I 
113TH CONGRESS 
2D SESSION 
H. R. 5183 
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 expendi-
tures. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 23, 2014 
Mrs. BLACK (for herself and Mr. BLUMENAUER) introduced the following bill; 
which was referred to the Committee on Ways and Means, and in addi-
tion to the Committee on Energy and Commerce, for a period to be sub-
sequently determined by the Speaker, in each case for consideration of 
such provisions as fall within the jurisdiction of the committee concerned 
A BILL 
To establish a demonstration program requiring the utiliza-
tion of Value-Based Insurance Design to demonstrate 
that reducing the copayments or coinsurance charged 
to Medicare beneficiaries for selected high-value prescrip-
tion medications and clinical services can increase their 
utilization and ultimately improve clinical outcomes and 
lower health care expenditures. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Value Based Insurance 
Design for Better Care Act of 2014’’ or the ‘‘VBID for 
Better Care Act of 2014’’. 
SEC. 2. FINDINGS. 
Congress makes the following findings: 
(1) A growing body of evidence demonstrates 
that increases in patient-level financial barriers (in-
cluding deductibles, copayments, and coinsurance) 
for high-value medical services (such as prescription 
medications, clinician visits, diagnostic tests, and 
procedures) systematically reduce their use. Savings 
attributable to cost-related decreased utilization of 
specific services may lead to an increase in total 
medical expenditures due to increased use of other 
related clinical services, such as hospitalizations and 
emergency room visits. 
(2) Empirical research studies demonstrate that 
reductions in beneficiary out-of-pocket expenses for 
high-value prescription medications and clinical serv-
ices can mitigate the adverse health and financial 
consequences attributable to cost-related decreased 
utilization of high-value services. 
(3) Financial barriers to prescription medica-
tions and clinical services that are deemed to be 
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high-value should be reduced or eliminated to in-
crease their use. 
(4) Value-Based Insurance Design is a method-
ology that adjusts patient out-of-pocket costs for 
prescription medications and clinical services accord-
ing to the clinical value—not exclusively the cost. 
Value-Based Insurance Design is based on the con-
cept of clinical nuance that recognizes— 
(A) prescription medications and clinical 
services differ in the clinical benefit provided; 
and 
(B) the clinical benefit derived from a spe-
cific prescription medication or clinical service 
depends on the clinical situation, the provider, 
and where the care is delivered. 
(5) The current ‘‘one-size-fits-all’’ copayment or 
coinsurance design for prescription medications and 
clinical services provided under the Medicare pro-
gram does not recognize the well-established value 
differences in health outcomes produced by various 
medical interventions. 
(6) The establishment by Medicare of copay-
ment and coinsurance requirements using Value- 
Based Insurance Design methodologies will improve 
patient-centered health outcomes, enhance personal 
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responsibility, and afford a more efficient use of tax-
payer dollars. 
SEC. 3. DEMONSTRATION PROGRAM. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services (in this section referred to as the ‘‘Sec-
retary’’) shall establish a 3-year demonstration program 
to test the use of value-based insurance design methodolo-
gies (as defined in subsection (c)(1)) under eligible Medi-
care Advantage plans offered by Medicare Advantage or-
ganizations under part C of title XVIII of the Social Secu-
rity Act (42 U.S.C. 1395w–21 et seq.). 
(b) DEMONSTRATION PROGRAM DESIGN.— 
(1) SELECTION OF MA REGION AND ELIGIBLE 
MEDICARE
ADVANTAGE
PLANS.—The 
Secretary 
shall— 
(A) select at least two MA regions (as de-
fined in section 1858(a)(2) of the Social Secu-
rity Act (42 U.S.C. 1395w–27a(a)(2))) with re-
spect to which to conduct the demonstration 
program under this section; and 
(B) approve eligible Medicare Advantage 
plans to participate in such demonstration pro-
gram. 
(2) START
OF
DEMONSTRATION.—The dem-
onstration program shall begin with respect to the 
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first plan year beginning after the date on which at 
least two eligible Medicare Advantage plans have 
been approved by the Secretary in at least one MA 
region selected under paragraph (1). 
(3) ELIGIBLE MEDICARE ADVANTAGE PLANS.— 
For purposes of this section, the term ‘‘eligible 
Medicare Advantage plan’’ means a Medicare Ad-
vantage plan under part C of title XVIII of the So-
cial Security Act (42 U.S.C. 1395w–21 et seq.) that 
meets the following requirements: 
(A) The plan is an MA regional plan (as 
defined in paragraph (4) of section 1859(b) of 
such Act (42 U.S.C. 1395w–28(b))) or MA 
local plan (as defined in paragraph (5) of such 
section) offered in the MA region selected under 
paragraph (1)(A). 
(B) The plan has— 
(i) a quality rating under section 
1853(n)(4) of such Act (42 U.S.C. 1395w– 
23(n)(4)) of 4 stars or higher based on the 
most recent data available for such year; 
(ii) in the case of a specialized MA 
plan for special needs individuals, as de-
fined in subsection (b)(6)(A) of section 
1859(b)(6)(A) of such Act (42 U.S.C. 
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1395w–28(b)(6)(A)), received a multi-year 
approval by the National Committee for 
Quality Assurance under subsection (f)(7) 
of such section; or 
(iii) at least 20 percent of the popu-
lation to whom the plan is offered consists 
of subsidy eligible individuals (as defined 
in section 1860D–14(a)(3)(A) of the Social 
Security 
Act 
(42 
U.S.C. 
1395w– 
114(a)(3)(A))). 
(c) VALUE-BASED INSURANCE DESIGN METHODOLO-
GIES.— 
(1) DEFINITION.—For purposes of this section, 
the term ‘‘value-based insurance design method-
ology’’ means a methodology for identifying specific 
prescription medications, and clinical services that 
are reimbursable under title XVIII of the Social Se-
curity Act, for which copayments, coinsurance, or 
both should be reduced or eliminated because of the 
high-value and effectiveness of such medications and 
services for specific chronic clinical conditions (as 
approved by the Secretary). 
(2) USE OF METHODOLOGIES TO REDUCE CO-
PAYMENTS AND COINSURANCE.—A Medicare Advan-
tage organization offering an eligible Medicare Ad-
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vantage plan selected to participate under the dem-
onstration program, for each plan year for which the 
plan is so selected and using value-based insurance 
design methodologies— 
(A) shall identify each prescription medica-
tion and clinical service covered under such 
plan for which the amount of the copayment or 
coinsurance should be reduced or eliminated, 
with respect to the management of specific 
chronic clinical conditions (as specified by the 
Secretary) of MA eligible individuals (as defined 
in section 1851(a)(3) of the Social Security Act 
(42 U.S.C. 1395w–21(a)(3))) enrolled under 
such plans, for such plan year; and 
(B) may, for such plan year, reduce or 
eliminate copayments, coinsurance, or both for 
such prescription medication and clinical serv-
ices so identified with respect to the manage-
ment of such conditions of such individuals— 
(i) if such reduction or elimination is 
evidence-based, for the purpose of encour-
aging such individuals in such plan to use 
such prescription medications and clinical 
services (such as preventive care, primary 
care, specialty visits, diagnostic tests, pro-
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cedures, and durable medical equipment) 
with respect to such conditions; and 
(ii) for the purpose of encouraging 
such individuals in such plan to use health 
care providers that such organization has 
identified with respect to such plan year. 
(3) PROHIBITION
OF
INCREASES
OF
COPAY-
MENTS AND COINSURANCE.—In no case may any 
Medicare Advantage plan participating in the dem-
onstration program increase, for any plan year for 
which the plan is so participating, the amount of co-
payments or coinsurance for any item or service cov-
ered under such plan for purposes of discouraging 
the use of such item or service. 
(d) REPORT ON IMPLEMENTATION.— 
(1) IN GENERAL.—Not later than 1 year after 
the date on which the demonstration program under 
this section begins under subsection (b)(2), the Sec-
retary shall submit to Congress a report on the sta-
tus of the implementation of the demonstration pro-
gram. 
(2) ELEMENTS.—The report required by para-
graph (1) shall, with respect to eligible Medicare Ad-
vantage plans participating in the demonstration 
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program for the first plan year of such program, in-
clude the following: 
(A) A list of each medication and service 
identified pursuant to subsection (c)(2)(A) for 
such plan with respect to such plan year. 
(B) For each such medication or service so 
identified, the amount of the copayment or co-
insurance required under such plan with respect 
to such plan year for such medication or service 
and the amount of the reduction of such copay-
ment or coinsurance from the previous plan 
year. 
(C) For each provider identified pursuant 
to subsection (c)(2)(B)(ii) for such plan with 
respect to such plan year, a statement of the 
amount of the copayment or coinsurance re-
quired under such plan with respect to such 
plan year and the amount of the reduction of 
such copayment or coinsurance from the pre-
vious plan year. 
(e) REVIEW AND ASSESSMENT OF UTILIZATION OF 
VALUE-BASED INSURANCE DESIGN METHODOLOGIES.— 
(1) IN
GENERAL.—The Secretary shall enter 
into a contract or agreement with an independent, 
non-biased entity having expertise in value-based in-
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surance design methodologies to review and assess 
the implementation of the demonstration program 
under this section. The review and assessment shall 
include the following: 
(A) An assessment of the utilization of 
value-based insurance design methodologies by 
Medicare Advantage plans participating under 
such program. 
(B) An analysis of whether reducing or 
eliminating the copayment or coinsurance for 
each medication and clinical service identified 
pursuant to subsection (c)(2)(A) resulted in in-
creased adherence to medication regimens, in-
creased service utilization, improvement in qual-
ity metrics, better health outcomes, and en-
hanced beneficiary experience. 
(C) An analysis of the extent to which 
costs to Medicare Advantage plans under part 
C of title XVIII of the Social Security Act par-
ticipating in the demonstration program is less 
than costs to Medicare Advantage plans under 
such part that are not participating in the dem-
onstration program. 
(D) An analysis of whether reducing or 
eliminating the copayment or coinsurance for 
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providers identified pursuant to subsection 
(c)(2)(B)(ii) resulted in improvement in quality 
metrics, better health outcomes, and enhanced 
beneficiary experience. 
(E) An analysis, for each provider so iden-
tified, the extent to which costs to Medicare Ad-
vantage plans under part C of title XVIII of the 
Social Security Act participating in the dem-
onstration program is less than costs to Medi-
care Advantage plans under such part that are 
not participating in the demonstration program. 
(F) Such other matters, as the Secretary 
considers appropriate. 
(2) REPORT.—The contract or agreement en-
tered into under paragraph (1) shall require such 
entity to submit to the Secretary a report on the re-
view and assessment conducted by the entity under 
such paragraph in time for the inclusion of the re-
sults of such report in the report required by para-
graph (3). 
(3) REPORT TO CONGRESS.—Not later than 3 
years after the date on which the demonstration pro-
gram begins under subsection (b)(2), the Secretary 
shall submit to Congress a report on the review and 
assessment of the demonstration program conducted 
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under this subsection. The report shall include the 
following: 
(A) A description of the results of the re-
view and assessment included in the report sub-
mitted pursuant to paragraph (2). 
(B) Such recommendations as the Sec-
retary considers appropriate for enhancing the 
utilization of the methodologies applied under 
the demonstration program to all Medicare Ad-
vantage plans under part C of title XVIII of the 
Social Security Act so as to reduce copayments 
and coinsurance under such plans paid by 
Medicare beneficiaries for high-value prescrip-
tion medications and clinical services for which 
coverage is provided under such plans and to 
otherwise improve the quality of health care 
provided under such plans. 
(f) EXPANSION
OF DEMONSTRATION PROGRAM.— 
The Secretary shall expand the demonstration program, 
pursuant to notice and comment rulemaking, to imple-
ment, on a permanent basis, the components of the dem-
onstration program that are beneficial to Medicare bene-
ficiaries and the Medicare program, unless the report 
under subsection (d) or (e)(3) contains an evaluation that 
the demonstration program— 
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(1) increases expenditures under title XVIII 
with respect to Medicare beneficiaries participating 
in the demonstration program; or 
(2) decreases the quality of health care services 
furnished to such Medicare beneficiaries partici-
pating in the demonstration program. 
(g) WAIVER AUTHORITY.—The Secretary may waive 
such provisions of titles XI and XVIII of the Social Secu-
rity Act as may be necessary to carry out the demonstra-
tion program under this section. 
(h) IMPLEMENTATION FUNDING.—For purposes of 
carrying out the demonstration program under this sec-
tion, the Secretary shall provide for the transfer from the 
Federal Hospital Insurance Trust Fund under section 
1817 of the Social Security Act (42 U.S.C. 1395i) and 
the Federal Supplementary Insurance Trust Fund under 
section 1841 of the Social Security Act (42 U.S.C. 1395t), 
including the Medicare Prescription Drug Account in such 
Trust Fund, in such proportion as determined appropriate 
by the Secretary, of such sums as may be necessary. 
Æ 
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