Centers for Medicare and Medicaid Services (CMS) has recently announced new developments in the Medicare Advantage Value-Based Insurance Design Model (VBID) that will now be open to new applicants in three new states (Alabama, Michigan and Texas) and include new diseases such as rheumatoid arthritis and dementia in the clinical categories.

The new developments are expected to work with full effect from January 1, 2018. VBID was originally introduced last year to improve health outcomes and lower expenditures for Medicare Advantage enrollees. The new diseases will be added to the clinical categories for which participants may offer benefits and adjustments to existing clinical categories. Last but not the least, the minimum enrollment size for some MA and MA-PD plan participants is also going to be changed, according to CMS.

“As part of the better care, smarter spending, healthier people approach to improving health care delivery, CMS will test VBID in Medicare Advantage and measure whether structuring patient, cost sharing and other health plan design elements encourage enrollees to use health care services in a way that improve their health and reduces costs,” according to CMS press release.

VBID model was devised back in September 2015 to test the innovations in the health plan designed to determine whether it can improve health outcomes and lower expenditures for Medicare Advantage enrollees for CMS-specified chronic conditions. These conditions include diabetes, congestive heart failure, chronic obstructive pulmonary disease (COPD), past stroke, hypertension, coronary artery disease, mood disorders and combinations of these categories.

The initial working of the model is going to start from January 2017 which will be extended to a period of five years. Initially the model is going to be implemented in seven states — Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania and Tennessee. However, it has been announced that in 2018 it is also going to be tested in Alabama, Michigan and Texas.

According to CMS, the initiative of adding value based elements in health insurance model can generate positive results regarding improvement of the quality of care while reducing the cost for Medicare Advantage enrollees with chronic diseases. In addition to improving outcomes and reducing cost, this initiative is intended to provide new supplemental benefits to cater the clinical needs of enrollees, specifically such as ‘the elimination of co-pays for eye exams for beneficiaries with diabetes or extra tobacco cessation assistance for enrollees with COPD’.

Medicare Advantage is a prominent health insurance plan in the US that works as a substitute for original Medicare Parts A and B benefits. The general Medicare services include lab tests, surgeries and doctor visits along with other services such as wheelchairs. Medicare Part A includes in-hospital care, hospice and skilled nursing services, excluding those of physicians and surgeons.

Part B includes medical insurance and all the medically necessary doctors’ services, preventive care, durable medical equipment and medically necessary outpatient hospital services such as ER, laboratory, X-rays and diagnostic tests etc.

Medicare Part D provides outpatient prescription drug insurance benefit plan, also known as Medicare Advantage Prescription Drug plan (MAPD). It is provided through private insurance companies that have contracts with the government.

On the other hand, Medicare Part C is not a separate benefit. It is actually a part of Medicare policy that allows private health insurance companies to provide general Medicare benefits.

Moreover, it is worth-mentioning here that the Medicare Advantage Value-Based Insurance Design Model was developed by the Center for Medicare and Medicaid Innovation, Baltimore, US. The Innovation Center came into existence under the Affordable Care Act 2010.

The Affordable Care Act was passed by Congress and then signed by President Barack Obama on March 23, 2010. Moreover, in June 2012, the Supreme Court gave it the official status of the healthcare law aimed at increasing the quality of health insurance and affordability, in order to reduce the overall healthcare costs. It was made mandatory for hospitals and primary physicians to transform their practices financially, technologically and clinically to achieve better health outcomes and cost effectiveness in healthcare sector. CMS is optimistic about the fact that the current additions in the VBID model would help improve quality of care while reducing the costs massively.