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School & Program Updates

School & Program Updates

Fed to Try out Value-based Insurance Design after Decade of Work at Michigan

A health insurance model designed to improve care and cut costs — a concept that grew out of a decade of work at the University of Michigan — will be tested in seven states, according to an announcement today from the Centers for Medicare & Medicaid Services.

[Photo: Dr. A. Mark Fendrick]

The Medicare Advantage Value-Based Insurance Design Model program trial will allow the government to see how well this form of insurance design improves care while keeping costs down for patients and the government. The CMS announcement moves forward a plan that had been making its way through the legislative process.

CMS said the Medicare Advantage Value-Based Insurance Design trial will begin Jan. 1, 2017, and be available through Medicare Advantage plans in Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee.

“We are pleased that CMS has announced a V-BID demonstration program to implement clinically nuanced designs in the Medicare Advantage program,” said Dr. Mark Fendrick, director of the U-M Center for Value-Based Insurance Design and professor of Health Management and Policy at U-M School of Public Health. “Reducing cost-sharing for high-value clinical services and providers may improve the consumer experience, enhance quality of care, and potentially lower medical expenditures.”

Value-based insurance design is built around the concept that not all health services are created equal, and that patients should face no or low costs when utilizing those that provide great benefit at reduced cost. It’s based on research that shows higher out-of-pocket costs and co-pays often discourage patients from using screenings, immunizations and other high-value services relative to cost. As a result, patients often end up costing the system and themselves more by delaying or bypassing important preventative and early care.

“The Medicare Advantage Value-Based Insurance Design Model fills an immediate need for testing ways to improve care and reduce cost in Medicare Advantage Plans and offers the prospect of lower out-of-pocket costs and premiums along with better benefits for enrollees in Medicare Advantage,” said Dr. Patrick Conway, CMS deputy administrator and chief medical officer.

The U-M V-BID Center was established in 2005. Its faculty and staff, based in the U-M School of Public Health and Medical School, have worked with numerous private and public payers, employers, unions and business coalitions nationwide to use V-BID design in their plans, with success. Some public health plans in a few states have adopted some of the principles as well.

For more information on the U-M Center for Value-Based Insurance Design, click here.