CMS announced it will start testing value-based insurance models on Medicare Advantage plans starting in 2017. The program is an opportunity for Medicare Advantage plans (MA plans) to offer clinically-nuanced benefit packages aimed at improving quality of care while also reducing costs. As part of the “better care, smarter spending, healthier people” approach to improving health care delivery, CMS will test Value-Based Insurance Design (VBID) in Medicare Advantage and measure whether structuring patient cost sharing and other health plan design elements encourages enrollees to use healthcare services in a way that reduces costs. The MA-VBID model will begin January 1, 2017 and run for five years. CMS will test it in 7 states including Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee. These states have been selected because they are "generally representative" of the national Medicare Advantage market. The model will focus on Medicare Advantage members who have diabetes, chronic obstructive pulmonary disease, congestive heart failure, past stroke, hypertension, coronary artery disease or mood disorders. Insurers can create VBID plans through four approaches. Reduced Cost Sharing for High-Value Services Plans can choose to reduce or eliminate cost sharing for items or services, including covered Part D drugs, that they have identified as high-value for a given target population. Participating plans have broad flexibility to choose which items or services are eligible for cost-sharing reductions; however, these services must be clearly identified and defined in advance, and cost-sharing reductions must be available to all enrollees within the target population. Examples of interventions within this category include eliminating co-pays for eye exams for diabetics and eliminating co-pays for ACE inhibitors for enrollees who have previously experienced an acute myocardial infarction. Reduced Cost Sharing for High-Value Providers Plans can choose to reduce or eliminate cost sharing when providers that the plan has identified as high-value treat targeted enrollees. Plans may identify high-value providers, not solely based on cost, across all Medicare provider types, including physicians/practices, hospitals, skilled-nursing facilities, home health agencies, ambulatory surgical centers, etc. Examples of interventions within this category include reducing cost sharing for diabetics who see a physician who has historically achieved strong results in controlling patients’ Hba1c levels and eliminating cost sharing for heart disease patients who elect to receive non-emergency surgeries at high-performing cardiac centers. Reduced Cost Sharing for Enrollees Participating in Disease Management or Related Programs Participating plans can reduce cost sharing for an item or service, including covered Part D drugs, for enrollees who choose to participate in a plan-sponsored disease management or similar program. This could include an enhanced disease management program, offered by the plan as a supplemental benefit, or it could refer to specific activities that are offered or recommended as part of a plan’s basic care coordination activities. Plans using this approach can condition enrollee eligibility for cost-sharing reductions on meeting certain participation milestones. For instance, a plan may require that enrollees meet with a case manager at regular intervals in order to qualify. However, plans cannot make cost-sharing reductions conditional on achieving any specific clinical goals – e.g., a plan cannot condition cost-sharing reductions on enrollees achieving certain thresholds in Hba1c levels or body-mass index. Examples of interventions within this category include elimination of primary care co-pays for diabetes patients who meet regularly with a case manager and reduction of drug co-pays for patients with heart disease who regularly monitor and report their blood pressure. Coverage of Additional Supplemental Benefits Under this approach, participating plans can make coverage for supplemental benefits available only to targeted populations. Such benefits may include any service consistent with existing Medicare Advantage rules for supplemental benefits. Examples of interventions within this category include physician consultations via real-time interactive audio and video technologies for diabetics, or supplemental tobacco cessation assistance for enrollees with COPD.