CMS Announces Changes in Medicare Part D and Medicare Advantage

The Centers for Medicare & Medicaid Services’ (CMS) Center for Medicare and Medicaid Innovation, which tests innovative payment and service delivery models to lower costs and improve the quality of care, recently announced a new payment model for Medicare Part D and transformative updates to the existing Medicare Advantage model.

The model for Medicare Advantage plans is an update to the Medicare Advantage value-based insurance design (VBID) model that CMS first launched in 2017. The model for Part D plans is called the Part D payment modernization model. These are both voluntary models to advance innovation – meaning certain Medicare Advantage and Part D plans can choose to participate, and patients can choose to enroll in participating plans. The models will be closely monitored and if they clear certain thresholds for impact on quality, costs and access to benefits, the models can be expanded in scope.

Under the new model, which will take effect for the 2020 plan year, participating plans will take on greater risk for spending in the catastrophic phase of Part D, creating new incentives for plans, patients and providers to choose drugs with lower list prices. Based on plan year performance, CMS will calculate a spending target for what governmental spending would have been without plans taking on this additional risk. Participating Part D plans will share in savings if they stay below the target but will be accountable for losses if they exceed the target.

For the first time, the model also introduces a Part D rewards and incentives program to align this model with the changes to VBID, and provide Part D plans with additional tools to control drug costs and help enrollees in choosing drugs with lower list prices.

The wide-ranging enhancements to the VBID model will test a new series of service delivery approaches for Medicare Advantage plan beneficiaries for the 2020 plan year, including:

  • Allowing plans to provide reduced cost sharing and additional benefits to enrollees in a more targeted fashion than previously has been allowed, including customization based on chronic condition, socioeconomic status or both, and even for benefits not primarily related to health care, such as transportation.
  • Bolstering the rewards and incentives programs that plans can offer beneficiaries to take steps to improve their health, permitting plans to offer higher value individual rewards than were previously allowed.
  • Increasing access to telehealth services by allowing plans to use telehealth instead of in-person visits, as long as an in-person option remains, to meet a range of network requirements, including certain requirements that could not previously be fulfilled through telehealth.

Beginning in the 2021 plan year, the VBID model will test allowing Medicare Advantage plans to offer Medicare’s hospice benefit. This change is designed to increase access to hospice services and facilitate better coordination between patients’ hospice providers and their other clinicians.

Plans participating in the VBID program will be offered along with traditional Medicare Advantage plans. CMS will monitor whether plans that take up these more tailored coverage options are able to reduce costs and increase quality.

Medicare Advantage plans in all 50 states and territories may apply for the VBID model for 2020, as a result of a provision signed into law by President Donald Trump in the Bipartisan Budget Act of 2018. In addition, the model now is available to more Medicare Advantage plan types, including all special needs plans and regional preferred provider organizations (PPOs) in all states and territories.

The Part D Payment Modernization and VBID models will run through 2024. Requests for applications to participate in the VBID model for 2020 and the Part D Payment Modernization model for 2020 now are available on the CMS website. Medicare beneficiaries will be able to select plans participating in these models for the 2020 plan year.

CMS issued an evaluation report for the first year of the VBID model. Plans in only seven states could participate in the model for the first year (2017). The report shows participating plans began to leverage the new tools that were introduced right away, with 45 plans participating and offering more benefits to enrollees.

Most 2017 Medicare Advantage data are not yet complete for a full impact analysis, but the agency is continuing to assess the model.

A fact sheet on the VBID program is available here and a fact sheet on the Part D modernization plan is available here.

For more information, contact Amanda Newell at THA, 615-401-7441.