VBID should stay until CMS truly assesses what may be lost
The Centers for Medicare and Medicaid Services (CMS) announced in December that it was sunsetting the Value Based Insurance Design (VBID) within the Medicare Advantage (MA) program as of the end of CY 2025. The move took many plans by surprise as it comes just 20 months after CMS said it was extending VBID until 2030. Sixty-two insurers covering more than 7 million beneficiaries are participating in VBID in 2025. These include big, medium, and small plans.
CMS says it is sunsetting the program for a few reasons:
- In calendar years 2021 and 2022, the model cost the Medicare Trust Fund a combined $4.5 billion in substantial and unmitigable costs. CMS says that the level of costs was unprecedented for CMS Innovation Center models. No viable policy modifications existed to make the model more sustainable and address these excess costs.
- CMS says additional analyses of model performance and policy options demonstrated that the costs were driven in part by increased risk score growth, higher Star scores, and Part D expenditures.
- CMS also says many of the VBID model’s interventions are now widely available in the MA program and that model termination will not impact the ability of MA plans to continue to offer most of the interventions offered under the model.
I have often said that CMS has far too many reform pilots in the Medicare space, that they have not shown savings, and they are administratively expensive. I have called for the termination of most of them and the creation of a small subset of pilots with uniform rules to ensure administrative ease and consistency for both plans and providers alike.
At the same time, while I am sympathetic to CMS’ arguments in VBID, I think the program should continue until CMS is able to craft new policies to allow many innovative approaches to continue that are not otherwise allowed outside of VBID.
VBID explained
The MA VBID model, launched in 2017, offers the added flexibility to target potentially high-value services and cost-sharing assistance for prescription drugs to chronically ill and underserved populations, with the goal of increasing access to and uptake of these services to improve health and decrease avoidable medical spending of these enrollees. MA plans in VBID may provide patients with tailored supplemental benefits to help ensure their medical needs are met and to manage chronic health conditions. Eligible populations in VBID are those who have one or more chronic health conditions, are enrolled in the Low Income Subsidy (LIS) program, or have a place of residence in the most underserved areas.
What are the arguments in favor of continuing VBID for some time? There are at least six.
Certain VBID benefits would go away
CMS clearly indicates that “many” of the VBID interventions will be able to continue. But some of the most important may not.
Today there are three programs that provide flexibility to innovate on benefits.
- More narrow and traditional supplemental benefits that are primarily health-related – These are the earliest and most prolific of the supplemental benefits, including vision (exams or eyewear), dental (exams and other services), hearing (exams and aids), over-the-counter (OTC) drugs, and non-emergency transportation.
- Additional expanded primarily health-related supplemental benefits — In 2019, CMS clarified (to address existing ambiguities) what supplemental benefits could be offered as well as expanded the health-related category. Added benefits included adult day care services, in-home support services, home and bathroom safety devices and modifications.
- Special supplemental benefits for the chronically ill (SSBCI) – In 2020, CMS allowed the offering of benefits that are not primarily tied to healthcare to eligible chronically ill enrollees. The item or service must have “a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee.” A chronically ill enrollee is one that (1) has at least one medically complex condition that is life-threatening or significantly limits health or function, (2) has a high risk of hospitalization or other negative health outcomes, or (3) requires intensive care coordination. By their nature, these benefits are targeted to a subset of the enrollee population. These SSBCI benefits include food, expanded meals, expanded transportation, general supports for living, social needs, housekeeping, and more.
It is important to note that some of these supplemental benefit expansions do allow plans to waive the so-called uniformity mandate in Medicare, which generally requires benefits to be offered to everyone in the plan. This allows targeting of such benefits to subsets of the enrollee population based on clinical conditions and other factors.
But there is concern that some of the VBID offerings covered within the design model are not absolutely allowed under the three programs. There are VBID benefits that don’t fit within the not primarily health-related SSBCI benefits outlined above. Further, the targeting of certain innovations for core Medicare benefits occurs in VBID. Without the VBID rules, continuing such benefits to a targeted subset of enrollees would violate the uniformity mandate in Medicare. More on this below.
Increased risk scoring is a bigger issue that needs reform
I am a bit perplexed by CMS’ discussion of risk score growth in VBID. The VBID benefits target the most medically intensive of enrollees so it stands to reason that risk scoring could be higher (initially and over time) for such populations. Thus, there would be risk score differences between plans in VBID and those that are not. It is my view that the risk score issues are not specific to VBID per se but related to a more systemic problem that needs to be addressed. Don’t throw VBID out – tackle the risk adjustment problem overall. Further, the program is not yet old enough to know whether savings and better outcomes will result over time even if risk scores are greater on VBID populations now. Last, the increased risk scores do not go away just because VBID is sunset, although it is true that further hikes on existing members and increases on new members in a VBID might not occur.
Increased Star scores
CMS also calls out the fact that contracts with VBID had higher Star scores and thus quality bonuses. Is it not the goal to drive outcome performance and award plans for excelling on quality? Could it be that VBID benefits do in fact work based on higher Star scores and that costs could come down over time with better quality? It is a confusing message from CMS. I would note that CMS previously found that VBID had a positive impact in several areas in terms of driving quality, including breast cancer screening and medication adherence.
Increased pharmacy costs
I am similarly flummoxed by CMS’ concern about higher Part D costs. Again, it stands to reason that highly morbid populations have higher and growing pharmacy costs. Part of the innovation was to make drugs more readily assessable to these populations in an effort to save in other areas (perhaps inpatient and emergency room costs). Did CMS do enough analysis here? Again, is the program old enough to determine if costs dropped in other areas outside of pharmacy?
Further, there is real concern that the ability to have $0 cost-sharing on drugs for the VBID populations will go away. CMS touts the $2 generic demonstration the Biden administration was proposing to create. This was expunged by Trump as he came into office. I think plans should innovate on generic costs and not have it dictated by the government. But even if there were merit to the $2 generics idea, it would have been a poor substitute for the zeroing out of copays in total for certain drugs in VBID. Many of the populations are LIS eligible and their cost-sharing is already very low, but that level of cost-sharing still creates impediments to drug compliance and medication adherence. Actuarial firm Wakely makes a compelling case that medication adherence in these populations will be impacted greatly by the VBID sunset. It seems clear to me that existing supplemental benefit and waiver of uniformity rules may not allow $0 targeted cost-sharing to continue.
Plans struggle with medication adherence generally in Stars. This is especially true for those with social risk factors (SRFs). CMS’ Health Equity Index (HEI) is just arriving (SY 2027) and CMS will be taking away one of the most valuable ways to promote better adherence — lower cost-sharing.
This is where CMS likes to focus
CMS, too, is being a bit inconsistent. CMS has a goal of integrating Medicare and Medicaid, reducing the cost and improving outcomes of dual eligibles and complex populations, and improving health equity. While VBID does not exclusively cater to these populations, VBID plans positively contribute to these goals. Further, the hospice benefit component of VBID tackles other major issues related to coordination of benefits at end of life. It offers some good experiments as America ages and more and more long-term care is needed and integrated with acute care coverage. The SSBCI program offers a path forward post VBID, but it certainly is more constrained than VBID itself.
As well, VBID’s core thesis – making benefits more affordable so that disease-impacted populations utilize them to improve their health — is one that CMS should realize is essential to reducing costs and improving outcomes throughout government programs.
Precious little time to react
CMS announced the change in December, but this still gives plans precious little time to react and rethink offerings before bids are due in 2026 for 2027 benefits. It is roughly a six-month timeframe. Further, it comes at a time when MA plans are struggling with insufficient rate hikes, poor Star scores and revenue, and high utilization coming out of COVID. These headwinds mean it will be very hard to come up with feasible alternatives for the loss of certain VBID innovations. The sunset of VBID also means that the over 7 million in VBIDs will face major disruption in 2026. This comes after up to 2 million had to change MA plans for 2025 due to financial challenges that led to MA plans realigning products and service areas.
Conclusion
Yes, a lot has changed since VBID started and there are more opportunities to offer additional benefits and target them than before. But that is not absolute as even CMS notes. Important benefit offerings targeted to those with chronic conditions would go away and cause major fallout. As plans and advocacy groups note, eliminating VBID does hurt efforts to target certain core Medicare, social needs, and drug benefits to low-income and highly co-morbid members.
CMS should do the following:
- Reconsider the sunset and add several years before ending the experiment.
- Look at the targeted benefits added under VBID and determine if they are allowed under existing program structures or supplemental benefits.
- Consider expanding waiver of uniformity requirements and benefit variation to capture the key benefits offered under VBID that would otherwise not be allowable after the sunset. This is especially key for varying out-of-pocket (OOP) costs for certain services in the medical and pharmacy worlds.
- If VBID goes away, seek to incorporate some of the soon-to-be-lost flexibility into Special Needs Plans (SNPs).
- Look at and consider expanding rewards and incentives in the MA program.
#cms #medicareadvantage #partd #vbid #innovation #biden #trump #snps #supplementalbenefits #quality #stars
— Marc S. Ryan
