CMS Announces New Model to Lower Drug Prices in Medicare Part D and Transformative Updates to Existing Model for Medicare Advantage
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- Models to provide seniors with more benefits while strengthening competition among plans
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Today,
"Expanding choices for patients, aligning incentives, and providing new flexibility for insurers in Medicare Advantage and Medicare Part D will deliver better value from these programs," said HHS Secretary
The model for Medicare Advantage plans is an update to the
"The American healthcare system is very different today than it was thirteen years ago when the Medicare Advantage and Part D programs were launched in their current forms, but due to the slow pace of change in government, these programs have not been fully updated to reflect today's realities," said CMS Administrator
The President's Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs called on HHS to increase competition, improve negotiation, create incentives for lower list prices, and reduce out-of-pocket costs. Through the Part D Payment Modernization model announced today, CMS is executing on the Blueprint. This model advances
The Part D Payment Modernization model announced today advances
In fact, over the past 10 years (2008-2017), federal spending in the Part D catastrophic phase has nearly quadrupled from
This issue of plans having limited responsibility in the catastrophic phase, and the related lack of incentives plans have to focus on high list prices, was raised in the President's FY 2019 budget, and it has been highlighted by MedPAC and by multiple other stakeholders in response to CMS RFIs. Under the new model, which takes effect for the 2020 plan year, participating plans will take on greater risk for spending in the catastrophic phase of Part D, creating new incentives for plans, patients, and providers to choose drugs with lower list prices. Based on plan year performance, CMS will calculate a spending target for what governmental spending would have been without plans taking on this additional risk. Participating Part D plans will share in savings if they stay below the target but will be accountable for losses if they exceed the target. For the first time, the model also introduces a Part D rewards and incentives program to align this model with the changes to VBID, and to provide Part D plans with additional tools to control drug costs and help enrollees in choosing drugs with lower list prices.
The wide-ranging enhancements to the VBID model announced today will test a new series of service delivery approaches for Medicare Advantage plan beneficiaries for the 2020 plan year, including:
* Allowing plans to provide reduced cost sharing and additional benefits to enrollees in a more targeted fashion than has previously been allowed, including customization based on chronic condition, socioeconomic status, or both, and even for benefits not primarily related to health care, such as transportation;
* Bolstering the rewards and incentives programs that plans can offer beneficiaries to take steps to improve their health, permitting plans to offer higher value individual rewards than were previously allowed; and
* Increasing access to telehealth services by allowing plans to use access to telehealth services instead of in-person visits, as long as an in-person option remains, to meet a range of network requirements, including certain requirements that could not previously be fulfilled through telehealth.
Beginning in the 2021 plan year, the VBID model will also test allowing Medicare Advantage plans to offer Medicare's hospice benefit. This change is designed to increase access to hospice services and facilitate better coordination between patients' hospice providers and their other clinicians.
Plans participating in the VBID program will be offered along with traditional Medicare Advantage plans. CMS will monitor whether plans that take up these more tailored coverage options are able to reduce costs and increase quality.
Medicare Advantage plans in all 50 states and territories may apply for the VBID model for 2020, thanks to a provision signed into law by
Today, CMS is also issuing an evaluation report for the first year of the VBID model. Plans in only 7 states could participate in the model for the first year (2017). The report shows that participating plans began to leverage the new tools that were introduced right away, with 45 plans participating and offering more benefits to enrollees. Most 2017 Medicare Advantage data are not yet complete for a full impact analysis, but the agency is continuing to assess the model. Today's update of VBID was informed by experience during the early years of the model.
For fact sheets on today's announcements, please visit https://cms.gov/newsroom/fact-sheets/value-based-insurance-design-model-vbid-fact-sheet-cy-2020 and https://cms.gov/newsroom/fact-sheets/part-d-payment-modernization-model-fact-sheet.
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