According to the New York Times, more Medicare beneficiaries are choosing Medicare Advantage plans than in previous years. What are they? Medicare Advantage Plans cover all services of Original Medicare plus more. The government pays for Original Medicare at the time when Medicare benefits are needed. However, Medicare Advantage Plans, also referred to as “Part C” or “MA Plans,” are provided by private companies. These private companies must be approved by Medicare, as Medicare pays them to cover all Medicare benefits. Those who utilize Medicare Advantage Plans are covered for hospital and medical insurance, otherwise known as Medicare Part A and Medicare Part B.
There are different types of Medicare Advantage Plans. For Private Fee for Service plans, one can generally go to any provider as long as they accept the plan’s payment terms. For Health Maintenance Organization (HMO) plans, patients can only go to doctors, hospitals, or any healthcare providers that are selected in a particular plan’s network. The only case when this is not applicable is in emergency situations where urgent care is needed. For those using Preferred Provider Organization (PPO) plans, individuals pay less if they seek treatment from providers that belong to a network and pay more if they are out of network. Special Needs Plans provide attention to those who need specialized care. Specifically, focused healthcare is given to those who have chronic illnesses or must stay in nursing homes. There is another type of plan called a Point-of-Service plan, which allows individuals to get some services out-of-network for higher copayment or coinsurance. Often Medicare beneficiaries have difficulty distinguishing between the plans and what best fits their needs.
Recently, CMS released a Medicare Advantage value-based insurance design model, or MA-VBID. This aims to increase healthcare quality and decrease costs through financial incentives to promote cost efficient health care services and consumer choices. Through preventative care services, individuals are encouraged to maintain and even improve their health. In addition to preventative care, other solutions are offered such as wellness visits and treatments to control blood pressure or diabetes at little to no cost. These types of treatments can potentially save patients money because they reduce the likelihood of future expensive medical procedures.
According to the Centers for Medicare and Medicaid services, the new model for Medicare Advantage value-based insurance design will be implemented on January 1, 2017 and will remain in effect for five years. In the first year of testing, seven states will utilize the new services, including: Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee. With the Centers for Medicare and Medicaid Services’ approval, eligible Medicare Advantage plans in these states may offer varied plan benefit designs for targeted enrollees, such as reduced cost sharing or additional services. However in this new model, enrollees never receive fewer benefits or are charged higher cost sharing than other Medicare Advantage enrollees.
This particular model will test whether or not giving Medicare Advantage plans flexibility to target groups of patients with chronic conditions and encouraging them to use services that are of the highest value to them, will lead to higher-quality and more cost-efficient care. This model focuses on chronic conditions like diabetes, chronic obstructive pulmonary disease, congestive heart failure, stroke victims, hypertension, coronary artery disease, mood disorders, rheumatoid arthritis, or dementia. The agency will make adjustments and manage enrollment size during the following year.
Overall, the objective behind the value-based insurance design model is to promote individuals to use high-value clinical services that also have the capability to provide a positive impact on health. According to Centers for Medicare and Medicaid services, evidence shows that the inclusion of value-based elements in health insurance benefit design may be effective in improving the quality of care while reducing cost for Medicare Advantage enrollees with serious diseases.
The Value Based Insurance Design model supports improved health outcomes and health care cost savings, or cost neutrality, through the use of structured patient cost sharing and other health plan design elements that encourage enrollees to use high-value clinical services. The MA-VBID model will provide flexibility for MA and MA-PD plans accepted into the model to develop clinically-nuanced benefit designs for enrollee populations that fall within certain clinical categories. This model will be rigorously evaluated in order to answer several key research questions, including: (a) does the model improve enrollee outcomes, satisfaction and out-of-pocket costs, (b) does the model result in lower expenditures for participating health plans, and if so, (c) do these lower costs translate into lower plan bids over time, resulting in savings for Medicare and/or for enrollees. If this model proves to be successful, it has the potential to have a major impact on Medicare costs.