CMS Announces End of Medicare Advantage VBID Model

Breaking News: VBID Model Termination

 

The Centers for Medicare & Medicaid Services (CMS) has made a pivotal announcement regarding the Medicare Advantage Value-Based Insurance Design (VBID) model’s termination after 2025. This decision stems from the discovery of substantial and unprecedented costs to Medicare Trust Funds, amounting to $4.5 billion over just two years – $2.3 billion in 2021 and $2.2 billion in 2022.

 

The timing of this announcement is strategic, providing over a year for stakeholders to prepare for the transition. This extended notice period reflects CMS’s commitment to ensuring a smooth transition while maintaining program stability and beneficiary care continuity.

 

The termination announcement has sent ripples through the healthcare industry, prompting discussions about the future of value-based care models and their financial sustainability within the Medicare system.

 

Understanding the VBID Model’s Journey

 

Origins and Evolution

Launched in 2017, the VBID model represented a bold experiment in Medicare Advantage innovation. The program began with a focused scope but expanded significantly over the years to encompass various interventions and approaches.

 

The model was designed as a comprehensive testing ground for innovative approaches within Medicare Advantage plans, incorporating multiple strategic objectives:

• Developing new approaches to lower Medicare spending while enhancing care quality
• Creating targeted high-value services for chronically ill populations
• Implementing innovative cost-sharing assistance programs for prescription drugs
• Building comprehensive approaches to address health-related social needs (HRSNs)
• Establishing new standards for program transparency

 

Implementation Phases

The model’s implementation occurred in several phases:

1. Initial Launch (2017): Focus on basic value-based design principles
2. Expansion Phase (2018-2019): Integration of additional benefits and services
3. Maturity Phase (2020-2022): Full implementation of comprehensive interventions
4. Final Phase (2023-2025): Attempted cost containment and program optimization

 

What Led to the Termination?

 

Unprecedented Cost Increases

Detailed evaluation reports revealed several concerning trends that contributed to the program’s unsustainability:

 

Risk Score Growth

• Participant risk scores showed anomalous increases compared to non-VBID plans
• The pattern of increase was consistent across different plan types
• Risk score growth exceeded historical trends and expectations

 

Financial Impact

• Higher than anticipated rebates to participating MA plans
• Substantial growth in Part D expenditures
• Unexpected increases in supplemental benefit costs
• Cumulative effect on Medicare Trust Funds exceeded projections

 

Systemic Issues

• The cost impact was pervasive across all VBID interventions
• Plan types of all sizes and structures showed similar patterns
• Geographic variations did not explain the cost disparities

 

 

 

 

 

Silver Linings: Lasting Benefits and Lessons

 

Program Achievements

Despite its termination, VBID has left a positive legacy:

• Improved screening for health-related social needs
• Enhanced transparency in MA program reporting
• Advanced medication adherence strategies
• Established frameworks for supplemental benefits

 

Integration into Standard MA Programs

Many VBID innovations have been incorporated into regular MA programs through:

• Special Supplemental Benefits for the Chronically Ill (SSBCI)
• Enhanced reporting requirements
• Improved supplemental benefit policies
• Stronger focus on health equity

 

Looking Ahead: The Future of Medicare Advantage

 

New Initiatives

CMS is developing alternative programs to maintain momentum:

• The Medicare $2 Drug List model (planned for January 2027)
• Continued implementation of Inflation Reduction Act provisions
• Enhanced focus on whole-person health approaches
• New transparency initiatives

 

Support During Transition

CMS has outlined several support mechanisms:

• Early announcement to allow adequate preparation time
• Coordination with beneficiary advocacy groups
• Partnership with State Health Insurance Assistance Programs
• Enhanced communication during the 2026 Open Enrollment Period

 

 

 

 

 

 

Conclusion

 

While the VBID model’s termination marks the end of a significant experiment in Medicare Advantage, its legacy will continue through transformed policies and practices. The focus now shifts to implementing these lessons while maintaining fiscal responsibility and ensuring beneficiary access to high-quality, affordable healthcare.

 

CMS remains committed to innovation in healthcare delivery while protecting the Medicare Trust Funds, suggesting that future initiatives will build upon VBID’s successes while avoiding its financial pitfalls.