CMS is Discontinuing the MA Value-Based Insurance Design Model

The United States Centers for Medicare and Medicaid Services (CMS) recently announced that it will discontinue the Medicare Advantage (MA) Value-Based Insurance Design model at the end of this year. CMS cited “increased risk score growth and Part D expenditures” that made the model too costly to continue to operate.

Under the Value-Based Insurance Design model, MA plans were able to offer supplemental benefits. Most patients who participated in the model had chronic conditions. In calendar years 2021 and 2022, the model cost the Medicare Trust Fund $2.3 billion and $2.2 billion, respectively. This was an “unprecedented” cost with a lack of “viable policy modifications” that may make the model more financially feasible. As the law requires CMS either terminate or make changes to models that are expected to increase Medicare costs, the “consistent evaluation report findings of significantly increased costs” associated with the model – combined with “unsuccessful efforts to consider policy options to mitigate losses” – CMS has no choice but to terminate the model.

Since the launch of the Model in 2017, the Value-Based Insurance Design model tested different MA health plan interventions that were meant to decrease Medicare spending and increase the quality of care for enrollees. MA plans participating in the Model had the flexibility to target potentially high-value services and cost-sharing assistance for prescription drugs to chronically ill and underserved populations, with the goal of increasing access to and uptake of these services to improve health and decrease avoidable medical spending of these enrollees.

CMS found that plan participation in the Value-Based Insurance Design model was often associated with an increase in risk scores and Hierarchical Condition Category diagnoses for some enrollees. However, there was no association between increased costs and health-related social needs offerings.

CMS notes that it does not expect that the termination of the Model will impact the ability of MA plans to offer most of the interventions offered under the model as many of the Model’s interventions are “widely available” in the MA program. CMS also stated its commitment to promoting “whole-person health, transparency, and affordability in the MA program.”

One of the supplemental benefits was dual special needs plans (DSNPs) offering $0 prescription co-pays. To avoid prescription cost sharing being added back into DSNPs in 2026, CMS has proposed a voluntary model that caps out-of-pocket prescriptions at $2 per month. However, the model doesn’t begin until January 2027 and may face an uncertain future with the change in Administration.