A new test within the Medicare Advantage program will lower out-of-pocket costs for chronically ill patients who seek high-value services and providers. Supporters hope the project will lead to changes in federal law and become a template for all health plans with sizable cost-sharing, which have become the standard plan offering from employers and insurers.
But experts say the federal project needs to have both carrots and sticks to lower unnecessary spending and improve people's health. Lower out-of-pocket costs for care deemed to be high quality and clinically effective must be paired with increased cost-sharing for services that are viewed as wasteful or not as valuable.
Last week, the CMS raised the curtain on its latest voluntary demonstration program, called the Medicare Advantage Value-Based Insurance Design Model. The five-year project will start Jan. 1, 2017. Advantage plans in Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania and Tennessee can participate.
The point of value-based insurance design, commonly called VBID, is to steer chronically ill patients toward cost-effective healthcare services that have proven clinical benefits, as well as toward doctors and hospitals that consistently provide those services at a lower cost. Employers and insurers incentivize employees and members by waiving or reducing copayments, coinsurance and other out-of-pocket costs for certain procedures, services, prescription drugs and networks.
A popular VBID is for diabetic patients. Instead of patients paying for a doctor-recommended eye exam completely out of pocket, the health insurer can lower or eliminate patients' cost-sharing through a tailored benefit plan. Patients are more likely to get the exam if it's affordable or free. And research suggests patients with chronic conditions may avoid costly interventions, such as hospital admissions, if they adhere to their care plans.
Only Medicare Advantage members who have diabetes, congestive heart failure, chronic obstructive pulmonary disease, a history of stroke, hypertension, coronary artery disease or mood disorders are eligible for the model.
VBID advocates say the strategy builds “clinical nuance” into health plans. It also better aligns patients with their physicians, who are increasingly paid based on how well they take care of people.
“Clinicians are now being benchmarked on the quality of care,” said Dr. Mark Fendrick, director and co-founder of the University of Michigan's Center for Value-Based Insurance Design, the group that led the push for the new CMS experiment. “They'd be much happier to have their patients pay less out of pocket to have those services done. ... This is a no-brainer to me.”
Paul Ginsburg, a professor of health policy and management at the University of Southern California, said there is already some cost-sharing in Medicare Advantage plans that could provide savings for beneficiaries. But there “may not be as big of an opportunity as commercial high-deductible plans,” he said.
Commercial plans are Fendrick's next target. Federal regulations require all enrollees in high-deductible health plans and health savings accounts to fully pay for their prescriptions and treatments until they meet their deductible. The exception is preventive screenings, which now receive first-dollar coverage under the Affordable Care Act. However, services that treat “an existing illness, injury or condition,” including chronic diseases, have to be paid by patients.
Fendrick hopes the government will permit more testing of “clinically nuanced” cost-sharing in high-deductible plans and eventually expand federal rules. “While patients in those plans are insured, they often don't have adequate coverage for these high-value services because of the high deductibles and other out-of-pocket costs,” Fendrick said.
An important detail in the federal VBID model is that Advantage members will not lose any benefits or pay higher cost-sharing for any services. Insurers can only add benefits or reduce out-of-pocket costs.
That means patients can still access potentially overused or wasteful services for the same prices. Experts believe successful VBID plans need to encourage the use of clinically preferred drugs, tests and treatments, but also discourage overused services that may be unnecessary or harmful.
But in Medicare, raising beneficiary costs for any service is a political hot potato. “I think, in an ideal world, you'd have the flexibility to do both,” said Amanda Starc, a health economist at the University of Pennsylvania.
The country's largest Medicare Advantage insurer has signaled its interest in the new federal pilot program. UnitedHealthcare operates Medicare plans in each of the seven demonstration states and has 3.5 million Advantage members nationally. Dr. Sam Ho, chief medical officer at UnitedHealthcare, said the company is “definitely excited about pursuing this opportunity.” The company is reviewing its options.
