Hospice VBID: Understanding the 2023 Program Modifications

The hospice component of the value-based insurance design (VBID) model will begin its third year on Jan. 1, 2023, meaning that some of the program’s rules will change.

Often called the MA hospice carve-in, the voluntary demonstration is designed to assess payer and provider performance related to hospice within Medicare Advantage (MA). The U.S. Centers for Medicare & Medicaid Services (CMS) has indicated that hospices should ensure that their billing staff is familiar with the 2023 modifications.

For the final two years of the program, payers will have more leeway when it comes to payment rates and patient access to hospice providers outside of their health plan’s network, according to Bill Dombi, president of the National Association for Home Care & Hospice (NAHC).


“It’s operating in a framework [in 2021-2022] that’s not going to continue [as of 2023],” Dombi told Hospice News. “There’ll be more reliance on network providers, as well as payment rates being controlled by the plans more so than the current fee-for-service rates. VBID was on our radar from Day 1, and it’s unfortunately still on our radar because of this expansion.”

During the first two years of the carve-in, CMS required MA plans to pay 100% of the fee-for-service per diem whether the patient chooses an in-network or out-of-network provider. This enabled beneficiaries to receive care from the provider of their choice regardless of network status. It also gave the plans and providers time to establish those network relationships.

For 2023, VBID rules vary depending on how long a Medicare Advantage Organization (MAO) has participated in the demonstration. MAOs that have participated since the program’s launch in 2021 can offer beneficiaries incentives to use their plans’ in-network providers, whereas new entrants to the program are still bound by those first-phase requirements.


Before the “mature” plans can offer these incentives, they must have a minimum number of in-network providers in their service regions, as well as a comprehensive strategy for providing adequate access to necessary, appropriate and equitable hospice care, according to CMS guidance.

With the carve-in’s second year only now coming to a close, data on network status in 2022 are not yet available. Numbers from the program’s first year offer few clues for the 2023 landscape.

A total of 9,630 VBID beneficiaries received hospice care through the VBID demo in 2021, and 525 utilized the program’s supplemental benefits, according to a report the RAND Corporation prepared for CMS. Of those, only about 37% received care from in-network providers.

Among the program’s 596 year-one hospice participants, slightly more than 17% were in-network.

In interviews with CMS, providers listed several reasons for joining plan networks. Among the most frequently occurring factors was a desire to ensure patients who wished to do so could choose to receive hospice coverage through their MA plan.

Some hospices also sought to build on their existing relationships with these payers or establish themselves as early adopters of payment innovations. But some also said that they felt participation was necessary to ensure their long-term sustainability.

“There’s a really good chance that going forward, this is going to be our new world, where we have to participate with these Medicare Advantage plans,” representatives of one unnamed hospice told CMS. “If [the payment rate is] something reasonable, I think it’s in our best interests to sign these agreements and participate. Because say in three or four years, if we have to be in-network with these plans, we need to build that relationship. We need the experience. We need to be in-network.”

In 2023, the VBID hospice component will grow in terms of participation and geography. CMS indicated that 119 health plans will participate next year, up from 53 in 2021. Geographically, the program will be available in 806 counties in 24 states, up from 461 in 2022.

Another new feature for 2023 is a voluntary Health Equity Incubation Program, through which participating MAOs will prepare health equity plans detailing how they will address disparities in outcomes, access or beneficiaries’ care experiences.

This aligns with previous statements from the CMS that health equity will be a key component of their payment model demonstrations going forward.

“CMS is working hard to advance health equity by designing, implementing, and operationalizing policies and programs that support health for all the people that are served by our programs by eliminating avoidable differences in health outcomes experienced by people who are disadvantaged or underserved and providing care and support that our enrollees need to thrive,” Laurie McWright, deputy director for CMMI’s Seamless Care Models Group, said in a CMS webinar. “I think it’s safe to say that the VBID Model Health Equity Incubation Program fits well into this vision and reflects the priority and emphasis we are placing on health equity within the VBID Model.”

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