Public Payers News

CMS Redesigns Value-Based Model for Medicare Advantage Plans

CMS continues to invest time and effort in reforming the healthcare industry toward value-based care such as its work in redesigning Medicare Advantage Plans.

By Vera Gruessner

The Centers for Medicare & Medicaid Services (CMS) has recently announced in a new fact sheet that their Medicare Advantage Value-Based Insurance Design model will be changing slightly during its second year of operation. These different designs are meant to help Medicare Advantage beneficiaries have access to plans that are steered toward cost reduction and quality care improvements.

Value-Based Care Reimbursement

The Medicare Advantage Value-Based Insurance Design model is meant to test out a theory that providing Medicare Advantage plans with more flexibility will stimulate beneficiaries to use medical services that are most beneficial for them and, thereby, create more cost efficiencies.

CMS predicts that this new coverage design model among Medicare Advantage plans will lead to a reduction in the use of avoidable and expensive care such as emergency room visits and hospitalizations, a boost in patient health outcomes, and a reduction in spending for the Medicare program and beneficiaries themselves.

There are specific clinical conditions that beneficiaries must have in order to be eligible for the new Medicare Advantage design. These include diabetes, chronic obstructive pulmonary disease (COPD), congestive heart failure (CHF), past stroke, hypertension, coronary artery disease, and mood disorders. Starting in 2018, some of the changes that will take place for the new design model includes adding two clinical conditions for eligibility purposes: rheumatoid arthritis and dementia.

“In addition to developing interventions targeted at all enrollees in one or more of the above categories, participating MA plans will have the flexibility to identify specific combinations of the listed chronic conditions for one or more ‘multiple co-morbidities’ groups and establish tailored VBID [Medicare Advantage Value-Based Insurance Design] interventions for each group. Participating MA plans are required to provide VBID benefits to all VBID-eligible enrollees in the selected group. Participating MA plans selecting the Mood Disorders group will also have additional flexibility to focus on specific conditions within that group,” the CMS fact sheet stated.

“For each of the selected enrollee groups, participating plans may select one or more plan design modifications from a menu of four general approaches.  Within each approach, plans have flexibility on how (and to what extent) to implement that approach.  Plans may vary their proposed interventions from one target population to another, and from one participating plan to another.  CMS will also consider proposals for related variants of these interventions offered to targeted groups of enrollees, such as supplemental benefits conditional on participation in a disease management program.”

The model will also be conducted in three new states starting on January 1, 2018, which are Alabama, Michigan, and Texas. Adjustments will be made to clinical categories as well, reports CMS. The minimum enrollment size will also be changed for a few Medicare Advantage Part D participants and Medicare Advantage plans.

The first year of operation for this payment model will occur on January 1, 2017 and will be tested in the following seven states: Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee.

CMS has worked toward positioning the healthcare industry to adopt value-based care payment strategies in recent years. Currently, 30 percent of Medicare reimbursement is in the form of alternative payment models while CMS is seeking to increase this number to 50 percent by 2018. Bundled payment models have also become a more common method for transitioning the healthcare space toward value-based reimbursement.

One of the key programs that CMS has established to operate on a bundled payment program is the Comprehensive Care for Joint Replacement Model, which reimburses providers based on an episode of care instead of a fee-for-service approach.

This model pays providers for hip and knee replacement surgeries among Medicare beneficiaries including rehabilitation, post-surgery hospital stays, and any treatments due to surgical complications. This bundled payment program is actually meant to incentivize providers to reduce the rates of hospital-acquired infections or surgery complications.

In fact, the focus of the federal agency to push forward bundled payment programs has brought major payers like Humana to adopt this value-based care model as well. Chip Howard, Vice President of Payment Innovation at Humana, offered some vital tips for implementing bundled payments in an interview last June.

“I would really start with an overall piece of advice around looking at retrospective versus prospective payments for bundles,” Howard told HealthPayerIntelligence.com. “Retrospective is essentially fee-for-service where providers are getting paid as usual, but at the end of a performance period, the cost of the bundle is reconciled versus the cost target and savings are evaluated and shared.”

“The prospective model is the upfront payment to the provider responsible for the bundle: the fixed rate that is intended to pay for all bundled services. I won’t advocate for one method or the other, but I do think from the payer perspective, there are some things to think about with prospective bundling around changing infrastructure and claims systems to be able to accommodate the upfront payment versus the traditional fee-for-service world,” concluded Howard.

CMS has also established the Bundled Payments for Care Improvement Initiative, which uses four payment models during an episode of care and brings more accountability to the provider. Since these value-based care reimbursement programs have brought positive results, some are calling on for CMS to adopt more bundled payment models in their Medicare and CHIP programs.

For instance, the Center for American Progress has sought the Department of Health & Human Services (HHS) to aim their sights on adopting more bundled payment programs so that costs could be contained and more providers would transition toward value-based care reimbursement.

The organization hopes that more investment in bundled payment programs could pay for more common medical conditions and geriatric concerns within the Medicare program. While CMS has been striving toward bringing more awareness to value-based care reimbursement and redesigning health plans, there are likely more reforms on the horizon for the future of the healthcare industry.

 

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