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Part D plans would take on more financial risk under new CMMI model

By Susannah Luthi  | January 18, 2019

The CMS Innovation Center on Friday announced a new model to try to shrink skyrocketing Medicare Part D drug spending, and expanded its so-called value-based insurance design model for Medicare Advantage plans across all 50 states.

The strategy for Part D targets the high spend in the catastrophic phase of the Part D benefit. Patients hit this once they have spent the limit permitted under their insurance. Medicare then steps in to cover 80% of the drug costs.

Under the new optional model, Part D plans will shoulder more of the financial risk for that catastrophic phase and share in the savings if the total spend comes in under the target set by the CMS.

Government spending for this catastrophic phase has spiked from $9.4 billion to $37.4 billion over the last decade, averaging a 17% increase annually. The agency said 3.2 million people have reached this phase.

The expansion to all 50 states of a value-based design option for Medicare Advantage plans will happen in concert with the Part D model as part of the agency’s drive to rework Medicare.

The model, known as V-BID, will also take on much wider scope, letting plans tailor their benefits and lower cost-sharing to accommodate a patient’s particular chronic condition. They will also be able to address an enrollee’s socioeconomic status by including non-healthcare related benefits like transportation.

MA plans can also offer more financial rewards for enrollees who boost their healthy lifestyle efforts or focus on advance care or preventive care.

Insurers can also offer telemedicine consultations to their enrollees as a replacement for office visits and still meet network adequacy requirements—as long as patients still have the option of an in-person visit and can always keep their preferred choice.

This will likely expand MA plans’ reach in rural areas where due to network adequacy requirements they currently don’t have much market reach.

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