February 14, 2025 • 18 mins
Let us know what you think about Health Affairs podcasts at communications@healthaffairs.org. If you have 30 minutes to spare, let us know and we'll set up a 30-minute chat for the first 20 listeners that reach out. Coffee will be on us.
Health Affairs' Jeff Byers welcomes Mark Fendrick of The University of Michigan's Center for Value-Based Insurance Design (VBID) to discuss the recent announcement from CMS that the Medicare Advantage VBID model would be ending after 2025, and what the future holds for VBID moving forward with the new Trump administration.
Check out a recently released Health Policy brief from Nathaniel Tran and Gilbert Gonzales exploring LGBTQI+ policies.
Join Health Affairs on February 25 for an exclusive Insider virtual event featuring Stacie Dusetzina and Laura Tollen discussing HHS’s announcement of the 15 additional drugs selected for Medicare drug price negotiations, including weight-loss drugs such as Ozempic and Wegovy.
Also, join a live recording of A Health Podyssey on March 12 featuring Rob Lott and Yashaswini Singh discussing her recent paper on the effect of private equity on physician turnover. Register for the live taping here.
Related Articles:
- The End Of The MA Value-Based Insurance Design Model: What Next? (Health Affairs Forefront)
- V-BID X: Creating A Value-Based Insurance Design Plan For The Exchange Market (Health Affairs Forefront)
- Medicare Advantage Value-Based Insurance Design (VBID) Model to End after Calendar Year 2025 (CMS)
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Jeff Byers (00:39):
Hello and welcome to Health Affairs This Week. I am
your host, Jeff Byers. We'rerecording on 02/06/2025. Before
we begin, I wanted to remindlisteners that we released a new
health policy brief last weektitled implications of public
policies for LGBTQI pluspopulation health in The US.
Check that out.
(00:59):
Also, coming up this month, wehave an insider event where
Stacy Dusetzina and Laura Tolanwill host a thirty minute
virtual event outlining the newdrugs at the Medicare
negotiating table. This eventwill feature a fifteen minute q
and a with Stacy and Laura aswell. So if you're into that,
please check the show notes andsign up for that. And if you're
into podcasts, and I know youare, since you're listening, we
(01:21):
are going to be doing a livetaping of A Health Policy, our
other show, on March 12. RobLott will chat with Yashaswini
Singh on her upcoming paper inthe March issue of Health
Affairs discussing, privateequity's effect on physician
turnover.
So we'll be taping that on March12, and you can, come listen,
submit questions, and all thatgood stuff. And then we'll
(01:43):
publish the episode on ourregular channel afterwards. So,
something new, I would try them.It'll be interesting to see.
Please show up.
And today to discuss value basedinsurance design, I'm joined by
Mark Fendrick from theUniversity of Michigan's Center
for Value Based InsuranceDesign. Mark, welcome to the
program.
Mark Fendrick (02:03):
It's a pleasure to be here.
Jeff Byers (02:04):
Yeah. So you are wearing we're recording this on
February 6, and you are wearingPhiladelphia Eagles, some swag.
So either by the time listenershear this, you're gonna be very
happy or very disappointed. Sodo you wanna give any quick,
either or scenarios or soundbites of what we can use just in
case of what happens?
Mark Fendrick (02:22):
No. Exactly right. Fly eagles fly.
Jeff Byers (02:24):
Fantastic. So, the news of the week that we're
discussing is, the MedicareAdvantage value based insurance
design is set to end thiscalendar year. So, you have been
noted as the godfather of valuebased insurance design. So why
VBID? What can you tell us aboutVBID?
Mark Fendrick (02:42):
Yeah. Before we talk about the unwinding, Jeff,
I think it's really important totalk about the motivation for
value based insurance design andparticularly in the Medicare
program. So although many folkswho are not in Medicare like
yourself think that once you ageinto the program or have
disability needs to be in theprogram that you're no longer
have financial obligations atthe point of service. Turns out
(03:04):
that one third of Medicarebeneficiaries report it was very
difficult to afford health carecosts, and it's well established
that out of pocket cost relatednon adherence leads to lower use
of those services I beg mypatients to do, potentially
leading to future healthcomplications and greater
spending over time. So we haveworked not only in the Medicare
(03:25):
space, but my colleague, MichaelChernu, and I of Harvard Medical
School have been trying tomitigate the impact of these out
of pocket costs and structuralbarriers, and basically came up
with this idea of value basedinsurance design.
But instead of setting consumercost sharing based on the cost
of the service, such that cheapthings are cheap and expensive
things are expensive, in valuebased insurance design, cost
(03:46):
sharing is set such that highvalue services, the out of
pocket costs are low or none,and cost sharing would then be
added on to those services thatdon't make Americans healthier.
Medicare has implemented severalVBID programs in addition to the
MA VBID demo, some of which,your listeners know about, the
Affordable Care Act provisionthat eliminates cost sharing for
(04:09):
specific preventive services. Alot of people know about the $35
monthly out of pocket cap oninsulin products. And very
excited we're a month into the$2,000 maximum out of pocket
expense cap for those inMedicare who use prescription
drugs. So anything that lowersout of pocket cost burden for
the things that make peoplehealthier would fall typically
(04:29):
into the v bid realm.
Jeff Byers (04:31):
And so what's different with this MA version
or this MA model?
Mark Fendrick (04:35):
The MA v bid model, when implemented almost a
decade ago, was the first everto allow Medicare Advantage
Plans to lower cost sharing forspecific services or specific
providers as opposed to what hadbeen classic in Medicare is
something called uniform benefitdesign. So you realize that some
(04:57):
people may benefit from acertain type of screening, or
diabetic patients may benefitmore from an eye exam than those
without diabetes. But because ofthe uniformity rule, which was
implemented in 1965, it wasimpossible to say, I'm gonna
make it easier for you becauseyou have heart disease or you
have cancer or you have diabetesto get a certain service than
(05:17):
someone who doesn't. So this wasin fact the motivation in the
fact that we wanted to haveeasier access for certain
services for certain people asopposed to making it blunt for
everyone else. The issue, ofcourse, with any model under the
Centers for Medicare andMedicaid Innovation or CMMI is
(05:37):
that the regulation state veryclearly that CMS has to
terminate models that increasecost to the Medicare program.
And the evaluations of the MAVbid model show significantly
increased cost, billions ofdollars, in fact, leaving CMS no
viable option to continue. Iwill say, Jeff, the key point
(05:59):
here to me is, one, is I did notgo to medical school to learn
how to save people money.Uh-huh. And second, really
importantly, is that all of thespecific services that we
incentivize in the MA VBIDmodel, whether it be clinician
visits, drugs, diagnostic tests,all of those things, Jeff, are
cost effective, meaning you haveto spend money to get the
(06:21):
health. And very, very, very,very few things in medical care
save lives and saves money.
So I've waited for a decade tobe able to say on your show, my
colleague Michael Chernu hassaid for years to kind of temper
down the idea that anything thatleads to more utilization of
high value services will savemoney. He would say, remember
(06:43):
that if you buy more things thatdon't save money, you will not
save money. And I'll explainwhy, the reasons why the MAB bid
model cost, CMS so much. Butthis was absolutely no surprise
to us, and we completelypredicted from the beginning
that, again, increasing accessto services that don't save
money would be highly likely tosave money.
Jeff Byers (07:05):
Right. Yeah. From the actual, press release, I
believe, CMS noted the excesscost of this model were, quote,
unprecedented in CMS innovativecenter models. And they noted
that cost for 2,300,000,000.0and 2,200,000,000.0 in recent
years. So, yeah, can you go overwhy, you might be seeing that
(07:28):
kind of thing?
Mark Fendrick (07:29):
So let me first, because I went to med school to
make people healthier as opposedto save or make people money, I
just wanna make sure it'sextremely clear that the
evaluations of the MAV BITprogram report that the main
goals, at least for me, that,improved adherence to high value
services and better patientoutcomes were achieved. Right?
So we don't know exactly whetherthat $4,000,000,000 that you
(07:54):
cite was high or low value forthe health benefits that we
actually gained, but that wouldbe the evaluation that I would
argue for. So for instance, Iknow everyone who reads health
affairs and and follows all thehealth, Affairs podcasts and
programs are aware of the factthat we have these very high
(08:14):
cost but high value prescriptiondrugs to treat obesity. And if
you look at the numbers from theCongressional Budget Office,
kind of the same type of peoplewho presented that
$4,000,000,000 that you gave, weknow that to achieve these
healthcare goals, it costs usincremental dollars to do that.
So we have to figure out, is itworth the 4,000,000,000, in my
(08:35):
opinion, on the MAV bidemo interms of the health care gains
that we achieved? But to answeryour specific question about the
financial implications of the MAVBID model, there are really two
main drivers for the addedexpenditures to the Medicare
trust funds. First is riskadjustment, and the second is
higher plan rebate payments. I'mnot gonna go into the very kind
(09:00):
of sophisticated and complicatedformulas that CMS uses to pay MA
plans based on risk adjustment,But it should come as no
surprise given that particularlyearly on, the MA VBID
demonstration focused onspecific chronic conditions that
MA plans actually sought toidentify individuals who had
(09:21):
those conditions. And giventhose conditions often led to
higher spending, these patientsalso had higher risk scores,
which again led to CMS payinghigher payments.
The point about the risk scoresis really important because as a
clinician, if the accuratecoding of these chronic disease
patients actually led tointerventions that led to better
(09:43):
health, I think that spending onrisk scoring is quite good.
However, if these coding changeswere just to identify patients
who are already getting thosetreatments but to lead to higher
revenues or payments, thatspending, in my opinion, is not
beneficial. So what we don'tknow, Jeff, is whether we'll get
to rebates in a second, the samereason. We don't know that these
(10:04):
billions of dollars going outare actually helping patients or
just helping the plants.
Jeff Byers (10:09):
And, you know, one thing that you just mentioned
struck a chord with me, andmaybe it's related, maybe it's
not, you can let me know, isthat there has been some fraud
in the MA marketplace. I believewe had another podcast on that
recently. Are these thingsrelated?
Mark Fendrick (10:25):
Again, I I I follow the issues of fraud,
waste, and abuse in Medicare andcommercial plans quite closely.
Like all things, and it ties tothe idea of value based
insurance design, it depends. Noone really knows just yet what
has been the health outcomestied to the coding. We know the
coding is real. So if you see acode that someone's getting some
intervention that's supposed tohappen every ten years, like a
(10:47):
colonoscopy, and gets it everymonth, that would certainly
raise a fraud red flag.
But if in the case of a verycommon disease condition that
fell under the MAV bid model,If, more patients were screened
for, diagnosed with, and treatedwell for diabetes, for instance,
right, those interventions areall cost effective and not cost
(11:08):
saving. So if you told me that apopulation of either undiagnosed
or not completely well treateddiabetic patients had better
quality metrics and outcomes andled to increased spending on
those things, I would say that'sa terrific outcome. If the
process only led to people whoare already well controlled in
diabetes getting upcoded forthings that they had not been
(11:30):
coded for previously, I'm lessenthusiastic about the clinical
benefits of that additionalspend.
Jeff Byers (11:36):
Well, we can get into rebates or we can discuss
you mentioned at the top of theprogram a lot of different VBID
designs, and then we're talkingabout the sunsetting of the MA
model. What is actually workingin those other models?
Mark Fendrick (11:49):
If you look specifically that if you make
people pay less for something,they buy more of it, and you
want people to buy more of thosethings, which is the basic tenet
of VBID programs, we have seennot only in Medicare that there
is now a robust evidence base,Jeff, that, you know, as my my
mother said, you know, this isreally a a question that doesn't
(12:10):
need to be researched. But infact, because there are people
who are somewhat skeptical aboutthe role of out of pocket costs,
it should come as no surprisethat there is a robust benefit
base that demonstrates that VBIDinterventions that lower out of
pocket costs increase adherenceto high value services, reduce
disparities because those whobenefit most from reductions in
(12:30):
cost sharing are those whotypically are financially
insecure or for underservedpopulations. And most
importantly, the studies thatlook specifically at patient
centered outcomes show that themore people use things that are
supposedly very good for theirhealth, the healthier they are.
What's really interesting isthat as much as I would like to
think that these VBID programswere actually lower
expenditures, it's only in veryrare circumstances that if you
(12:53):
buy more things that save money,you'll actually save money.
And our initial actuarialmodeling that we did for CMMI
and others before the MA VBIDmodel was actually introduced,
there are some situations likeclinical chronic conditions like
congestive heart failure thathave high rates of preventable
hospitalizations. So becausethose offsets are easily
determined and measurable, thosewould be the interventions,
(13:14):
Jeff, I'd say, if you need tosave money, go on specific
areas. But if you look at otherconditions, like diabetes, for
instance, you get close to costneutrality, but the more people
you find, particularly thosewith mild diabetes with very few
offsets, it takes a very, verylong time to incur savings for
the incremental costs you madeto make them healthier, which I
(13:35):
would want us to do anywayregardless if it saved money or
not.
Jeff Byers (13:38):
Well, as we wrap up our discussion quickly on the
VBID portion, like, what's next?What what can we expect here?
Mark Fendrick (13:44):
What you'll see in the press release from CMMI
regarding the unwinding the MAVBID demo, I think they infer,
if not explicitly say, that thisis not the end of value based
insurance design. And for thosewho filed the MA VIBIT demo,
there were a lot of things thatwere not classically considered
value based insurance design,but things we're very excited
(14:05):
about, like food is medicine andtransportation. But there's ways
to make the MAV demo better.One, by, allowing a longer time
period to assess those clinicaloffsets that save money. And
second, which I think is veryimportant, is that the initial
regulations around the MA V BIDmodel did not allow any
implementations of things tospend less on the things we
(14:27):
shouldn't be buying.
So there's a lot of interest inthe current administration
around the measurement andreduction of low value care
because, for better or forworse, there's billions of
dollars that Medicare spends,Jeff, that I wouldn't buy even
if it were free. So the way toget the MAV bid model to cost
neutral is not to wait twentyyears to prevent a heart attack,
(14:48):
but stop buying those thingslike pre op testing for low risk
surgery or back imaging forpeople who need physical therapy
and allowing us to rob low valuecare Peter to pay high value
care Paul is a way to make thatmove forward. The other thing,
too really worth mentioning isin the first Trump
administration, we kind ofapplied this more of the good
(15:10):
stuff, less of the bad stuff ina concept called VBID x. There's
a nice, health affairs forefrontthat describes this idea that
you sit down with clinicians,patients, and actuaries, and you
put some things in the highvalue column and make them less
expensive, understanding yourcost will go up, and you use
those actuaries to make, benefitdesign and payment in such a way
(15:32):
that every dollar you spend moreon, say, insulin, the less you
spend on things you don't need,like vitamin d testing.
Jeff Byers (15:38):
Yeah. We'll put the link to that forefront piece in
the show notes. That that was aprevious piece, and I know you
have another piece on rebatesand risk scoring to be published
next week, but it's this week.Like, we're recording on the
sixth. It's supposed to bepublished next week.
So we'll also put a link in theshow notes for that. As we wrap
(15:59):
up, you mentioned the firstTrump administration. So you
focus have focused your careeron out of pocket costs. Is there
anything that you can tell usthat you forecast for the second
Trump administration that mightrelate to out of pocket cost?
Mark Fendrick (16:14):
Yeah. As anything about this administration ties
to one of my favorite quotesfrom Yogi Berra, who said
predictions are dangerous,particularly those about the
future. But I I will say that,the first Trump administration
did implement, particular VBIDpolicies that lowered out of
pocket costs. Many people don'tknow that the $35 insulin co pay
cap for which the Biden Harrisadministration talked a lot
(16:37):
about was actually implementedas a pilot, in the Trump
administration called the Part dSenior Savings Model. They also
implemented for commercial plansIRS notice 02/2019 dash '45,
which allowed for the first timecertain high deductible health
plans to cover specific chronicdisease services, including
several medication classesbefore the plan was deductible
(16:59):
was met, and this impactedmillions of Americans who were
able to get those services atusual cost sharing as opposed to
having paid full price ifdeductible still exists.
We also hope that the Trumpadministration will implement
Medicare's $2 drug list model,which was announced in the
previous administration, whichoffers low cost and standardized
(17:20):
prices for over a hundredgeneric drugs that just about
everyone in Medicare who takesany drug uses. So we're
optimistic as, you know, theTrump administration has always
said that lowering prescriptiondrug costs was a priority, and,
we hope to build on not onlywhat they did in the first
administration, but to find thisvery, very rare, Jeff,
(17:41):
bipartisan political support fora health care idea that patients
shouldn't have to have a bakesale to afford their insulin,
nor they should have an onlinefundraiser to pay for a cancer
drug that was designed to treattheir tumor. So we're optimistic
we'll make incremental steps tolower out of pocket costs while
the grown ups argue what theprices should actually be.
Jeff Byers (18:02):
Well, thanks for that. As, as former editors of
my work know when asking aboutif I'm gonna hit a deadline, You
know, the answer is the samewith this. Time will tell. So
with that, Mark Fendrick, thankyou for joining us today on
Health Fairs This Week. If you,the listener, enjoyed this
episode with references to theEagles and Yogi Berra, send it
(18:23):
to the Draft King in your life.
Thanks, and we look forward toseeing you next week.
Mark Fendrick (18:27):
Thanks so much for having me.
Hello and welcome to Health Affairs This Week. I am
your host, Jeff Byers. We'rerecording on 02/06/2025. Before
we begin, I wanted to remindlisteners that we released a new
health policy brief last weektitled implications of public
policies for LGBTQI pluspopulation health in The US.
Check that out.
(00:59):
Also, coming up this month, wehave an insider event where
Stacy Dusetzina and Laura Tolanwill host a thirty minute
virtual event outlining the newdrugs at the Medicare
negotiating table. This eventwill feature a fifteen minute q
and a with Stacy and Laura aswell. So if you're into that,
please check the show notes andsign up for that. And if you're
into podcasts, and I know youare, since you're listening, we
(01:21):
are going to be doing a livetaping of A Health Policy, our
other show, on March 12. RobLott will chat with Yashaswini
Singh on her upcoming paper inthe March issue of Health
Affairs discussing, privateequity's effect on physician
turnover.
So we'll be taping that on March12, and you can, come listen,
submit questions, and all thatgood stuff. And then we'll
(01:43):
publish the episode on ourregular channel afterwards. So,
something new, I would try them.It'll be interesting to see.
Please show up.
And today to discuss value basedinsurance design, I'm joined by
Mark Fendrick from theUniversity of Michigan's Center
for Value Based InsuranceDesign. Mark, welcome to the
program.
Mark Fendrick (02:03):
It's a pleasure to be here.
Jeff Byers (02:04):
Yeah. So you are wearing we're recording this on
February 6, and you are wearingPhiladelphia Eagles, some swag.
So either by the time listenershear this, you're gonna be very
happy or very disappointed. Sodo you wanna give any quick,
either or scenarios or soundbites of what we can use just in
case of what happens?
Mark Fendrick (02:22):
No. Exactly right. Fly eagles fly.
Jeff Byers (02:24):
Fantastic. So, the news of the week that we're
discussing is, the MedicareAdvantage value based insurance
design is set to end thiscalendar year. So, you have been
noted as the godfather of valuebased insurance design. So why
VBID? What can you tell us aboutVBID?
Mark Fendrick (02:42):
Yeah. Before we talk about the unwinding, Jeff,
I think it's really important totalk about the motivation for
value based insurance design andparticularly in the Medicare
program. So although many folkswho are not in Medicare like
yourself think that once you ageinto the program or have
disability needs to be in theprogram that you're no longer
have financial obligations atthe point of service. Turns out
(03:04):
that one third of Medicarebeneficiaries report it was very
difficult to afford health carecosts, and it's well established
that out of pocket cost relatednon adherence leads to lower use
of those services I beg mypatients to do, potentially
leading to future healthcomplications and greater
spending over time. So we haveworked not only in the Medicare
(03:25):
space, but my colleague, MichaelChernu, and I of Harvard Medical
School have been trying tomitigate the impact of these out
of pocket costs and structuralbarriers, and basically came up
with this idea of value basedinsurance design.
But instead of setting consumercost sharing based on the cost
of the service, such that cheapthings are cheap and expensive
things are expensive, in valuebased insurance design, cost
(03:46):
sharing is set such that highvalue services, the out of
pocket costs are low or none,and cost sharing would then be
added on to those services thatdon't make Americans healthier.
Medicare has implemented severalVBID programs in addition to the
MA VBID demo, some of which,your listeners know about, the
Affordable Care Act provisionthat eliminates cost sharing for
(04:09):
specific preventive services. Alot of people know about the $35
monthly out of pocket cap oninsulin products. And very
excited we're a month into the$2,000 maximum out of pocket
expense cap for those inMedicare who use prescription
drugs. So anything that lowersout of pocket cost burden for
the things that make peoplehealthier would fall typically
(04:29):
into the v bid realm.
Jeff Byers (04:31):
And so what's different with this MA version
or this MA model?
Mark Fendrick (04:35):
The MA v bid model, when implemented almost a
decade ago, was the first everto allow Medicare Advantage
Plans to lower cost sharing forspecific services or specific
providers as opposed to what hadbeen classic in Medicare is
something called uniform benefitdesign. So you realize that some
(04:57):
people may benefit from acertain type of screening, or
diabetic patients may benefitmore from an eye exam than those
without diabetes. But because ofthe uniformity rule, which was
implemented in 1965, it wasimpossible to say, I'm gonna
make it easier for you becauseyou have heart disease or you
have cancer or you have diabetesto get a certain service than
(05:17):
someone who doesn't. So this wasin fact the motivation in the
fact that we wanted to haveeasier access for certain
services for certain people asopposed to making it blunt for
everyone else. The issue, ofcourse, with any model under the
Centers for Medicare andMedicaid Innovation or CMMI is
(05:37):
that the regulation state veryclearly that CMS has to
terminate models that increasecost to the Medicare program.
And the evaluations of the MAVbid model show significantly
increased cost, billions ofdollars, in fact, leaving CMS no
viable option to continue. Iwill say, Jeff, the key point
(05:59):
here to me is, one, is I did notgo to medical school to learn
how to save people money.Uh-huh. And second, really
importantly, is that all of thespecific services that we
incentivize in the MA VBIDmodel, whether it be clinician
visits, drugs, diagnostic tests,all of those things, Jeff, are
cost effective, meaning you haveto spend money to get the
(06:21):
health. And very, very, very,very few things in medical care
save lives and saves money.
So I've waited for a decade tobe able to say on your show, my
colleague Michael Chernu hassaid for years to kind of temper
down the idea that anything thatleads to more utilization of
high value services will savemoney. He would say, remember
(06:43):
that if you buy more things thatdon't save money, you will not
save money. And I'll explainwhy, the reasons why the MAB bid
model cost, CMS so much. Butthis was absolutely no surprise
to us, and we completelypredicted from the beginning
that, again, increasing accessto services that don't save
money would be highly likely tosave money.
Jeff Byers (07:05):
Right. Yeah. From the actual, press release, I
believe, CMS noted the excesscost of this model were, quote,
unprecedented in CMS innovativecenter models. And they noted
that cost for 2,300,000,000.0and 2,200,000,000.0 in recent
years. So, yeah, can you go overwhy, you might be seeing that
(07:28):
kind of thing?
Mark Fendrick (07:29):
So let me first, because I went to med school to
make people healthier as opposedto save or make people money, I
just wanna make sure it'sextremely clear that the
evaluations of the MAV BITprogram report that the main
goals, at least for me, that,improved adherence to high value
services and better patientoutcomes were achieved. Right?
So we don't know exactly whetherthat $4,000,000,000 that you
(07:54):
cite was high or low value forthe health benefits that we
actually gained, but that wouldbe the evaluation that I would
argue for. So for instance, Iknow everyone who reads health
affairs and and follows all thehealth, Affairs podcasts and
programs are aware of the factthat we have these very high
(08:14):
cost but high value prescriptiondrugs to treat obesity. And if
you look at the numbers from theCongressional Budget Office,
kind of the same type of peoplewho presented that
$4,000,000,000 that you gave, weknow that to achieve these
healthcare goals, it costs usincremental dollars to do that.
So we have to figure out, is itworth the 4,000,000,000, in my
(08:35):
opinion, on the MAV bidemo interms of the health care gains
that we achieved? But to answeryour specific question about the
financial implications of the MAVBID model, there are really two
main drivers for the addedexpenditures to the Medicare
trust funds. First is riskadjustment, and the second is
higher plan rebate payments. I'mnot gonna go into the very kind
(09:00):
of sophisticated and complicatedformulas that CMS uses to pay MA
plans based on risk adjustment,But it should come as no
surprise given that particularlyearly on, the MA VBID
demonstration focused onspecific chronic conditions that
MA plans actually sought toidentify individuals who had
(09:21):
those conditions. And giventhose conditions often led to
higher spending, these patientsalso had higher risk scores,
which again led to CMS payinghigher payments.
The point about the risk scoresis really important because as a
clinician, if the accuratecoding of these chronic disease
patients actually led tointerventions that led to better
(09:43):
health, I think that spending onrisk scoring is quite good.
However, if these coding changeswere just to identify patients
who are already getting thosetreatments but to lead to higher
revenues or payments, thatspending, in my opinion, is not
beneficial. So what we don'tknow, Jeff, is whether we'll get
to rebates in a second, the samereason. We don't know that these
(10:04):
billions of dollars going outare actually helping patients or
just helping the plants.
Jeff Byers (10:09):
And, you know, one thing that you just mentioned
struck a chord with me, andmaybe it's related, maybe it's
not, you can let me know, isthat there has been some fraud
in the MA marketplace. I believewe had another podcast on that
recently. Are these thingsrelated?
Mark Fendrick (10:25):
Again, I I I follow the issues of fraud,
waste, and abuse in Medicare andcommercial plans quite closely.
Like all things, and it ties tothe idea of value based
insurance design, it depends. Noone really knows just yet what
has been the health outcomestied to the coding. We know the
coding is real. So if you see acode that someone's getting some
intervention that's supposed tohappen every ten years, like a
(10:47):
colonoscopy, and gets it everymonth, that would certainly
raise a fraud red flag.
But if in the case of a verycommon disease condition that
fell under the MAV bid model,If, more patients were screened
for, diagnosed with, and treatedwell for diabetes, for instance,
right, those interventions areall cost effective and not cost
(11:08):
saving. So if you told me that apopulation of either undiagnosed
or not completely well treateddiabetic patients had better
quality metrics and outcomes andled to increased spending on
those things, I would say that'sa terrific outcome. If the
process only led to people whoare already well controlled in
diabetes getting upcoded forthings that they had not been
(11:30):
coded for previously, I'm lessenthusiastic about the clinical
benefits of that additionalspend.
Jeff Byers (11:36):
Well, we can get into rebates or we can discuss
you mentioned at the top of theprogram a lot of different VBID
designs, and then we're talkingabout the sunsetting of the MA
model. What is actually workingin those other models?
Mark Fendrick (11:49):
If you look specifically that if you make
people pay less for something,they buy more of it, and you
want people to buy more of thosethings, which is the basic tenet
of VBID programs, we have seennot only in Medicare that there
is now a robust evidence base,Jeff, that, you know, as my my
mother said, you know, this isreally a a question that doesn't
(12:10):
need to be researched. But infact, because there are people
who are somewhat skeptical aboutthe role of out of pocket costs,
it should come as no surprisethat there is a robust benefit
base that demonstrates that VBIDinterventions that lower out of
pocket costs increase adherenceto high value services, reduce
disparities because those whobenefit most from reductions in
(12:30):
cost sharing are those whotypically are financially
insecure or for underservedpopulations. And most
importantly, the studies thatlook specifically at patient
centered outcomes show that themore people use things that are
supposedly very good for theirhealth, the healthier they are.
What's really interesting isthat as much as I would like to
think that these VBID programswere actually lower
expenditures, it's only in veryrare circumstances that if you
(12:53):
buy more things that save money,you'll actually save money.
And our initial actuarialmodeling that we did for CMMI
and others before the MA VBIDmodel was actually introduced,
there are some situations likeclinical chronic conditions like
congestive heart failure thathave high rates of preventable
hospitalizations. So becausethose offsets are easily
determined and measurable, thosewould be the interventions,
(13:14):
Jeff, I'd say, if you need tosave money, go on specific
areas. But if you look at otherconditions, like diabetes, for
instance, you get close to costneutrality, but the more people
you find, particularly thosewith mild diabetes with very few
offsets, it takes a very, verylong time to incur savings for
the incremental costs you madeto make them healthier, which I
(13:35):
would want us to do anywayregardless if it saved money or
not.
Jeff Byers (13:38):
Well, as we wrap up our discussion quickly on the
VBID portion, like, what's next?What what can we expect here?
Mark Fendrick (13:44):
What you'll see in the press release from CMMI
regarding the unwinding the MAVBID demo, I think they infer,
if not explicitly say, that thisis not the end of value based
insurance design. And for thosewho filed the MA VIBIT demo,
there were a lot of things thatwere not classically considered
value based insurance design,but things we're very excited
(14:05):
about, like food is medicine andtransportation. But there's ways
to make the MAV demo better.One, by, allowing a longer time
period to assess those clinicaloffsets that save money. And
second, which I think is veryimportant, is that the initial
regulations around the MA V BIDmodel did not allow any
implementations of things tospend less on the things we
(14:27):
shouldn't be buying.
So there's a lot of interest inthe current administration
around the measurement andreduction of low value care
because, for better or forworse, there's billions of
dollars that Medicare spends,Jeff, that I wouldn't buy even
if it were free. So the way toget the MAV bid model to cost
neutral is not to wait twentyyears to prevent a heart attack,
(14:48):
but stop buying those thingslike pre op testing for low risk
surgery or back imaging forpeople who need physical therapy
and allowing us to rob low valuecare Peter to pay high value
care Paul is a way to make thatmove forward. The other thing,
too really worth mentioning isin the first Trump
administration, we kind ofapplied this more of the good
(15:10):
stuff, less of the bad stuff ina concept called VBID x. There's
a nice, health affairs forefrontthat describes this idea that
you sit down with clinicians,patients, and actuaries, and you
put some things in the highvalue column and make them less
expensive, understanding yourcost will go up, and you use
those actuaries to make, benefitdesign and payment in such a way
(15:32):
that every dollar you spend moreon, say, insulin, the less you
spend on things you don't need,like vitamin d testing.
Jeff Byers (15:38):
Yeah. We'll put the link to that forefront piece in
the show notes. That that was aprevious piece, and I know you
have another piece on rebatesand risk scoring to be published
next week, but it's this week.Like, we're recording on the
sixth. It's supposed to bepublished next week.
So we'll also put a link in theshow notes for that. As we wrap
(15:59):
up, you mentioned the firstTrump administration. So you
focus have focused your careeron out of pocket costs. Is there
anything that you can tell usthat you forecast for the second
Trump administration that mightrelate to out of pocket cost?
Mark Fendrick (16:14):
Yeah. As anything about this administration ties
to one of my favorite quotesfrom Yogi Berra, who said
predictions are dangerous,particularly those about the
future. But I I will say that,the first Trump administration
did implement, particular VBIDpolicies that lowered out of
pocket costs. Many people don'tknow that the $35 insulin co pay
cap for which the Biden Harrisadministration talked a lot
(16:37):
about was actually implementedas a pilot, in the Trump
administration called the Part dSenior Savings Model. They also
implemented for commercial plansIRS notice 02/2019 dash '45,
which allowed for the first timecertain high deductible health
plans to cover specific chronicdisease services, including
several medication classesbefore the plan was deductible
(16:59):
was met, and this impactedmillions of Americans who were
able to get those services atusual cost sharing as opposed to
having paid full price ifdeductible still exists.
We also hope that the Trumpadministration will implement
Medicare's $2 drug list model,which was announced in the
previous administration, whichoffers low cost and standardized
(17:20):
prices for over a hundredgeneric drugs that just about
everyone in Medicare who takesany drug uses. So we're
optimistic as, you know, theTrump administration has always
said that lowering prescriptiondrug costs was a priority, and,
we hope to build on not onlywhat they did in the first
administration, but to find thisvery, very rare, Jeff,
(17:41):
bipartisan political support fora health care idea that patients
shouldn't have to have a bakesale to afford their insulin,
nor they should have an onlinefundraiser to pay for a cancer
drug that was designed to treattheir tumor. So we're optimistic
we'll make incremental steps tolower out of pocket costs while
the grown ups argue what theprices should actually be.
Jeff Byers (18:02):
Well, thanks for that. As, as former editors of
my work know when asking aboutif I'm gonna hit a deadline, You
know, the answer is the samewith this. Time will tell. So
with that, Mark Fendrick, thankyou for joining us today on
Health Fairs This Week. If you,the listener, enjoyed this
episode with references to theEagles and Yogi Berra, send it
(18:23):
to the Draft King in your life.
Thanks, and we look forward toseeing you next week.
Mark Fendrick (18:27):
Thanks so much for having me.
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