R.I.P. VBID. Is Medicare Advantage Alone or Will it Go Beyond?

What's next when policy can't fix what policy created?

Last December, CMS announced that it would terminate the Medicare Advantage Value-Based Insurance Design (MA VBID) model due to “substantial and unmitigable costs to the Medicare Trust Funds.” 

How substantial? More than $2 billion annually in both 2021 and 2022. Why these spikes? That is a more complicated question, as are others on whether VBID can succeed more broadly and what that will require.

What is VBID?

First conceptualized in 2005 by the University of Michigan Center for VBID (UM VBID Center), Value-Based Insurance Design “is built on the principle of lowering or removing financial barriers to essential, high-value clinical services.” In its response to CMS’s termination of the model, the Center added that VBID “aims to lower out-of-pocket costs for high-value services while discouraging spending on low-value care.”

Low-value care includes services “that provide little or no benefit to patients, have potential to cause harm, incur unnecessary cost to patients, or waste limited healthcare resources.” High-value services include the increased use of preventive and essential chronic care.

But there is also a fine line between low and high value. For example, PSA screening for prostate cancer saves lives (high value) but becomes low-value for older men (age 70+). This per the Task Force on Low-Value Care, which in 2017 included this screening in its Top Five List of low-value services:

• Vitamin D screening tests
• Diagnostic tests before low-risk surgery
• Imaging within six weeks of low-back pain onset
• Branded drugs when identical generics are available

From January 2012-May 2019, waste from low-value care — a/k/a “overtreatment" — totaled $12.8-28.6 billion.

VBID: Outcomes versus cost in MA

It’s not unusual for CMS and its Innovation Center (CMMI) to retire models. In fact, it’s required if models do not generate savings or improve outcomes with cost neutrality for Medicare within a specified time.

Launched in 2017, the MA VBID model sought to enhance healthcare access for chronically ill and underserved populations by reducing cost-sharing and offering supplemental benefits. These benefits are often associated with the social drivers of health (SDOH), such as lack of access to healthy food or transportation to medical appointments. The model also sought to increase health improvement activities (e.g., preventive screenings, care management and/or disease management (CM/DM)

The MA VBID model did improve outcomes, specifically patient adherence to cholesterol and diabetes medication, as well as breast cancer screening.

It also cost Medicare an additional $2.3 billion in 2021 and another $2.2 billion in 2022.

This spike — after three-plus years of relative cost neutrality, if not savings — was a bridge too far, for CMS. Its press release terminating VBID, the agency noted that its excess costs “were unprecedented in CMS Innovation Center models” and that “no viable policy modifications” could address them.

How bad does a model have to be to earn those assessments? Or is there simply a limit to

what a model can and cannot achieve if cost and quality expectations are not realistic? Are the conclusions different for VBID when applied to Medicare Advantage versus other programs and populations?

Let’s assess.

VBID: A glass half full or half empty?

In a Health Affairs post-mortem, UM personnel — including VBID Center director Dr. A. Mark Fendrick — note that CMS’s termination of the MA model “should be interpreted as an assessment of the specific design of this program as opposed to a conclusion about the general cost (or potential) of VBID as a concept.”

The article adds that a “robust evidence base demonstrates that V-BID interventions increase adherence to high-value services, reduce disparities, improve patient outcomes, and in some instances decrease expenditures.” The article concludes that “the primary goals of V-BID programs in general, and the MA-VBID model specifically, are to increase access to care, enhance equity, and ultimately improve the health of Medicare beneficiaries – not to save money.”

VBID wasn’t required to save money for the Medicare program. But costing it $4.5 billion in two years is another matter.

The problem is that at least some of the problems that plagued the VBID MA model plague the MA program in general — namely risk code and rebate finagling. Per Health Affairs:

• Substantially higher risk scores increased CMS payments to MA plans for VBID enrollees. Higher scores help if more patients who need more care are identified. They hurt if they represent upcoding, an MA plan practice that inflates patient risk scores artificially to bilk money from Medicare.
• Higher rebates increased these payments further. Every year, MA plans submit bids for how they will cover the expected costs of providing Medicare Part A and B services. Bids below benchmarks earn plans a percentage of money back based on their Star Ratings (rebates). Higher rebates under MA VBID were thus attributed to higher quality care.

Such is the paradox of value in healthcare and why few to no models can improve cost and quality unilaterally.

In Part II of this series, HealthLeaders will explore what the high cost of VBID in Medicare Advantage means for the model — and for value-based care — in general.