Health Affairs This Week BEST OF: What's Happening with Value-Based Insurance Design? w/ Mark Fendrick
Dec 24, 2025
Mark Fendrick, Director of the University of Michigan's Center for Value-Based Insurance Design, dives into the significance of value-based insurance design (VBID) and the recent end of the Medicare Advantage VBID model. He explains how the model uniquely targeted cost-sharing reductions and discusses the reasons behind its termination, including rising Medicare costs. Fendrick also shares insights on VBID's effectiveness in lowering barriers to high-value care and offers recommendations for improving future designs, ensuring patients receive better access and outcomes.
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VBID Aligns Cost Sharing With Clinical Value
- Value-based insurance design (VBID) sets cost sharing by clinical value instead of price to encourage high-value care.
- VBID reduces financial barriers to effective services, improving adherence and outcomes for beneficiaries.
MA Model Broke Uniform Benefit Rules
- The MA VBID model allowed targeting benefits to specific patients and providers, breaking Medicare's historical uniform benefit rule.
- CMMI must end models that increase Medicare spending, and evaluations showed large added costs for the MA VBID demo.
Health Gains Often Cost Money
- The MAVBID demo met goals like improved adherence and better outcomes, though the value per dollar spent remains uncertain.
- Increased utilization of high-value but not cost-saving services predictably raises program spending.