II 

113TH CONGRESS 

2D SESSION S. 2783 

To establish a demonstration program requiring the utilization of ValueBased Insurance Design to demonstrate that reducing the copayments 

or coinsurance charged to Medicare beneficiaries for selected high-value 

prescription medications and clinical services can increase their utilization 

and ultimately improve clinical outcomes and lower health care expenditures. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 10, 2014 

Mr. THUNE (for himself and Ms. STABENOW) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To establish a demonstration program requiring the utilization of Value-Based Insurance Design to demonstrate 

that reducing the copayments or coinsurance charged 

to Medicare beneficiaries for selected high-value prescription medications and clinical services can increase their 

utilization and ultimately improve clinical outcomes and 

lower health care expenditures. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Value Based Insurance 

3 Design for Better Care Act of 2014’’ or the ‘‘VBID for 

4 Better Care Act of 2014’’. 

5 SEC. 2. FINDINGS. 

6 Congress makes the following findings: 

7 (1) A growing body of evidence demonstrates 

8 that increases in patient-level financial barriers (in9 cluding deductibles, copayments, and coinsurance) 

10 for high-value medical services (such as prescription 

11 medications, clinician visits, diagnostic tests, and 

12 procedures) systematically reduce their use. Savings 

13 attributable to cost-related decreased utilization of 

14 specific services may lead to an increase in total 

15 medical expenditures due to increased use of other 

16 related clinical services, such as hospitalizations and 

17 emergency room visits. 

18 (2) Empirical research studies demonstrate that 

19 reductions in beneficiary out-of-pocket expenses for 

20 high-value prescription medications and clinical serv21 ices can mitigate the adverse health and financial 

22 consequences attributable to cost-related decreased 

23 utilization of high-value services. 

24 (3) Financial barriers to prescription medica25 tions and clinical services that are deemed to be high 


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1 value should be reduced or eliminated to increase 

2 their use. 

3 (4) Value-Based Insurance Design is a method4 ology that adjusts patient out-of-pocket costs for 

5 prescription medications and clinical services accord6 ing to the clinical value—not exclusively the cost. 

7 Value-Based Insurance Design is based on the con8 cept of clinical nuance that recognizes— 

9 (A) prescription medications and clinical 

10 services differ in the clinical benefit provided; 

11 and 

12 (B) the clinical benefit derived from a spe13 cific prescription medication or clinical service 

14 depends on the clinical situation, the provider, 

15 and where the care is delivered. 

16 (5) The current ‘‘one-size-fits-all’’ copayment or 

17 coinsurance design for prescription medications and 

18 clinical services provided under the Medicare pro19 gram does not recognize the well-established value 

20 differences in health outcomes produced by various 

21 medical interventions. 

22 (6) The establishment by Medicare of copay23 ment and coinsurance requirements using Value24 Based Insurance Design methodologies will improve 

25 patient-centered health outcomes, enhance personal 


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1 responsibility, and afford a more efficient use of tax2 payer dollars. 

3 SEC. 3. DEMONSTRATION PROGRAM. 

4 (a) IN GENERAL.—The Secretary of Health and 

5 Human Services (in this section referred to as the ‘‘Sec6 retary’’) shall establish a 3-year demonstration program 

7 to test the use of value-based insurance design methodolo8 gies (as defined in subsection (c)(1)) under eligible Medi9 care Advantage plans offered by Medicare Advantage or10 ganizations under part C of title XVIII of the Social Secu11 rity Act (42 U.S.C. 1395w–21 et seq.). 

12 (b) DEMONSTRATION PROGRAM DESIGN.— 

13 (1) SELECTION OF MA REGION AND ELIGIBLE

14 MEDICARE ADVANTAGE PLANS.—The Secretary 

15 shall— 

16 (A) select at least two MA regions (as de17 fined in section 1858(a)(2) of the Social Secu18 rity Act (42 U.S.C. 1395w–27a(a)(2))) with re19 spect to which to conduct the demonstration 

20 program under this section; and 

21 (B) approve eligible Medicare Advantage 

22 plans to participate in such demonstration pro23 gram. 

24 (2) START OF DEMONSTRATION.—The dem25 onstration program shall begin with respect to the 


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1 first plan year beginning after the date on which at 

2 least two eligible Medicare Advantage plans have 

3 been approved by the Secretary in at least one MA 

4 region selected under paragraph (1). 

5 (3) ELIGIBLE MEDICARE ADVANTAGE PLANS.— 

6 For purposes of this section, the term ‘‘eligible 

7 Medicare Advantage plan’’ means a Medicare Ad8 vantage plan under part C of title XVIII of the So9 cial Security Act (42 U.S.C. 1395w–21 et seq.) that 

10 meets the following requirements: 

11 (A) The plan is an MA regional plan (as 

12 defined in paragraph (4) of section 1859(b) of 

13 such Act (42 U.S.C. 1395w–28(b))) or MA 

14 local plan (as defined in paragraph (5) of such 

15 section) offered in the MA region selected under 

16 paragraph (1)(A). 

17 (B) The plan has— 

18 (i) a quality rating under section 

19 1853(n)(4) of such Act (42 U.S.C. 1395w– 

20 23(n)(4)) of 4 stars or higher based on the 

21 most recent data available for such year; 

22 (ii) in the case of a specialized MA 

23 plan for special needs individuals, as de24 fined in subsection (b)(6)(A) of section 

25 1859(b)(6)(A) of such Act (42 U.S.C. 


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1 1395w–28(b)(6)(A)), received a multi-year 

2 approval by the National Committee for 

3 Quality Assurance under subsection (f)(7) 

4 of such section; or 

5 (iii) at least 20 percent of the popu6 lation to whom the plan is offered consists 

7 of subsidy eligible individuals (as defined 

8 in section 1860D–14(a)(3)(A) of the Social 

9 Security Act (42 U.S.C. 1395w– 

10 114(a)(3)(A))). 

11 (c) VALUE-BASED INSURANCE DESIGN METHODOLO12 GIES.— 

13 (1) DEFINITION.—For purposes of this section, 

14 the term ‘‘value-based insurance design method15 ology’’ means a methodology for identifying specific 

16 prescription medications, and clinical services that 

17 are reimbursable under title XVIII of the Social Se18 curity Act, for which copayments, coinsurance, or 

19 both should be reduced or eliminated because of the 

20 high value and effectiveness of such medications and 

21 services for specific chronic clinical conditions (as 

22 approved by the Secretary). 

23 (2) USE OF METHODOLOGIES TO REDUCE CO24 PAYMENTS AND COINSURANCE.—A Medicare Advan25 tage organization offering an eligible Medicare AdVerDate Mar 15 2010 23:38 Sep 10, 2014 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2783.IS S2783

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1 vantage plan selected to participate under the dem2 onstration program, for each plan year for which the 

3 plan is so selected and using value-based insurance 

4 design methodologies— 

5 (A) shall identify each prescription medica6 tion and clinical service covered under such 

7 plan for which the amount of the copayment or 

8 coinsurance should be reduced or eliminated, 

9 with respect to the management of specific 

10 chronic clinical conditions (as specified by the 

11 Secretary) of MA eligible individuals (as defined 

12 in section 1851(a)(3) of the Social Security Act 

13 (42 U.S.C. 1395w–21(a)(3))) enrolled under 

14 such plans, for such plan year; and 

15 (B) may, for such plan year, reduce or 

16 eliminate copayments, coinsurance, or both for 

17 such prescription medication and clinical serv18 ices so identified with respect to the manage19 ment of such conditions of such individuals— 

20 (i) if such reduction or elimination is 

21 evidence-based, for the purpose of encour22 aging such individuals in such plan to use 

23 such prescription medications and clinical 

24 services (such as preventive care, primary 

25 care, specialty visits, diagnostic tests, proVerDate Mar 15 2010 23:38 Sep 10, 2014 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2783.IS S2783

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1 cedures, and durable medical equipment) 

2 with respect to such conditions; and 

3 (ii) for the purpose of encouraging 

4 such individuals in such plan to use health 

5 care providers that such organization has 

6 identified with respect to such plan year. 

7 (3) PROHIBITION OF INCREASES OF COPAY8 MENTS AND COINSURANCE.—In no case may any 

9 Medicare Advantage plan participating in the dem10 onstration program increase, for any plan year for 

11 which the plan is so participating, the amount of co12 payments or coinsurance for any item or service cov13 ered under such plan for purposes of discouraging 

14 the use of such item or service. 

15 (d) REPORT ON IMPLEMENTATION.— 

16 (1) IN GENERAL.—Not later than 1 year after 

17 the date on which the demonstration program under 

18 this section begins under subsection (b)(2), the Sec19 retary shall submit to Congress a report on the sta20 tus of the implementation of the demonstration pro21 gram. 

22 (2) ELEMENTS.—The report required by para23 graph (1) shall, with respect to eligible Medicare Ad24 vantage plans participating in the demonstration 


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1 program for the first plan year of such program, in2 clude the following: 

3 (A) A list of each medication and service 

4 identified pursuant to subsection (c)(2)(A) for 

5 such plan with respect to such plan year. 

6 (B) For each such medication or service so 

7 identified, the amount of the copayment or co8 insurance required under such plan with respect 

9 to such plan year for such medication or service 

10 and the amount of the reduction of such copay11 ment or coinsurance from the previous plan 

12 year. 

13 (C) For each provider identified pursuant 

14 to subsection (c)(2)(B)(ii) for such plan with 

15 respect to such plan year, a statement of the 

16 amount of the copayment or coinsurance re17 quired under such plan with respect to such 

18 plan year and the amount of the reduction of 

19 such copayment or coinsurance from the pre20 vious plan year. 

21 (e) REVIEW AND ASSESSMENT OF UTILIZATION OF

22 VALUE-BASED INSURANCE DESIGN METHODOLOGIES.— 

23 (1) IN GENERAL.—The Secretary shall enter 

24 into a contract or agreement with an independent, 

25 non-biased entity having expertise in value-based inVerDate Mar 15 2010 23:38 Sep 10, 2014 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2783.IS S2783

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1 surance design methodologies to review and assess 

2 the implementation of the demonstration program 

3 under this section. The review and assessment shall 

4 include the following: 

5 (A) An assessment of the utilization of 

6 value-based insurance design methodologies by 

7 Medicare Advantage plans participating under 

8 such program. 

9 (B) An analysis of whether reducing or 

10 eliminating the copayment or coinsurance for 

11 each medication and clinical service identified 

12 pursuant to subsection (c)(2)(A) resulted in in13 creased adherence to medication regimens, in14 creased service utilization, improvement in qual15 ity metrics, better health outcomes, and en16 hanced beneficiary experience. 

17 (C) An analysis of the extent to which 

18 costs to Medicare Advantage plans under part 

19 C of title XVIII of the Social Security Act par20 ticipating in the demonstration program is less 

21 than costs to Medicare Advantage plans under 

22 such part that are not participating in the dem23 onstration program. 

24 (D) An analysis of whether reducing or 

25 eliminating the copayment or coinsurance for 


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1 providers identified pursuant to subsection 

2 (c)(2)(B)(ii) resulted in improvement in quality 

3 metrics, better health outcomes, and enhanced 

4 beneficiary experience. 

5 (E) An analysis, for each provider so iden6 tified, the extent to which costs to Medicare Ad7 vantage plans under part C of title XVIII of the 

8 Social Security Act participating in the dem9 onstration program is less than costs to Medi10 care Advantage plans under such part that are 

11 not participating in the demonstration program. 

12 (F) Such other matters, as the Secretary 

13 considers appropriate. 

14 (2) REPORT.—The contract or agreement en15 tered into under paragraph (1) shall require such 

16 entity to submit to the Secretary a report on the re17 view and assessment conducted by the entity under 

18 such paragraph in time for the inclusion of the re19 sults of such report in the report required by para20 graph (3). 

21 (3) REPORT TO CONGRESS.—Not later than 3 

22 years after the date on which the demonstration pro23 gram begins under subsection (b)(2), the Secretary 

24 shall submit to Congress a report on the review and 

25 assessment of the demonstration program conducted 


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1 under this subsection. The report shall include the 

2 following: 

3 (A) A description of the results of the re4 view and assessment included in the report sub5 mitted pursuant to paragraph (2). 

6 (B) Such recommendations as the Sec7 retary considers appropriate for enhancing the 

8 utilization of the methodologies applied under 

9 the demonstration program to all Medicare Ad10 vantage plans under part C of title XVIII of the 

11 Social Security Act so as to reduce copayments 

12 and coinsurance under such plans paid by 

13 Medicare beneficiaries for high-value prescrip14 tion medications and clinical services for which 

15 coverage is provided under such plans and to 

16 otherwise improve the quality of health care 

17 provided under such plans. 

18 (f) EXPANSION OF DEMONSTRATION PROGRAM.— 

19 The Secretary shall expand the demonstration program, 

20 pursuant to notice and comment rulemaking, to imple21 ment, on a permanent basis, the components of the dem22 onstration program that are beneficial to Medicare bene23 ficiaries and the Medicare program, unless the report 

24 under subsection (d) or (e)(3) contains an evaluation that 

25 the demonstration program— 


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1 (1) increases expenditures under title XVIII 

2 with respect to Medicare beneficiaries participating 

3 in the demonstration program; or 

4 (2) decreases the quality of health care services 

5 furnished to such Medicare beneficiaries partici6 pating in the demonstration program. 

7 (g) WAIVER AUTHORITY.—The Secretary may waive 

8 such provisions of titles XI and XVIII of the Social Secu9 rity Act as may be necessary to carry out the demonstra10 tion program under this section. 

11 (h) IMPLEMENTATION FUNDING.—For purposes of 

12 carrying out the demonstration program under this sec13 tion, the Secretary shall provide for the transfer from the 

14 Federal Hospital Insurance Trust Fund under section 

15 1817 of the Social Security Act (42 U.S.C. 1395i) and 

16 the Federal Supplementary Insurance Trust Fund under 

17 section 1841 of the Social Security Act (42 U.S.C. 1395t), 

18 including the Medicare Prescription Drug Account in such 

19 Trust Fund, in such proportion as determined appropriate 

20 by the Secretary, of such sums as may be necessary. 

Æ 


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