at potential enrollees,” the CMS memo said. Participating organizations and their representatives may respond with details about the benefits available if a potential enrollee asks about them, but in this case must make clear that “eligibility for interventions is not assured.”

There are fewer restrictions on communications with actual enrollees, whom CMS wants to receive introductory VBID information in the same mailing with the annual Evidence of Coverage (EOC) document. And the agency stressed that it believes “further and more intensive communications will likely be a prerequisite for the model’s success.”

The memo makes clear that part of the reason for the MA VBID program is financial. “In order for the plan to be approved to participate in the model,” CMS said, MA organizations have to include actuarially certified financial projections about its impact that “must show net savings to CMS over the course of the life of the model (five years).” The VBID “interventions” that a participating plan offers will be treated for bid purposes as “mandatory supplemental benefits,” the memo noted, and will not be included in satisfying existing CMS requirements such as the maximum increase in Total Beneficiary Cost that plans still must comply with.

MA plans participating in the VBID program will be able to make changes to their interventions at the beginning of each year starting with the second one, the agency said. CMS added that it may reopen the model to additional participants in year two and beyond, but it does not have to. And MA organizations in the VBID program may withdraw plans from it in future years by providing advance notice to CMS in accordance with the bid cycle.

View the CMS MA VBID memo by visiting the Sept. 17 From the Editor entry at your subscriber-only Web page: www.aishealth.com/newsletters/medicareadvantagenews.

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