Dr Mark Fendrick Highlights VBID Elements in the Inflation Reduction Act

Elements inspired by the principles of value-based insurance design (VBID) were incorporated into the recently signed Inflation Reduction Act (IRA), which could help reduce costs of care for patients, according to A. Mark Fendrick, MD, co–editor in chief of The American Journal of Managed Care^® and director of the V-BID Center at the University of Michigan.

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How is the IRA implementing some VBID elements to reduce out-of-pocket costs for essential medical services?

We were very excited to see that the Inflation Reduction Act of 2022 includes several value-based insurance design, or VBID, related elements. Notably, first, it caps Medicare patients’ out-of-pocket costs at $2000 per year, with an option to break that amount into affordable monthly payments. Second, it covers adult vaccines recommended by the Advisory Committee on Immunization Practices at the CDC, under Medicare Part D without cost sharing. Third is amendment of the Internal Revenue Service code to create a safe harbor allowing health savings account qualified health plans to cover insulin prior to meeting the plan deductible, and most notably and covered widespread by the media, the cap on Medicare patients’ out-of-pocket costs for insulin at $35 per month.