Testing, testing: Value-based insurance design coming soon to Part C

A Value-Based Insurance Design (VBID) model is being introduced by CMS as part of the attempt to improve care and lower costs in Medicare Advantage plans. The VBID model, which CMS announced will begin testing in select states in 2017, allows plans flexibility to offer targeted supplemental benefits to encourage beneficiaries with chronic conditions to seek the most effective care.

Model features

The VBID model will be used to test whether providing plan flexibility that offers targeted, extra supplemental benefits or reduces cost sharing for beneficiaries with chronic conditions will lead to higher-quality, more cost-efficient care. The VBID model will focus on beneficiaries with certain chronic conditions, including diabetes, congestive heart failure, chronic obstructive pulmonary disease (COPD), past stroke, hypertension, coronary artery disease, mood disorders, and a combination of any of those conditions. Under the VBID model, the plans will have the flexibility to provide supplemental benefits that are specifically tailored to a beneficiary’s chronic conditions, such as zero co-pay eye exams for beneficiaries with diabetes or tobacco cessation assistance for beneficiaries with COPD.


The VBID approach allows health insurers to structure enrollee cost sharing and other health plan components in a manner that encourages beneficiaries to use high-value clinical services, which may have the greatest potential to positively impact health. According to CMS, such approaches to insurance are becoming increasingly common in the commercial market and adding “clinically-nuanced” VBID components in health insurance benefit design may be an effective manner of improving quality of care and reducing costs for Medicare Advantage enrollees who suffer from chronic diseases.


The model will begin on January 1, 2017, and will run for five years in Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee.

Innovation center

The VBID model was developed by the Center for Medicare and Medicaid Innovation, which was created by the Section 3021 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) to allow for testing of innovating health care payment and delivery models in the attempt to reduce federal health care spending while maintaining or improving beneficiary quality of care.