CMS scraps value-based Medicare Advantage model

Citing overspending, the Centers for Medicare and Medicaid Services is calling an early end to an initiative that aimed to provide better, more efficient care to Medicare Advantage enrollees.

The Value-Based Insurance Design model, or VBID, will sunset at the end of 2025, CMS announced, just 20 months after the agency extended it until 2030. The latest data show “substantial and unmitigable costs” totaling $4.5 billion in 2021 and 2022, an amount "unprecedented in CMS innovation center models," CMS said in a news release Monday.

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"Additional analyses of model performance and policy options demonstrated that these substantial costs were driven in part by increased risk score growth and Part D expenditures and that no viable policy modifications could address these excess costs," CMS said in the news release.

"As many of the VBID model’s interventions are now widely available in the MA program, model termination will not impact the ability of MA plans to continue to offer most of the interventions offered under the model," CMS said.

The Center for Medicare and Medicaid Innovation created VBID in 2015 and expanded it two years later to allow Medicare Advantage carriers to experiment with benefit design for plans that cover low-income or chronically ill members. The agency sought savings it now says did not materialize.

Sixty-two insurers covering more than 7 million beneficiaries are participating in VBID in 2025, including UnitedHealth Group subsidiary UnitedHealthcare, Humana, CVS Health subsidiary Aetna, Elevance Health and the University of Pittsburgh Medical Center Health Plan, according to CMS.

“Eliminating VBID impedes plans’ ability to offer targeted benefits to low-income members that address their social needs,” Pittsburgh-based UPMC said in a statement.

The Better Medicare Alliance, which represents insurance, provider and patient groups, is "deeply disappointed," President and CEO Mary Beth Donahue said in a news release Wednesday.

“Terminating the only model serving Medicare Advantage organizations will have negative consequences on nearly 9 million seniors and people with disabilities, and particularly on minorities and those in low-income communities who rely on essential benefits like in-home support services, groceries and transportation,” Donahue said.

Ending VBID after next year will "move care delivery in the wrong direction and jeopardize the successes the program has already made," the Blue Cross Blue Shield Association said in a statement.

According to the CMS, its most recent analysis found VBID plans are costlier than other plans because of higher risk scores, Medicare Advantage Star Ratings quality bonuses and drug spending. Previous CMS assessments found that VBID plans were successful promoting medication adherence and breast cancer screenings compared to other Medicare Advantage plans.

Pulling the plug over higher spending linked to Star Ratings program bonuses is "jarring" because VBID is intended to improve quality, Adam Finkelstein, counsel at the consulting company Manatt Health, wrote in an email

“This is how Congress set up MA, to encourage plans to increase quality,” Finkelstein wrote. “Plans delivered better quality and got paid more for it. This is a feature, not a bug, of MA.”