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The Centers for Medicare & Medicaid Services (CMS) announced the redesign of the Medicare Advantage Value-Based Insurance Design (MA-VBID) model. The two phase process will start in January of 2017 and continue for 5 years. Because previous Medicare Advantage requirements have not incorporated VBID approaches, making this a big change for MA plans. The MA-VBID model is aimed at improving quality of care and reducing costs for Medicare Advantage Plans.

The first phase of the model, starting in 2017, will be rolled out in Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee. In 2018, three more states (Alabama, Michigan, and Texas) will be added to the mix.

The second phase of the model:  

  1. Open the test to new applicants
  1. Add rheumatoid arthritis and dementia to the clinical categories
  1. Make adjustments to existing clinical categories
  1. Change the minimum enrollment size for some MA and MA-PD plan participants

Value-Based Insurance Design (VBID)

VBID, as defined by CMS, refers to “health insurers’ efforts to structure enrollee cost sharing and other health plan design elements to encourage enrollees to use high-value clinical services.” There is evidence that suggests adopting VBID elements in health insurance benefits design can be an effective way to improve quality of care and reduce cost. The is why the CMS is testing VBID in the Medicare Advantage arena.


  1. This new model plans to test MA plan flexibility to “offer supplemental benefits or reduced cost sharing to targeted groups of enrollees with CMS-specified chronic conditions.” The redesign also encourages patients to use services that offer them the highest value and better care.
  1. Flexibility to create clinically-nuanced benefit designs will also be provided for MA and MA-PD plans that are accepted into model. The specific clinical categories are defined by CMS.
  1. Participating MA plans will also have the flexibility to identify specific combinations within the defined categories to help “establish tailored VBID interventions for each group.”

There will be four general approaches to the redesign in which participating plans will be encouraged to select one or more of these approaches:

  • Reduced Cost Sharing for High-Value Services
  • Reduced Cost Sharing for High-Value Providers
  • Reduced Cost Sharing for Enrollees Participating in Disease Management or Related Programs
  • Coverage of Additional Supplemental Benefits

To learn more about CMS’ MA-VBID model visit: