Remarks by Andy Slavitt: Keeping Medicare’s Promise with MACRA

Below are prepared remarks by Andy Slavitt, CMS Acting Administrator before the MACRA MIPS/APM Summit, Washington, D.C. on December 1, 2016.

So, you decided to come to Washington to see what was new and how things might be changing… I am sure we did not disappoint.

I am honored to have been invited to address this summit, which I’m sure will be your first of many. It’s a certainty that making our delivery system work better for patients and spend money more wisely will always be in season no matter which party is in charge. And, while many new approaches and changes may come to bear, ultimately health is not a partisan issue.

However, I do hope you all think of a better name– the MACRA MIPS/APM summit sounds like the world’s hardest word scramble. We’ve tried to make MACRA more accessible by naming it the Quality Payment Program… something to think about.

Looking at your speakers today, you have gathered some of the most experienced people across the country focused on the most difficult health care problems we as a nation face. Simply put, how to complete the changes we have begun to make the system more patient centered and accountable. So today, I come here to add my perspective to this discussion and continue to ask for your valuable help.

You, as clinical and business leaders, represent an active and important voice in the delivery of health care for all Americans. As we make changes, you are part of the leadership who will be the first to know what is working and what is not. You will also be the best at articulating what you need from Washington. At CMS, we have worked hard over the last few years to transform from an opaque bureaucracy into an accessible service organization, getting us closest to making decisions based on where care is provided across the country.

I want to talk about the next evolution for our health care system. 

For nearly two years, I have had the incredible honor to serve at CMS and to oversee the Medicare, Medicaid, and Marketplace programs, which together provide health coverage to one in three Americans and likely pays for the majority of care that occurs in most health care communities across the nation.

There’s an old joke at CMS that if you find yourself in a tense conversation, you can usually diffuse it by saying, “Well, my mom is a Medicare beneficiary.” Inevitably, the other person will say, “Mine too.” And, from that shared sense of responsibility, you can go forward from the right place – one that is focused on figuring out what’s right for the beneficiaries we serve.

That is because Medicare is a uniquely American promise. One that – for more than a half-century – has said to all Americans that as you get older, or if you have a disability, you will be able to access care, and your family won’t go broke in the process. Before Medicare, do you know how many seniors in this country lived in poverty? One in three…. One in three. Today, it’s less than one in ten. Our promise to the millions of Americans –our neighbors — particularly when we are living on a low or fixed income– is part of what has made us who we are.

Medicare is what provides your parents’ health care and if we do our jobs right, one day, your children’s. Think of it. How we make decisions today will allow us and our children to one day put that Medicare card in our wallets to keep us secure.

So how are we doing to advance Medicare to keep its promise?

Since the passage of the ACA, over the last 8 years, together, we have made significant progress in cost and quality and in evolving to meet the new shape of health care.

  • Today, 30% of fee-for-service Medicare payments flow through alternative payment models, up from essentially none in 2010. And, millions more are covered through innovative Medicare Advantage programs.
  • Quality and safety have improved with the rate of hospital-acquired conditions declining by 17%, which has prevented an estimated 87,000 deaths over 4 years. The rate at which Medicare patients are readmitted to the hospital within 30 days after discharge has decreased sharply, resulting in 565,000 fewer total readmissions.
  • Medicare provides more access with new prescription benefits and, thanks to the Affordable Care Act (ACA), we’ve closed the Medicare donut hole and with that, 11 million beneficiaries have saved an average of more than $2,000.
  • The CMS Innovation Center, which the ACA created, takes best practices from the clinical field and has developed over 30 alternative payment models and initiatives, serving millions of Medicare beneficiaries. The CBO expects the Innovation Center to reduce federal spending by about $34 billion over the next 10 years as we find new and better ways to care of people.
  • And, with all of this, we have been spending tax payer resources more wisely with extended record low medical inflation. The ACA extended the life of the Medicare trust fund and has helped deliver $473 billion in savings.

Of course, there has been enormous progress extending beyond Medicare: 

  • 20 million people now have health insurance who didn’t have it before the ACA (and I am sure you understand that affordable coverage for every American helps keep Medicare costs low. A 62-year old who has affordable coverage and can manage or prevent a chronic disease will be much healthier and less costly when they enter Medicare three years later.)

You have heard the 20 million stat before. But the effects are much more profound in the everyday life and health of people.

  • Since the ACA went into effect in 2014, more people now have a personal physician (increase of 3.5%) and easy access to medicine (increase of 2.4%).
  • Just yesterday, the CDC reported that families struggling to pay medical bills dropped from about 21% in 2011 to 16% in the first half of 2016.
  • There have been substantial decreases in the share of people who are unable to afford care (decrease of 5.5%) reporting fair or poor health (decrease of 3.4%).
  • The Medicaid coverage expansion has improved the financial security of the newly insured (for example, by reducing the amount of debt sent to a collection agency by an estimated $600 to $1000 per person gaining Medicaid coverage).
  • States that expanded Medicaid also saw their hospitals reduce debt by about 13%; 10% more than in states that didn’t expand Medicaid. As former Arizona Governor Jan Brewer said, “I don’t know how you could deliver that population any more services better, more cheaply, than what we’ve already done here,” when asked about her state’s Medicaid expansion.

If you don’t think this progress has made a major difference in the day-to-day lives of all Americans, you have been paying more attention to politics than people. In fact, there hasn’t been a greater stretch of progress in our nation’s history as measured by the amount of positive change that has impacted people and their lives and our path to a sustainable future as in the last 8 years.

But this progress should only be the start if we are to fulfill the real promise of caring for people in our country and doing it in a way that reduces the overall burden of the health care system.

Today, taxpayers spend over $500 billion each year for the Medicare program. The question that needs to be addressed head on is how Medicare will continue to control costs in the face of a demographic boom as over 10,000 Americans enter Medicare each day, rising demand for health care’s new cures and technologies; and an epidemic of chronic disease.

This is an important way to understand the context behind MACRA.

To build on the foundation we have begun on reforming the delivery system so that value based care can reach every community in America. Given this magnitude of change, I asked the team to approach MACRA differently. After this historic legislation passed, the CMS team was eager to get to work on implementation. But they heard something different from me. Stop writing, get out of DC, and start listening. 

Through 4,000 formal comments, nearly 100,000 attendees at our events across the nation, focus groups, design sessions, workshops, physician office visits (and countless tweets), we got to hear patients and clinician points of view on things we can do to make healthcare better for them.

  • We heard the deep dedication that both patients and clinicians have to the Medicare program, but also the many frustrations.
  • We heard from clinicians who challenged us to prove that MACRA and the Quality Payment Program wasn’t one more check-the-box program and instead allows them to focus on care and quality improvement
  • We heard from physicians who are fed up that their EHRs do not support patient care. Clinicians want technology that make their jobs easier, match their workflows, and give them access to needed data.
  • We heard patients who were tired of lugging around or repeating their treatment history — who wanted more time with a physician who knows them personally, so that they can get the right treatment at the right time without unneeded repetition or miscommunications.Our challenge isn’t about accountability or quality or costs or whatever euphemism people use. It’s to recognize that the path forward isn’t through any one model or new three-letter acronym or quick fix, but by addressing the basic things, which lead to bad outcomes, physician burnout, or for patients, particularly needier ones, to feel displaced and not get the right care.

Your opportunity with MACRA isn’t to implement a new scorekeeping system. If we do that, we will not only miss the opportunity to transform, but we will add complexity to an already overly complex system.

Based on what we heard, we made major changes to how we approached this program holistically.

First, we focused on a lighter touch and less regulation. By adopting the idea that if we simplified and reduced what was measured and gave physicians back more time with patients and instead supported their quality efforts, we would make more progress. And, we reduced the number of requirements in half to help level the playing field for small or independent practices.

Second, we came to realize MACRA is many clinicians’ first experience with reporting and paying for quality for the first time. We created multiple timelines to allow clinicians to pick their own pace of entry and development.

Third, we also recognize that many practices are advanced and ready to go further, so we built more opportunities for clinicians and to allow more innovative models to flourish. We estimate that about 25% of eligible Medicare clinicians will be in an Advanced Alternative Payment Models by 2018, and we have a goal of creating options for physicians in all specialties and geographies in order to allow them to pick models that are right for them.

As we move forward, we all need to keep building on what works while systematically demanding improvement where we can do better. 

So how do I suggest we tackle the next opportunities?

One. Build from a foundation of progress, not head backwards. There can be no delivery system reform without building on the foundation of reaching universal coverage. That means building on the record 20 million people who have newly found coverage and continuing the security and protections Americans have found, including no-cost preventive care, the elimination of lifetime and annual coverage limits, and the end of pre-existing condition exclusions. If we want to fix how care is delivered, so that we’re providing value, then we must ensure that Americans can afford and access quality care at every point in their lives. If we lose even some of the coverage gains made under the ACA, or leave people in limbo, people will lose access to regular care and we will drive up long-term costs. This doesn’t mean we shouldn’t improve how coverage works in a bipartisan fashion. We must always do that and we should now as new leaders bring new approaches and solicit new ideas.

Two. Insist that modernization of Medicare must actually mean modernization. Progress is achieved by ingenuity, innovation, teamwork, and the use of data and technology, not by changing funding formulas.  

I’ll say this bluntly: MACRA can’t work as well without a CMS Innovation Center that can move quickly to develop and expand new approaches to paying for care. With changes to the Innovation Center, the advanced alternative payment approaches could slow significantly. We will have a much narrower path with fewer specialty options and approaches, which take in patient and physician feedback. Medicare and commercial payers would then fall further out of alignment, and more importantly, less patients would have access to innovative care methods.

Three. Start to demand technology that can exchange data, that supports care, and that is affordable. MACRA is an opportunity to move the focus away from paperwork and reporting and towards paying for what works. For a variety of reasons, EHRs became an industry before they became a useful tool. The technology community must be held accountable by their customers and make room for new innovators and to give clinicians more freedom and more flexibility to focus on their patients, to practice medicine, and deliver better care. We worked alongside physicians to design technology tools (QPP.cms.gov) and a support center that allows physicians to learn about, access, and even design their involvement in the Quality Payment Program.

Four. Don’t forget that people are the heart of every policy made. We are on a journey as a nation towards better health for all. Patients. Care givers. Consumers. You know them better than anyone because you care for them. View MACRA as a step in the journey to develop care together.

With 50 days to go, I want to close by thanking everyone who has provided the often tough but critical feedback that has helped CMS do our jobs better — and that have helped me by sharing the realities of what really matters. The CMS team is committed to being your partner, to being transparent, to leading and delivering a path to better care. Remind us that your mother, and any mother are at the center of every decision we make, and we will be too.

 

Working to Achieve Health Equity: The CMS Equity Plan for Medicare One Year Later

By: Cara V. James, Ph.D., Director of the Office of Minority Health at the Centers for Medicare & Medicaid Services

One year ago, the Centers for Medicare & Medicaid Services (CMS) launched its first ever Equity Plan for Improving Quality in Medicare at a conference commemorating the 50th anniversary of Medicare and Medicaid and the 30th anniversary of the Report of the Secretary’s Task Force on Black and Minority Health. The CMS Equity Plan for Improving Quality in Medicare is an action-oriented plan that focuses on six priority areas and aims to reduce health disparities among vulnerable populations including, racial and ethnic minorities, sexual and gender minorities, and people with disabilities.

The foundation of the CMS Equity Plan for Improving Quality in Medicare, is our 3-part ‘path to equity’ framework. The path involves: (1) increasing understanding and awareness of disparities, (2) developing and disseminating solutions, and (3) taking sustainable action and evaluating progress. Our path to equity enables us to take a comprehensive approach to addressing health disparities because it promotes progress regardless of where stakeholders are in their efforts to achieve health equity. In addition, the path to equity can be adopted by a wide range of stakeholders and organizations and applied from the individual level up to the community, state, and policy levels. The priorities and activities described in the Equity Plan for Medicare were developed during a rigorous year-long process, which included examining evidence, identifying opportunities, and gathering input from a broad array of stakeholders across the country. The plan includes six priority areas and an array of activities.  They are:

Priority 1: Expand the Collection, Reporting, and Analysis of Standardized Data
Priority 2: Evaluate Disparities Impacts and Integrate Equity Solutions across CMS Programs
Priority 3: Develop and Disseminate Promising Approaches to Reduce Health Disparities
Priority 4: Increase the Ability of the Health Care Workforce to Meet the Needs of Vulnerable Populations
Priority 5: Improve Communication and Language Access for Individuals with Limited English Proficiency and Persons with Disabilities
Priority 6: Increase Physical Accessibility of Health Care Facilities

Since the launch of the CMS Equity Plan for Improving Quality in Medicare, we have been actively working to increase our understanding of disparities among Medicare beneficiaries with limited English proficiency and disabilities, and our knowledge of how to better prepare our workforce to meet the needs of vulnerable populations. To assist stakeholders in identifying disparities at a local, state, or regional level, we launched our Mapping Medicare Disparities Tool earlier this year.  The Mapping Medicare Disparities Tool is an interactive map, which can be used to identify areas of disparities between subgroups of Medicare beneficiaries in health outcomes, utilization, and spending. To assist in the identification of disparities within Medicare health plans, we released for the first time national and contract level quality data stratified by race and ethnicity.

We have been working to develop solutions to help spur sustainable action. As part of our Building an Organizational Response to Health Disparities portfolio, we released the Guide to Preventing Readmissions among Racially and Ethnically Diverse Medicare Beneficiaries. This guide gives an overview of key issues related to readmissions for racially and ethnically diverse Medicare beneficiaries, as well as useful resources for hospital leaders to take action to address readmission. Our guide offers case examples of strategies and initiatives. We also released a compendium of resources for standardized demographic and language data collection to help organizations collect and analyze their own data, so that they may begin to increase understanding and awareness of disparities that may exist within their own organization.

To ensure that actions around equity at CMS are sustainable, we have been working with our colleagues across the Agency to identify where equity can be embedded. To that end, reducing disparities, focusing on social determinants of health, and advancing health equity have been called out in a number of models and initiatives. Within the Merit‐Based Incentive Payment System (MIPS), achieving health equity is one of the areas for clinical practice improvement activities. At the heart of the Accountable Health Communities Model is identifying and addressing the health-related social needs of beneficiaries.

While we have reached a number of milestones this year, we know that there is still much work to be done to achieve health equity. As we continue implementing the CMS Equity Plan for Medicare, we will focus on building on our accomplishments, strengthening our partnerships, and monitoring and evaluating our progress. We cannot do this work alone, so we encourage you to join us on the path to equity. By working together, we can truly achieve care and services that are high quality, effective, and equitable.

To learn more about our accomplishments regarding achieving health equity in Medicare and other activities underway at the CMS Office of Minority Health, visit: go.cms.gov/omh.

CMS Finalizes its Measures Under Consideration List for Pre-rulemaking

By: Kate Goodrich, M.D., M.H.S., Director, Center for Clinical Standards & Quality, CMS

Medicare and other payers are rapidly moving toward a health care system that rewards high quality care while spending taxpayer dollars more wisely. Foundational to the success of these efforts is having quality measures that are meaningful to patients and providers alike, and that drive improvement and better outcomes for patients. Each year, CMS publishes a list of quality and cost measures that are under consideration for Medicare quality and value-based purchasing programs, and collaborates with the National Quality Forum (NQF) to get critical input from multiple stakeholders, including patients, clinicians, commercial payers and purchasers, on the measures that are best suited for these programs. Ultimately, these measures may help patients and families choose the nursing home, hospital, or clinician that is best for them, and can help providers deliver the highest quality of care to their patients.

I am happy to announce that CMS posted the final Measures under Consideration List on the CMS website and has sent them to NQF in preparation for this multi-stakeholder input. They can be found on the CMS website, at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityMeasures/Pre-Rule-Making.html and on the National Quality Forum’s (NQF) website, at http://www.qualityforum.org/Setting_Priorities/Partnership/Measure_Applications_Partnership.aspx).

This year’s MUC list contains 97 measures that have the potential to drive improvement in quality across numerous settings of care. CMS is considering new measures for nursing homes, hospitals, clinician practices, and dialysis facilities, among other settings, and continues to focus on important measures of patient outcomes, appropriate use of diagnostics and services, cost, and patient safety. This year, 39 percent of measures on the Measures under Consideration List are outcome measures, and an increased number of measures were submitted for consideration by specialty societies. CMS is committed to working with specialty societies and other stakeholders on the development and use of measures that are most meaningful to patients and clinicians for our programs.

The Affordable Care Act (ACA) (P.L. 111-148, enacted on March 23, 2010) added Section 1890A to the Social Security Act (the Act), which requires that the Secretary of the Department of Health and Human Services (HHS) establish a federal “pre-rulemaking process” for the selection of certain categories of quality and efficiency measures for use in various Medicare quality programs.  These measures and programs are described in section 1890(b)(7)(B) of the Act. One of the steps in this process requires that the Secretary make publicly available a list of quality and efficiency measures by December 1st that CMS is considering for adoption, through the annual rulemaking process, for use in these Medicare programs.  Additionally, this provision requires HHS to contract with a consensus-based entity (currently the National Quality Forum) to “convene multi-stakeholder groups to provide input on the selection of quality measures” for the programs specified in the law.

Subsequent to the posting of the Measures under Consideration List, NQF will accept comments on the list and convene the multi-stakeholder from the public on behalf of and for consideration by the Measure Applications Partnership (MAP) to review and provide input on which measures are most suitable for Medicare’s quality and value-based purchasing programs. This is the sixth year that CMS has collaborated with NQF on this pre-rulemaking process, and together we have worked to make the process more efficient and the feedback more meaningful. The input that we receive from the MAP is invaluable, and reflects the viewpoints of many experts in the field of quality and value, most importantly patients and consumers.

We invite you to review the Measures under Consideration List in detail and to participate in the public process during the MAP review. We believe it is critically important to hear all voices in the selection of quality and efficiency measures that are used for accountability and transparency purposes and look forward to another successful pre-rulemaking season. We are committed to working with patients, clinicians and others on how to best measure the quality and value of care while reducing burden on providers and driving improved outcomes for patients at lower costs.

For more information regarding the MAP’s purpose, meetings, 2016 Measures under Consideration List deliberations and voting, visit the NQF website, at http://www.qualityforum.org/map/.

CMS corrective actions cut improper payment rate for inpatient hospital claims by a massive 58.3 percent over the past couple of years

By Shantanu Agrawal, M.D., Deputy Administrator and Director for Center for Program Integrity (@cms.hhs.gov) and Jennifer Main, Director and Chief Financial Officer for Office of Financial Management (@cms.hhs.gov) 

The Centers for Medicare & Medicaid Services (CMS) is dedicated to reducing health care costs while, at the same time, making sure people get access to the right care, when and where they need it. CMS established the Comprehensive Error Rate Testing (CERT) program to calculate the Medicare Fee-for-Service (FFS) program improper payment rate. Due to the successes of corrective actions we put into place to address improper payments for inpatient hospital services, the overall Medicare FFS improper payment rate decreased from 12.1 percent in 2015 to 11.0 percent in 2016. Improper payments for inpatient hospital claims alone dropped a whopping 58.3 percent from 9.2 percent in 2014 to 3.8 percent in 2016. Inpatient hospital claims accounted for $10.45 billion in improper payments during the 2014 report period (July 1, 2012 to June 30, 2013) but was reduced to $4.42 billion during the 2016 report period (July 1, 2014 to June 30, 2015), an improper payment decrease of $6.03 billion.

Two major policies, intensive provider education, and improved oversight contributed to the reduction in improper payments for inpatient hospital claims. First, CMS changed its policy to allow hospitals to bill for Part B (Medical Insurance) services given during a hospital inpatient stay when an inpatient admission is found not to be reasonable and necessary. Second, CMS clarified policy for when an inpatient admission is generally appropriate for payment under Medicare Part A (Hospital Insurance) by establishing and modifying the “Two-Midnight rule.” The Two-Midnight rule applied to admissions beginning on or after October 1, 2013, and established benchmark criteria that should be used when determining whether a short stay hospital admission is payable under Medicare Part A. The Two-Midnight rule stated that inpatient admissions will generally be payable under Part A if the admitting practitioner expected the patient to require a hospital stay that crossed two midnights and the medical record supports that reasonable expectation.

Along with these policy changes, CMS put into place a comprehensive educational campaign to help providers comply with the regulations. After a limited number of “probe” audits of each provider’s short stay claims for Part A payment, Medicare Administrative Contractors (MACs) sent letters to the providers detailing the results of the probe audit and offered one-on-one education to further discuss the errors and encourage a change in future billing behavior. Providers with moderate or major error findings were engaged in up to three additional rounds of review and education to encourage greater accuracy with future claim submissions.

CMS is building on these corrective action successes by exploring opportunities to implement prior authorization and pre-claim review programs. We plan to continue monitoring those services whose payment vulnerabilities drive the improper payment rate, like home health and inpatient rehabilitation claims, to more effectively target our provider education and medical review efforts.

While CMS is pleased with the reductions we’ve already seen in the improper payment rate, we remain committed to collaborating across CMS to address potential vulnerabilities identified through our improper payment measurement programs and continuing to strengthen our program integrity efforts.

Updated Medicare and Medicaid Drug Spending Dashboard

By Andy Slavitt, Acting CMS Administrator, Niall Brennan, CMS Chief Data Officer, Tim Gronniger, CMS Deputy Chief of Staff

The increased costs of prescription drugs are one of the most critical items for American families. The development of high-value prescription drugs has improved the health and wellbeing of millions of Medicare and Medicaid beneficiaries. The continued investment in innovation is critical to unlock the treatments for many diseases such as cancer and Alzheimer’s, and help us better manage our chronic conditions like diabetes, heart disease and depression, providing significant benefits to patients across the country.

However, in order to have the maximum impact on these innovations, medications must also be affordable and accessible. In the last several months, we have heard about rapidly increasing prices for Epi-Pen, the rising lockstep cost of insulin medications, and the practice of some companies hiking prices by combining two cheaper products into one, higher-priced drug.

In order to provide a better sense of the frequency and pervasiveness of these increases, last year CMS published a new interactive tool that tracks the price of drugs purchased for Medicare beneficiaries. This tool allows the public to view drugs in Medicare Part B and D with high spending on a per user basis, high spending for the program overall, and those with high unit cost increases in recent years. Individual entries contain helpful graphs on trends for specific drugs over the last five years, as we see below for a drug that helps to control high blood sugar.

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This year, we are not only updating that tool with more current information, but are adding two important new pieces of information. First, we are adding information on drugs purchased for Medicaid beneficiaries, which totals another $57 billion in spending in 2015. Second, in an effort to provide more precise information, this year we are adding some high level information on rebates provided by drug manufacturers to offset some of the high drug costs in Medicare. 

Overall, there is significant growth in spending on prescription drugs, representing a significant burden. In 2015, total prescription drug costs were estimated to have been $457 billion, or 16.7 percent of personal health care spending. This is up from $367 billion, or 15.4 percent of personal health care spending in 2012. With annual growth expected to average 6.7 percent annually through 2025, we can expect increasing costs to continue to put pressure on families and programs that cover prescription drugs.

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Because Medicare and Medicaid beneficiaries often live on low- and fixed-incomes, the high and rising cost of certain drugs takes a significant toll on them. And prescription drug costs don’t only hit American seniors, people with disabilities, and low-income families; they also have a significant impact on taxpayers.

  • Total costs for Medicare Part D above the catastrophic limit increased by 85 percent to a total of $51 billion from 2013 to 2015, before accounting for rebates. Medicare pays 80 percent of the costs above the catastrophic limit.
  • An estimated 25 percent of the increase in Medicaid spending on prescription drugs between 2013 and 2014 was due to increased utilization, while 75 percent was due to increases in price.

The updated online dashboard tool presents information for three categories of Medicaid prescription drugs: drugs with high spending for the program overall, those with high spending on a per-prescription fill basis, and those with high unit cost increases in recent years. The dashboard provides trend analyses as well as additional detailed information on each drug, such as drug spending, number of prescription fills, brand and generic name, uses, and the name of the manufacturer.

For Medicare, this dashboard presents 80 drugs using 2015 data that met the criteria described below: 40 drugs provided through the Medicare Prescription Drug Program under Part D and 40 drugs administered by physicians and other professionals in the Medicare fee-for-service program under Part B. Products have been selected from each respective program based on three criteria: the top 15 drugs in total program spending; 15 drugs with both very high per-user spending and significant program spending; and 10 drugs with very high unit cost increases. For all drugs included on the list, the dashboard displays relevant spending, utilization, and trend data and also includes consumer-friendly information on the drug product descriptions, manufacturer(s), and clinical indications.

For both Medicare and Medicaid, the dashboard also provides information on the availability of Evidence-based Practice Center (EPC) reports from the Agency for Healthcare Research and Quality when available for a drug.

We encourage you to explore this information, which adds to the growing amount of data available. There are a number of highlights and some examples below.

Key Findings – Medicaid

  • Highest total spending on a single drug changed in 2015 with Harvoni, the brand name Hepatitis C virus treatment, overtaking Abilify (a brand name treatment for schizophrenia, depression, and other illnesses ), which was the drug with the highest total spending in Medicaid from 2011 to 2014.

Trends in Medicaid Total Spending for the Top 5 Drugs

 

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  • Joint impact to Medicare and Medicaid. The top two Medicare Part D drugs — Harvoni, the highly-effective brand name Hepatitis C therapy; and the diabetes management treatment and insulin pen, Lantus –also made it into the top five Medicaid drugs in terms of total spending. Each were associated with more than $1 billion in Medicaid spending.
  • Impact of unit increases. Ativan, a brand name drug to treat anxiety, had an average unit cost increase of 1,264 percent between 2014 and 2015. There were five other drugs that had unit cost increases of more than 300 percent. In total, Medicaid spending on these 20 drugs with unit cost increases more than doubled from $146 million in 2014 to $486 million in 2015.
  • Among Medicaid drugs with the highest cost per prescription fill, Advate, the brand name hemophilia treatment that prevents deadly bleeding episodes in adults and children, had an average cost per fill of $20,828 and was associated with total program spending of $354 million.
  • Dashboard drug lists may not include drugs covered in the news today. EpiPen, for example, does not appear in the top 20 Medicaid drug price increases or spending because because its large price increases occurred prior to this year. However, CMS data shows that Medicare and Medicaid spending on EpiPens rose by more than 500 percent from 2011 to 2015.

Of the 20 drugs with the highest per-unit cost increases in Medicaid, nine were generic drugs. Those products had increases in price ranging from 140 percent to nearly 500 percent between 2014 and 2015.

Key Findings – Medicare

  • The five Medicare Part D drugs with highest total drug spending each accounted for more than $2 billion in gross spending in Part D in 2015. The five drugs with the highest total Medicare Part B spending in 2015 are the same as 2014 and combined they totaled more than $7 billion in spending.

Trends in Medicare Part D Total Spending for the Top 5 Drugs

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  • Among the Part D drugs with the highest unit cost, the chemotherapy agent that treats leukemia and other cancers, Gleevec, had a per user cost of $81,152 and was associated with total program spending of $1.2 billion.
  • The brand name drug Glumetza that manages high blood sugar had an average unit cost increase of 381 percent in Part D between 2014 and 2015. There were three other drugs that had increases of more than 200 percent.
  • Among Part B drugs, the brand name treatment for multiple sclerosis and Crohn’s disease Tysabri had a per user cost of $39,767 and total program spending of $288.8 million.
  • The generic chemotherapy drug Mitomycin that treats stomach, pancreatic, and other cancers, had an average unit cost increase of 163 percent in Part B between 2014 and 2015, and there were six products that had unit cost increases of more than 20 percent. 

    Rebates in the Medicare Program

    These data do not include rebate information that Medicare may receive from pharmaceutical manufacturers because federal law restricts the release of this information. But, for the first time, we are able to provide an aggregated summary of Medicare Part D manufacturer rebate information for calendar year 2014 for several broad categories of brand name drugs [https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Information-on-Prescription-Drugs/2014_PartD_Rebates.html].

    In total, more than $16 billion in manufacturer rebates for brand name drugs were collected by Medicare Part D plans in 2014 for an average rebate of 17.5 percent. Among the Medicare Part D brand name drugs listed in the 2014 dashboard, the average manufacturer rebate was 17.8 percent. Twenty-two of these drugs accounted for a total of $6.6 billion in rebates. As reported by the HHS Office of Inspector General, it has been found that drug rebates in the Medicare Part D program are generally lower compared to other payors. Part of the reason for this is that Medicare cannot harness its full purchasing power to negotiate for rebates across all Part D plans. We believe releasing this information, even at this higher level, helps to shed new light on the relationship between drug pricing and overall program costs.

    Concluding Point

    We know that millions of Americans have come to rely on these prescription drugs to manage their chronic conditions or to treat serious illnesses. Maintaining access to those medications is the reason we believe informed dialogue on how to manage costs and cost increases are so important.

    As administrators for the Medicare and Medicaid program, our most important goal is to make sure that beneficiaries have access to high-value, innovative medicines that improve their lives. But because costs necessarily get passed on to beneficiaries and taxpayers through higher premiums, coinsurance, and taxes, we also have a responsibility to ensure that access to those medicines remains affordable. We hope by providing a better view into our spending on prescription drugs, this understanding can help policy makers, manufacturers, purchasers, and consumers to work together to better the health of all Americans.

Remarks by Andy Slavitt: The Need to Partner on Drug Innovation, Access and Cost

Below are the comments of CMS Acting Administrator Andy Slavitt on November 3, 2016 before the Biopharma Congress in Washington, D.C.

***

Thank you for having me here this evening. It’s a pleasure to join you again to reflect on the progress we’ve made since I spoke to you last year, as well as the goals I believe we should be working on together. I know you probably hoped I would come talk about a little demo we have been working on to address ways of testing the value of drug payments, and I’ll get to that in a few minutes. But, I’d like to start by stepping back and discussing what we’re trying to accomplish in the innovation space.

The Beneficiary

Ultimately, our goal is to bring highest quality, cutting edge health care and medicine to our beneficiaries as affordably, as quickly and as safely as possible. Because it’s patients that drive everything we do at CMS,  the care and well-being of 140 million Americans, most on fixed or modest incomes in the Medicare, Medicaid, Children’s Health Insurance and Marketplace programs, and the millions more who will need these programs someday.

They are daughters and sons who watch their parents lose their independence from debilitating conditions like Alzheimer’s and cancer. But, they are also Medicare patients who leave the hospital with five prescriptions to fill and no idea how to pay for them.

Obviously you, as the developers of these innovative treatments, have such a central part to play in their futures: from advance diagnostics and laboratory-developed tests to precision medicines that aim at our disease, but spare our minds and bodies based on our unique make-up. So let me begin by highlighting some of the exciting ways that CMS and innovators are beginning to collaborate on developing new products, getting them onto the market, and making them available to for patients as quickly as possible.

  1. Investing in Research —

First of all, we’re looking for more ways to invest in research. I’ve been a proud member of Vice President Biden’s Cancer Moonshot Task Force, which worked to break down barriers between the research community, the federal government, community oncologists, and other innovators on processes to address the full range of issues impacting breakthrough medical discoveries.

While we all look forward to the discoveries ahead, we don’t have to wait for them to make a meaningful difference in the lives of patients. On the Task Force, we developed new ways of working to create common data, leverage existing clinical research, and decide where to step on the gas so we can simplify the path to market for new discoveries in the areas of prevention, diagnosis, and treatment. Our recommendations are outlined in the Cancer Moonshot Report that Vice President Biden presented to the President on October 17th.

  1. Supporting Clinical Trials —

We are also actively engaged in supporting the investigation of new products by covering the costs of care for Medicare beneficiaries in certain categories of clinical trials and studies.

For example, in trans-aortic valve replacement, we partnered with a device company, providers, and FDA to cover the device within weeks of FDA approval for all FDA indications and included a registry for coverage with evidence development so we at the agency, the manufacturer, and providers could show improvements in long term outcomes and develop more evidence on additional indications where the device might be beneficial.

  1. Shortening the Wait for Innovative Products —

Francis Collins, Rob Califf, and I have established tri-Lateral leadership discussions among our agencies. We’re a sleeper group, but hope to establish critical ties that can eventually create a single front door to research safety, efficacy, coverage, and pricing – with appropriate firewalls and safeguards. Together we’re making it a priority to figure out how to coordinate in ways that advance product development. You may have seen that we just extended indefinitely our parallel review program. This is a CMS-FDA partnership that makes it possible for CMS to consider new devices for coverage even before their approval by the FDA. We believe that eliminating risk for you will improve lives and reduce costs as it significantly accelerates the speed at which your innovations become available to our beneficiaries.

In the case of Cologuard – a rapid screening test for colon cancer that has the potential to increase screening and early detection – we were able to initiate a National Coverage Analysis and proposed decision on the very day that the FDA approved the product, and we issued a final positive National Coverage Determination less than two month later, seven months ahead of our statutory deadline. We’re currently using parallel review to track the progress of FoundationOne® a first-of-its-kind comprehensive genomic profiling assay that incorporates multiple companion diagnostics to support precision medicine in oncology.

  1. Maintaining Affordability While Pushing for Innovation –-

We’re also trying new approaches to ensure patients continue to have access to the most innovative therapies. We have introduced a new way to pay for cancer care called the Oncology Care Model, which allows physicians to earn extra bonuses under MACRA. The model includes a novel therapy adjustment, which incorporates the cost of new therapies, once approved by the FDA, into our pricing model to ensure that physicians can focus on optimal patient care and outcomes, using the best treatments available.

  1. Data –-

CMS is also committed to releasing data whenever possible, across all our topics and sectors. We’ve released information on Medicare spending and utilization that provide unprecedented detail on how providers practice medicine and prescribe drugs in Medicare. Collectively, these data releases cover more than 85 percent of Medicare payments and include information not just on individual clinicians but also hospitals, skilled nursing facilities, home health agencies, and hospice providers. In addition, Medicare claims data shows us that we provided coverage for more than 145,000 beneficiaries in over 7,500 clinical studies in 2015.

We recognize the potential contribution this knowledge can add to studies in which large numbers of our beneficiaries enroll. We are interested in collaborating with you to consider how we can leverage the size of the Medicare program and the quantity of data we collect to help you develop real-world evidence to show improved health outcomes from use of your products.

Cost

Of course, as great as all these efforts have been, we still have a lot more to do. But before we get to that, let me turn to a different “reality” – how do we make sure that all Americans have access to not only the great care around the corner, but also the drugs they depend on today.

So let’s have a candid talk about drug costs. Not the politics, not the value argument, not even the patient perspective. Let’s start with the math:

  • At the top line, total prescription drug spending in 2015 was about $457 billion or 16.7 percent of health care spending.
  • Based on recent trends we’re currently projecting average annual increases of 6.7 percent through 2025.
  • Part B drug spending doubled from 2007 to 2015, and Part D costs increased 8.4 percent between 2013 and 2015
  • Specialty drugs are a big part of the equation. In 2014, they accounted for 31.8 percent or spending despite representing only 1 percent of prescriptions.
  • However, of the 20 drugs with the highest per-unit cost increases in Medicaid, seven were generic drugs. Those products had increases in price ranging from 140 percent to nearly 500 percent between 2014 and 2015.

Cost increases are pervasive. Despite all the attention it has generated this year, Mylan’s Epipen is not even on our top 20 list for either high price increases or spending overall in 2015. Many of these have been ongoing for a while with real patient impact and some are big stories waiting to happen.

You know, last year when I spoke here, the price increases at Turing were making news, and I told you I didn’t want this industry to be defined by its worst actors. I defended the industry then, but the more data that’s revealed, the more bad actors you find, and I’m telling you now: it’s too many.

These numbers don’t give us the full picture, but they do help to draw attention to a problem that is an increasing source of worry for families across the country. Drug costs have become the health policy issue Americans are most anxious to see us act on, and we have a responsibility to them to explore all the options available us to make their medications more affordable.

I hear occasionally from some that life sciences needs to tell its “value story” better. Perhaps. But it also needs to do the math. If something is growing by 11 percent, unless it’s causing something else to decrease by 12 percent, it’s not going to last forever. The reality is that in the next few years these costs will put unsustainable pressure on the Medicare program, and action is going to be necessary to address them. For my successor, this will likely be a big priority as well.

In every state I visit now, governors pull me aside to tell me that they can’t sustain the rising cost of drugs in their Medicaid programs. I was in Oregon just last week with Governor Brown, where they told me that pharmacy spending rose from 16 percent of costs in 2012 to 19 percent in 2015. They anticipate those numbers to rise for 2016. They cannot plan for it and now worry about being able to adequately fund their mental health system. As their federal partner, I am too.

Accessibility is as critical as affordability

Simply reducing the cost of medicine is not our focus. This is the richest country on earth and I’m quite confident there are solutions so that every American can have access to high-value innovative medicines that improve their lives. But because costs get passed on to consumers and taxpayers through higher premiums, coinsurance, and payroll taxes, and rapidly increasing costs affect the ability of everyone to access the medicines they need to maintain their health and add to the length and quality of their lives.

What you choose to do as an industry will help define the next several years. So the question is: can we have both innovation and the affordability necessary to make it accessible? I think the answer is yes.

These two goals shouldn’t be in opposition. In every-forward looking industry outside of health care, we see that competition actually fuels innovation, and affordability improves alongside the development of new technologies. There are plenty of policy options and certainly a number of ways innovators like you can choose to respond – from disputing the math and fighting it, to looking for win-wins.

CMS wants to be a partner in innovation. For those of you who look at data, find solutions, and pay for value, we want to partner with you.

I have seen some very encouraging signs of collaboration this year. Just last week, Johnson & Johnson became the first manufacturer to join our Health Care Payment Learning and Action Network – a group dedicated to transitioning the health care system to reward the value of care, rather than the volume. We are grateful for their commitment to this shared goal, and look forward to the perspective they will bring to the table.

In closing, last year I made commitments to four priorities in working with you: better data to collaborate on, exploring value-based models, ensuring the needs of the lowest-income, and improving innovation processes. We are just getting started here.

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Remarks by Andy Slavitt: A New Normal in Health Care Quality, Cost and Access

The following are comments delivered by CMS Acting Administrator Andy Slavitt at the American Academy of Actuaries annual meeting and public policy forum on Thursday, November 3, 2016 in Washington, D.C.

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I want to thank this Academy for the objectivity, technical leadership, and the expertise this membership brings to the hard questions of health care reform. It doesn’t matter what happens politically, there will always be ongoing debates about health care policy decisions, and your work and your voice are vital to our ability to get them right.

Any study of the history of American health care reform will reveal a series of fits and starts – a pattern of many years with little to no progress followed by a significant event which catalyzes change for a while and creates a “new normal.” The Affordable Care Act was such an event, as was MACRA. In between these spurts of progress, we adapt and make adjustments as necessary to live in “the normal.”

Normally in my speeches, I like to begin extolling the virtues of what’s been accomplished by the Affordable Care Act. But instead, I’m going to go in a different direction and talk a little bit about what it was like prior to the ACA during the “old normal.” The old normal required us to accept that our health care system was not designed for many of our neighbors, or frankly, for any of us. Remember what the “old normal” was like? It wasn’t that long ago.

Old Normal

Let me start at the beginning of the health-illness cycle:

  • Fifteen percent of the country had no preventive care; no reliable to primary care, let alone care management services. And, therefore, they utilized the ER for needed services.
  • When they got sick, millions of people could not fill their prescriptions. If they felt pain or needed surgery or other expensive care, they ignored it as long as possible
  • The finances were all backwards. People with low income were chased down for billed charges – well in excess of commercial rates.

As a result, health care became the leading cause of personal bankruptcy. And for hospitals and clinics, bad debt became part of the formula. And that meant cost shifting, raising the price for employers and reducing compensation.

Of course, there were other effects. A person with a past illness was prevented the ability to get insurance, which often meant the need to stick with an employer only for health benefits.

Finally, despite arguments from some that market forces served us best, the lack of transparent information, technology, incentives for quality, or incentives for coverage created little inclination to make things better. As a result, you and I would attend meetings like this once a year where people would talk about progress, but no one would ever deliver any.

I can go on, but suffice to say, the “old normal” was bad for patients, bad for our health, bad for hospitals and physicians. But, it was also bad for our economy, bad for medical trend, bad for our country.

One law isn’t going to fix all that in an instant. But today, when we count 20 million Americans in the “new normal” who now have the security of coverage due to the ACA, it represents an opportunity for us to move away from the dysfunction of the past.

So cutting the uninsured rate in half doesn’t just represent a set of numbers, even beyond the impact of people’s lives, it represents our country’s ability to set off on a path for progress, where we finally moved from fits and starts to a place where we can improve … and improve … and improve. But that’s not the work of the law — it’s the work of all of us. So what do we need to do next?

First, the basics – covering more and more people. The most obvious way to do this is to expand Medicaid everywhere. Millions of people, health outcomes, state budgets and health care finances will all instantly improve as they have around the country. We know this. Even rates the exchanges decreased by 7 percent when Medicaid is expanded.

Second — reach the millions of people this open enrollment period who are chronically uninsured, most of whom don’t realize that coverage is affordable thanks to the tax credits available to them. Open enrollment began Tuesday and it’s clear the demand is real with 150,000 people applied for coverage in the first day.

Third, we are going to need to teach people how to adapt to live in this “new normal.” We are beginning the process, in community after community across America, of re-connecting consumers to the health care system. All of us need to adapt to the new normal. For the consumer who’s used to making trips to the ER, it’s learning all the preventive and primary care avenues that are available to them; for the health plan, it’s adapting the past business model designed around underwriting- to one around new care and network management approaches; for the hospital it is learning how to make money when beds are empty, not by filling them. To continue to succeed in the new normal, we can’t take the old rules into the “new world” without making adjustments.

Fourth– find the places where tweaks and adjustments will help the ACA work better. We are in the early stages of a very new set of rules and just now beginning to see data now on care patterns, costs, and opportunities. If Medicare is any guide, a series of policy decisions are typically going to be necessary to improve it. Things like risk adjustment, state-based waivers, the impact of third party provider payments. Put politics aside, there will come a time for adjustments, whether at the state or Federal level and all things should be considered in order to get them right.

Fifth– and most importantly, is addressing the real factors that are driving up the cost of health care. Very few people outside of this room know what actually goes into their premium, what factors cause them to increase, and how rates are set. To the average person, what we call “unit prices”, their hospital stay or a prescription are too high but the relationship to their premium isn’t clear. Transparency into costs is important in a world where more people are paying their own premium. Hospital profits in many cases are double or more what they were before the ACA. Drug costs are growing at record levels. And there are more endemic issues like the costs of untreated chronic diseases like diabetes or the large “tax” the fee-for-service system imposes on us when care isn’t coordinated or when bad quality is delivered. While people may not equate these costs or inefficiencies to the premiums they pay each month, we need to make those connections clear that this is where the real work needs to happen.

Gaining on the Progress 

One thing that is clear is that we are either going to move forward and capitalize on the gains that have been made?  Or we are going to retreat back to a mode of saying what’s not perfect must be killed, and along with it, the gains we have made for millions of Americans and the health care system?

For the crowd who believes we should go back to the old normal, I bet very few have been in the position where they’ve ever had to declare bankruptcy from cancer. Or had to tell their daughter she couldn’t play on the volleyball team because “mommy doesn’t have health insurance for you.” To the people we interact with every day, who say they can sleep well at night because of the ACA, we need to keep moving forward.

At this point, what determines the success of health reform isn’t the big ideas, but the actual implementation. How we execute, measure, learn, and adjust. Our job, as I see it, and where we need you, is to use data and science to expand what works, look at what needs to improve and provide options, steer us to the best answers, analyze results, review and improve.

In the spirit of continuing to move forward, there are a number of areas we can address to make real progress. I will give three critical examples.

1. Moving from Treating Sickness to a Model of Prevention.

Let me start with the devastating impact of chronic disease, diabetes. One in 4 people 65 years or older, more than 11 million people, have diabetes. But diabetes-related care costs the Medicare program $42 billion annually, much of that money is spent on prescription drugs, insulin and other costs, let alone complications from heart disease, blindness and other illnesses.

And when someone develops diabetes, they cost taxpayers 86 percent more to take care of every year. So what if we could prevent illness rather than just treat it? Yesterday we made an exciting announcement – the expansion of a test to offer diabetes prevention services to Medicare beneficiaries. A prevention-based system is something that couldn’t have been conceived of in a system that was developed around treating illness.

So, how do you get there? The ACA created the ability through the CMS Innovation Center to observe what people tell us works, conduct small tests and if they work, expand that test further. For a model to expand, the CMS actuary needs to certify that a model not only improves care, but saves money and can do so at scale. With diabetes prevention, we began testing a model where participants identified at high risk for developing diabetes were provided strategies to increase their physical activity, control their weight, and decrease their risk of type 2 diabetes.

The results of this model were consistent with other studies. Participation led to an approximately 5 percent reduction in weight and saved Medicare an estimated $2,650 for each person enrolled in the program over a 15-month period, more than enough to cover the cost of the program. For us to manage the costs of the Medicare program, prevention has to be part of the new normal. And other models are around the corner, including testing the preventing of stroke and heart disease.

One lesson you learn often in healthcare, and that you probably all understand very well, is that one person’s expense is another’s revenue. I have been reminded of this recently, as when we announced that we wanted to expand the program, and continue to focus on prevention efforts, we got opposition from the drug manufactures. They have publicly criticized our efforts. With that said, it is clear to me that we are going to need to focus on the common good to be successful.

2. Expanding Value and Payment by Engaging Physicians in Better Models of Care

Second in the “new normal” is going interacting with the clinical community in a new way to be engaged and aligned in delivering high-quality patient-centered care. That means paying more for what works and creating an array of accountability models that fit the practice of medicine. And it means reducing burden so physicians can get back to practicing medicine, not filling out paperwork or typing on a keyboard.

And we must pay physicians to listen and talk to patients, not just cut, test, or prescribe.

Yesterday, we announced significant steps to improve payment for primary care, care coordination, and behavioral health.

These changes move Medicare further from an illness system toward a health care system that encourages teams of clinicians to work together and collaborate in order to provide more personalized care for their patients. Geriatricians, internists, and family physicians over time could see increases for coordinated care over 30 percent

And our medical home and episode based payment models under MACRA will allow physicians to receive PMPM payments and quality bonuses for being accountable, as part of a team, for delivering better care. And to engage physicians, the new Quality Payment Program we’ve introduced isn’t about more and more measurement, but more flexibility and a reduction in regulation and paperwork. Commercial health plans must also realize that reengaging physicians and other clinicians in care delivery is vital in this new normal.

3. Finally recognizing the role of the patient. 

Finally, if we are going to make progress, the individual and their family will need to be placed in the center of their care. And this is what drives CMS – the care and well-being of 140 million Americans in the Medicare, Medicaid, Children’s Health Insurance and Marketplace programs and the millions more who will need these programs someday. Most are on fixed or modest incomes, who are more diverse, more mobile and more disconnected from our fragmented system. They are also more sensitive to the cost of care than ever before:

  • They are Medicare patients leaving the hospital with five prescriptions to fill but unsure how to pay for them. We know keeping them at home will depend on the quality of the transition they make to their own doctor and with their medication;
  • They are daughters and sons who have to make the difficult decisions on how to care for their parents who are losing their independence and need more and more assistance. They want to understand their options for both home and institutional care and how quality, staffing, cultural commitment and budgets will keep their parents healthy and independent for as long as possible;
  • They are parents with children with disabilities that require 24 hour care, who spend their lives watching every dollar and interviewing every home care worker.
  • And, they are Marketplace customers who have coverage for the first time and are finally able to address symptoms they have long ignored. These families have become our weathervane for costs as they feel – in the monthly premiums they pay each month – everything in the system that unnecessarily increases the cost to care.

There are, of course, millions of us in a wide diversity of health circumstances, but each of us are actually looking for a common set of things from the health care system: to intersect with people who understand us and provide reliable, quality care; to understand what comes next in the care process so we can get home and have as productive and as healthy life as possible; and increasingly, we worry about having have access to care we can afford.

So what becomes clear from understanding consumers better is that for the millions of us who work in health care, affordable and coordinated care is now part of everyone’s job.

In closing, and as I think about my next 78 days, we have enormous opportunities for gains in our health care system, but only if we work for them. We can’t expect to do things the same way and make progress. And we have to take the opportunities we have for progress. Unlike many periods over the last 20 years, our opportunity for progress is richer than ever. I want to thank you for the role you have played in the progress we have achieved as a nation and we are excited about the progress we can continue to make together.

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