London Market Monitor – 31 May 2022
Our May review of the markets and Solvency II discount rates.
The Centers for Medicare and Medicaid Services (CMS) introduced its Medicare Advantage (MA) Value-Based Insurance Design (VBID) Model to “test a broad array of MA health plan innovations designed to reduce Medicare program expenditures, enhance the quality of care for Medicare beneficiaries (including those with low incomes such as dual-eligibles), and improve the coordination and efficiency of health care service delivery.” CMS also noted the VBID Model is intended to “contribute to the modernization of MA and test whether the model components improve health outcomes and lower costs for MA enrollees.”
The hospice component of the VBID Model (Hospice VBID) first became available in contract year 2021. It carves hospice benefits into an MA plan, as opposed to the alternative system of separately covering hospice benefits via Medicare fee-for-service (FFS) and covering other medical (non-hospice) services by an MA plan.
Key stakeholder objectives for Hospice VBID include:
Nine MAOs (in 206 counties) participated in 2021.
Thirteen MAOs (in 461 counties) are participating in 2022.
The CMS capitation payment for each Hospice VBID enrollee is calculated as the nationwide hospice capitation base rate multiplied by both:
The nationwide hospice capitation base rate is based on historical hospice claims costs for Medicare FFS beneficiaries, with adjustments for fee schedule changes, trend, and a small administrative cost allowance (0.09%) for claims processing.
MAOs may start their assessments for Hospice VBID participation by determining whether the capitation payments provide sufficient funding to make the benefit offering viable and sustainable. As part of that assessment, MAOs should consider any potential savings from improved coordination of end-of-life care as an additional offset for hospice program costs.
From that funding assessment, successful Hospice VBID participation and offerings require three vital characteristics of MAOs:
Underlying those critical success characteristics include the following steps:
While there may be opportunity to offer Hospice VBID, MAOs should consider potential risks, including:
Following application submission, additional crucial dates include the following:
Please note the opinions stated in this article are those of the authors and do not represent the viewpoint of Milliman.
Guidelines issued by the American Academy of Actuaries require actuaries to include their professional qualifications in all actuarial communications. The authors are members of the American Academy of Actuaries and meet the qualification standards for sharing the information in this article. To the best of their knowledge and belief, this information is complete and accurate.
This information is intended to provide a discussion of select items MAOs should consider when exploring the Hospice VBID option and considering participation in the Hospice VBID program. The list of considerations discussed in this article are not exhaustive and do not reflect the unique situations of each MAO. This information may not be appropriate, and should not be used, for other purposes. Milliman does not intend to benefit and assumes no duty of liability to parties who receive this information. Any recipient of this information should engage qualified professionals for advice appropriate to its own specific needs.
1 CMS. Medicare Advantage Value-Based Insurance Design Model. Retrieved March 23, 2022, from https://innovation.cms.gov/innovation-models/vbid.
2 CMS (September 19, 2021). Fact Sheet: Medicare Advantage Value-Based Insurance Design Model Calendar Year 2022 Model Participation. Retrieved March 23, 2022, from https://innovation.cms.gov/innovation-models/vbid.
3 CMS. Value-Based Insurance Design Model Incorporation of the Medicare Hospice Benefit Into Medicare Advantage: Calendar Year 2023 Request for Applications, page 58 (Timeline). Retrieved March 23, 2022, from https://innovation.cms.gov/media/document/cy-2023-rfa-vbid-hospice-benefit-component.