Medicare Advantage Value-Based Insurance Design Model Frequently Asked Questions About the End of the Model

Why is CMS terminating the Value-Based Insurance Design (VBID) model?
The Centers for Medicare & Medicaid Services (CMS) is terminating the Medicare Advantage (MA) Value-Based Insurance Design (VBID) Model at the end of 2025 due to the model’s substantial and unmitigable costs to the Medicare Trust Funds. Excess costs to the Medicare Trust Funds of this magnitude — $2.3 billion in Calendar Year (CY) 2021 and $2.2 billion in CY 2022 associated with the VBID model, based on the prior and forthcoming evaluation reports, respectively — are unprecedented in CMS Innovation Center models. Additional analyses of model performance and policy options demonstrated that these substantial costs were driven in part by increased risk score growth and Part D expenditures and that no viable policy modifications could address these excess costs. As such, the model must be terminated at the end of 2025 to meet the CMS Innovation Center’s statutory requirements.
What were the findings of the forthcoming evaluation report and the additional analyses conducted by CMS?
Alongside this announcement, CMS published an executive summary of the forthcoming evaluation report, in advance of the release of the full report in early 2025. This forthcoming evaluation confirmed that the VBID model was associated with substantially increased costs to the Medicare Trust Funds, driven in part by increased risk scores in participating MA plans. The model’s cost to the Medicare Trust Funds is estimated to be $2.2 billion in CY 2022, on top of the estimated $2.3 billion in costs in CY 2021 based on the prior report, which is unprecedented for CMS Innovation Center models. CMS also released additional analyses of VBID risk score impact by intervention and plan type, as well as the impact of various risk score factors. These analyses found that although the magnitude of association varied, the enrollee risk score increase associated with VBID was seen across VBID interventions and plan types. MA plan participation in VBID was also associated with an increase in the number of Hierarchical Condition Category (HCC) diagnoses for certain enrollees that are factored into risk scores, including conditions that were and were not targeted for VBID interventions. Notably, CMS found no evidence to conclude that the increased costs of the model were associated with the offering of interventions that address health-related social needs (HRSNs).
Why is CMS announcing the termination of the VBID model now instead of trying to make changes to the model or waiting for additional evaluation results?
In a December 2023 blog post, CMS summarized findings from the 2023 VBID evaluation report and indicated that the evaluation results would continue to be reviewed closely, and that additional model changes or model termination might be possible in the future. To be responsive to initial cost concerns, CMS made changes to the VBID model for CY 2025 (e.g., using a competitive application process). Since the release of the 2023 evaluation report and the December 2023 blog post, the CMS Innovation Center continued to review the model, conducting additional analyses and examining new data from the forthcoming evaluation report covering performance years 2020 through 2023. In its review, CMS found that in addition to the previously estimated $2.3 billion in costs associated with the model for CY 2021, VBID was associated with a $2.2 billion cost to the Medicare Trust Funds in CY 2022 — an unprecedented cost trend in Innovation Center models.
The statute authorizing CMS to test innovative payment and service delivery models requires CMS to either terminate or make changes to models that are expected to increase costs to the Medicare program. Given consistent evaluation report findings of significantly increased costs associated with the VBID model, combined with unsuccessful efforts to consider policy options to mitigate losses, CMS sees no viable modifications that could address the substantial costs associated with the model. Therefore, the VBID model will terminate at the end of CY 2025, in accordance with the law.
How does CMS plan to support enrollees most impacted by the VBID model’s termination?
CMS is committed to working with plans, enrollees, and others to support a stable transition for all those affected by the VBID model’s termination. CMS announced termination at this time to provide ample notice to MA plans and other partners, allowing time for plans to prepare for CY 2026. Additionally, CMS will coordinate closely with beneficiary and consumer advocacy groups and the State Health Insurance Assistance Programs to assist beneficiaries in the 2026 Open Enrollment Season.
What is CMS’ vision for the future of the MA program?
The VBID model’s requirements regarding supplemental benefits, health equity plans, and reporting on HRSN screening outcomes enabled plans to prioritize addressing HRSNs and advancing whole-person health. CMS looks forward to building on these achievements to continue to provide high-value benefits to beneficiaries. Additionally, CMS will continue to make drugs more affordable for millions of Americans, by continuing to implement improvements to the Part D benefit through provisions included in the Inflation Reduction Act and through the proposed Medicare $2 Drug List Model, which CMS aims to start in January 2027. Informed by the experience in the VBID model, CMS will also explore innovations that not only advance whole-person health, enhance transparency, and promote drug affordability but also address rising costs and protect the Medicare Trust Funds.

Medicare Advantage Value-Based Insurance Design Model Frequently Asked Questions About the End of the Model

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