Medicare Advantage Value-Based Insurance Design: Key Considerations

The Centers for Medicare & Medicaid Services (CMS) recently announced a proposed demonstration that will test varying benefit designs based on health status. The Medicare Advantage Value-Based Insurance Design (MA-VBID) Model will allow organizations to offer targeted supplemental benefits and/or reduced cost sharing to enrollees with specific chronic conditions to further the goal of improving beneficiary health, reducing the utilization of avoidable high-cost care, and reducing costs for plans, beneficiaries, and the Medicare program. The overall goal of this demonstration is to improve clinical outcomes while reducing plan expenditures.

Do you qualify?

This demonstration is proposed for seven states: Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee. According to the announcement, only current MA organizations in good standing in those states will be allowed to participate. The demonstration is aimed at Health Maintenance Organizations (HMOs), Health Maintenance Organization Point of Service (HMO-POS) plans, and local Preferred Provider Organizations (PPOs) in order to determine how it affects beneficiaries and costs in the most common plans. Special Needs Plans (SNPs), Regional PPOs, Medicare-Medicaid Plans (MMPs), Private Fee-for-Service (PFFS) plans, Employer Group Waiver Plans (EGWPs), Health Savings Accounts, and cost plans are not eligible.

The demonstration will waive certain regulations so benefit plans can vary for enrolled members based on their diagnosis, condition, or need for a medical service. Currently, health status distinctions in providing benefits to enrolled beneficiaries are prohibited by regulations.

How we can help:

Applications

The CMS process begins with the submission of a Request for Application (RFA), which is currently due on November 15, 2015. Organizations failing to submit an RFA cannot participate in 2017 but may be allowed at a later date during the five-year demonstration period. Organizations must submit an RFA that has sufficient detail to allow CMS to determine if the benefit plan addresses targeted beneficiaries, will provide measureable results, and is appropriately structured for the demonstration. We can work with your organization through every step of the application process, from gathering the right data and completing the application, to submitting the application and responding to follow-up questions.

Financial Analysis

The key to designing a successful MA-VBID model is to establish programs to simultaneously manage revenue through best-in-class Star Ratings operations and targeted risk adjustment for these prevalent diseases and avoid adverse risk selection as well as an ongoing review of cost and utilization drivers from medical and pharmacy claims. An initial assessment of claims and financials can help highlight existing strengths and weaknesses in medical management (including pharmacy) as well as provider networks. With annual bids as the source of financial truth, targets need to be realistic and timely.

Benefit Design Analysis

Organizations can propose any myriad of combinations of benefits or services provided they are based on the proposed chronic conditions listed in the announcement. Most importantly, CMS notes participating organizations can initiate the demonstration with a limited benefit and can expand their benefit plans during the five-year term of the demonstration. While the benefits will be mandatory supplemental benefits, CMS proposes to prohibit marketing these benefits to non-member beneficiaries.

 
Resources

We can work with your organization to design and implement a comprehensive data analysis to guarantee you have the right products, programs, and capabilities in place to compete and ensure you are go-to-market ready.

Is this the right opportunity for your organization? Attend our webinar to find out. Join John Gorman, Founder and Executive Chairman at Gorman Health Group, and I on Tuesday, September 29, from 1-2 pm ET, as they outline the MA-VBID plan requirements as well as what you should be doing now to prepare for January 2017. Register now >>

 

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