The Centers for Medicare & Medicaid Services (CMS) is releasing a Request for Applications (RFA) for eligible Medicare Advantage Organizations (MAOs) to apply to participate in the Value-Based Insurance Design (VBID) Model in Calendar Year (CY) 2025, to test innovative strategies in Medicare Advantage (MA) plan design aimed at enhancing the quality of care for Medicare beneficiaries and reducing Medicare spending.
The VBID Model tests an array of MA health plan innovations that have the potential to lower Medicare spending while improving the quality of care for people with Medicare. The most recent changes to the model announced in the CY 2025 RFA, such as requirements to offer at least two supplemental benefits in health-related social need (HRSN) focus areas (subject to certain eligibility criteria), reflect an increased focus on meeting underserved enrollees' medical and social needs. In CY 2025, CMS has put in place additional measures to better understand the drivers of potential quality improvements and cost performance (e.g., data on savings projections) to help better ensure the model generates savings for the Medicare program.
Accompanying the RFA is a Request for Information (RFI) and the Area Deprivation Index (ADI) Databook. The RFI covers two topic areas: (1) ways to advance health equity in MA through benefit design; and 2) network standards to expand access to higher quality hospice care through the VBID Model’s Hospice Benefit Component. The ADI Databook is a valuable resource for MAOs considering targeting enrollees by place of residence in the most underserved ADI areas. The ADI Databook is intended to be a static reference file showing the overlap between each MAO’s service areas and ADI in CY 2023.
Overview
The Center for Medicare and Medicaid Innovation (CMS Innovation Center), under the authority of section 1115A of the Social Security Act, established the VBID Model in January 2017, and it is scheduled to run through December 2030. The model began allowing MAOs to vary their plan benefit designs for enrollees with limited clinical conditions. Since then, the model has expanded the permissible clinical conditions and has allowed MAOs to include additional interventions representing a broad array of value-based approaches to service delivery in MA, including the targeting of enrollees by chronic condition(s), socioeconomic status, (new in CY 2025) place of residence in the most underserved ADI areas, or a combination of those criteria, and more flexibility in the use of rewards and incentives. The model was initially limited to select states but was expanded by the Bipartisan Budget Act of 2018 (Public Law No. 115-123) (BBA 2018), which required the model to allow plans in all 50 states and territories to participate beginning in CY 2020.
This core model design, which gives MAOs additional flexibilities to adjust and target their MA benefit packages, tests whether their offering of these modified benefit packages reduces costs and improves quality outcomes for enrollees. In concert with the CMS Innovation Center Strategy Refresh (PDF), the VBID Model continues evolving. The VBID Model extension announcement earlier this year includes several updates to the tested flexibilities outlined in detail below. Examples of these flexible benefits include providing healthy food/groceries to beneficiaries with a chronic condition(s), based on socioeconomic status, place of residence in the most underserved ADI areas (new in CY 2025), or a combination of those criteria, and eliminating cost-sharing for Part D prescription drugs for beneficiaries with low-incomes.
Building upon this focus on health equity, the CY 2025 RFA contains updates in alignment with the Innovation Center’s vision for a health system that achieves equitable outcomes through high-quality, affordable, and person-centered care. These include:
- Adding a new flexibility allowing MAOs to target supplemental benefits to enrollees living in the most underserved ADI areas.
- Establishing a new participation requirement that each participant (excepting those participating only in the Hospice Benefit Component) must offer a minimum of two supplemental benefits to address priority HRSNs from among the categories of food and nutrition, transportation, and/or housing and living environment.
- Leveraging the model’s learning program to provide operational assistance in health equity areas, and further refining the collection of data on VBID benefits addressing HRSNs in areas with a substantial evidence base, such as (1) food and nutrition, (2) transportation, and (3) housing and living environments (e.g., rent and utilities support).
- Continuing to require all MAOs applying to the model to submit, within their application, and receive approval for a single Health Equity Plan (HEP).
- Modifying monitoring and data collection to better support evaluation and further understanding of drivers of improved quality and cost reductions.
Additionally, the CY 2025 RFA includes certain revisions to the model participation requirements to promote participation by higher quality plans that can achieve the model goals, including producing savings for the Medicare Program:
- Adjusting participation eligibility requirements related to program integrity and compliance to better align with the MA Program and reinstitute a minimum three-star rating requirements.
- Requiring plans as part of participation to show net savings to CMS due to participation over the course of the calendar year and over the course of the model, net of risk score trends attributable to the model, as part of the financial requirement.
Notably, beginning in CY 2025, CMS may choose to limit accepted applications depending on the volume of applications.
Summary of Key Updates
Wellness and Health Care Planning (WHP): CMS remains fully committed to its partnership with MAOs to ensure that all enrollees have an equitable opportunity to complete an advance care plan. Beginning in CY 2025, CMS will streamline and restructure this relationship by discontinuing WHP as a stand-alone VBID component. Advance Care Planning (ACP) activities that were under WHP are being discontinued as a discrete element and instead will be integrated into the Health Equity Plan (HEP) required of all model participants.
Area Deprivation Index (ADI): To reach additional beneficiaries with significant HRSNs beyond Low Income Subsidy (LIS) (or dual status in the territories), CMS is adding a new flexibility to target supplemental benefits and reduced or eliminated cost sharing to enrollees living in the most underserved ADI areas.
Supplemental Benefits to Address HRSNs: VBID MAO participants (excluding those only participating in the Hospice Benefit Component) must offer in each VBID-participating PBP a minimum of two supplemental benefits from the categories of food and nutrition, transportation, or housing and living environment to address priority HRSNs.
Concurrent Care: For CY 2025, CMS is more closely aligning flexibilities for concurrent care under the VBID Model with those offered in other CMS Innovation Center models. Accordingly, under the VBID Model, “transitional concurrent care” is now referred to as “concurrent care.” By describing the VBID Model’s flexibility as “concurrent care,” CMS seeks to clarify that participating MAOs may create programs without any prescribed time-based limits on curative services, items, or drugs during a hospice election.
Eligibility Requirements: CMS is modifying eligibility requirements related to program integrity and compliance to better account for quality and align to the MA Program, including the addition of a minimum three-star overall quality Star Rating. New this year are additional requirements around cost savings, including a requirement to show net savings to CMS over the course of the calendar year and over the course of the model, net of risk score trends that are attributable to the model.
For CY 2025, the VBID Model will discontinue the following components:
Part C Rewards and Incentives (RI) Programs: Given the similar ability to offer Part C RI Programs authorized through flexibilities in the broader Part C Program outside of the model, this offering is being discontinued, as part of VBID, and is not included for CY 2025.
New and Existing Technologies: Due to limited participation, the flexibility to cover new and existing technologies and FDA-approved medical devices is being discontinued for CY 2025.
Summary of the VBID Model for 2025
For CY 2025, the VBID Model will include the following components :
- VBID Flexibilities targeted to enrollees based on chronic health condition(s), socioeconomic status, and/or place of residence in the most underserved ADI areas, including:
- Primarily and non-primarily health-related supplemental benefits.
- Use of high-value providers and/or participation in care management programs/disease management programs.
- Reductions in cost sharing for Part C items and services and covered Part D drugs.
- Part D Rewards and Incentives (RI) Programs.
- Medicare Hospice Benefit Component.
Details on the VBID Model for CY 2025
For CY 2025, CMS is testing the following health plan innovations in MA through the VBID Model.
VBID Flexibilities: For CY 2025, participating MAOs may provide non-uniform supplemental benefits (including supplemental benefits that are not primarily health related), such as reduced cost-sharing and/or additional benefits, to targeted enrollees. MAOs are also permitted to establish reduced cost-sharing for high-value providers. MAOs may target enrollees for VBID benefits and services based on the following: (1) chronic health conditions(s); (2) low-income subsidy (LIS) eligibility; (3) place of residence in the most underserved ADI areas; (4) a combination of chronic health condition(s), LIS eligibility, and/or place of residence in the most underserved ADI areas.
Hospice Benefit Component: As in prior years, the Medicare Part A hospice benefit is incorporated into MA as an optional part of the VBID Model for CY 2025. Participating MAOs may opt to participate in the Hospice Benefit Component only. CMS is testing the impact on payment and service delivery of incorporating the Medicare Part A hospice benefit into coverage by MA plans with the goal of creating a seamless care continuum for enrollees in the MA program for Part A and Part B services. As part of this model test, MAOs that participate in this component will be able to offer their enrollees additional services, including non-hospice palliative care for those not eligible for hospice care, concurrent care through in-network providers (which may help ease enrollees’ transition to hospice), and hospice supplemental benefits (which may be limited to enrollees who use in-network providers when approved by CMS) to provide additional coverage, items, services, or supplies to support enrollees in hospice.
For MAOs that apply and are accepted to be part of the Hospice Benefit Component, CMS will evaluate the impact on cost and quality of care for MA enrollees, including how the component improves quality and timely access to the hospice benefit, and the enabling of innovation through fostering partnerships between MAOs and hospice providers.
Please refer to CY 2025 VBID Hospice Benefit Component RFA and CY 2024 materials, such as the CY 2024 Hospice Capitation Payment Rate Actuarial Methodology, rate book and data book, available at https://www.cms.gov/priorities/innovation/innovation-models/vbid.
CMS will publish updated materials for CY 2025 in the future. These additional materials and resources, along with all past materials, are available on the VBID Model Hospice Benefit Component webpage: https://www.cms.gov/priorities/innovation/innovation-models/vbid/vbid-hospice-benefit-overview.
Part D Rewards and Incentive (RI) Program: MAOs offering Medicare Advantage Prescription Drug Plans (MA-PDs) participating in this model for CY 2025, will continue to be allowed to offer certain Part D RI. Based on the programmatic waivers available with model participation, participating MAOs may use Part D RI with a value that reflects the benefit of the service, rather than just the cost of the service, up to $600 annually. They may propose to use an RI program for the Part D benefit offered by a participating MA-PD plan.