CMS to End VBID Model in 2025: What It Means for Medicare Advantage Plans and Agents

The Centers for Medicare & Medicaid Services (CMS) recently announced the termination of the Medicare Advantage (MA) Value-Based Insurance Design (VBID) model, set to end on December 31, 2025. While the VBID model brought innovative strategies to improve care quality and access for Medicare beneficiaries, its substantial costs to the Medicare Trust Funds ultimately led to this decision. Here’s what agents, enrollees, and the Medicare community need to know about this development.

Why CMS is Ending the VBID Model

Since its launch in 2017, the VBID model aimed to enhance care for chronically ill and underserved populations through interventions like targeted benefits, reduced prescription drug cost-sharing, and supplemental services. However, evaluation reports for 2021 and 2022 revealed that the model incurred unprecedented costs of $2.3 billion and $2.2 billion, respectively.

Key drivers of these costs included:

• Increased Risk Scores: Enrollees in VBID plans showed higher-than-expected risk score growth compared to non-participating plans.
• Higher Part D Expenditures: VBID plans were linked to increased spending on prescription drugs.
• Rebates and Incentives: Participating MA plans received higher rebates, further increasing overall program costs.

Despite CMS implementing changes for 2025, no viable modifications could sufficiently address these financial challenges. Federal laws governing CMS innovation models mandate termination of programs that increase Medicare costs without the ability to offset them.

What This Means for Medicare Advantage Plans

Although the VBID model is ending, many of its benefits and innovations have already been integrated into the broader MA program. For example:

• Special Supplemental Benefits for the Chronically Ill (SSBCI): These benefits, introduced through VBID, will continue to be available, offering services like transportation assistance and healthy food programs.
• Health Equity Initiatives: MA plans will maintain flexibility to target benefits for specific populations, fostering whole-person health.
• Prescription Drug Cost Transparency: The Inflation Reduction Act (IRA) ensures continued access to low-cost medications and expanded subsidies under Medicare Part D.

MA plans will have ample time to adapt to the model’s termination, ensuring continuity of care for enrollees during the 2026 Open Enrollment Period.

What Agents Need to Know

For insurance agents, the end of the VBID model underscores the importance of staying informed about Medicare program changes and understanding their impact on clients. Here’s how to navigate the transition:

• Educate Clients: Help clients understand that while the VBID model is ending, most supplemental benefits will still be available through their MA plans.
• Leverage Opportunities: Highlight the continued availability of key benefits like transportation services and cost-sharing assistance to support client retention and satisfaction.
• Stay Updated: Monitor new CMS initiatives, such as the Medicare $2 Drug List model launching in 2027, to provide timely advice to clients.

Charting a New Path for Medicare Innovation

While the VBID model is coming to an end, CMS remains committed to innovation within the MA and Part D programs. Lessons learned from the model will inform future strategies to enhance health equity, affordability, and transparency while protecting the Medicare Trust Funds. Agents can expect ongoing improvements, such as expanded supplemental benefits and simplified prescription drug costs, to create new opportunities for serving clients.

Partner with PSM Brokerage for Medicare Success

Navigating changes in Medicare programs requires the right tools and support. At PSM Brokerage, we equip agents with everything they need to stay ahead in the ever-evolving Medicare market:

• Training Resources: Stay informed about policy changes and best practices for advising clients.
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• Dedicated Support: From compliance to marketing, we’re here to help you grow your business.

Don’t let program changes hold you back. Partner with PSM Brokerage and turn challenges into opportunities for growth. Contact us today to learn more and take your Medicare sales to the next level!

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