Tackling Tough Issues Together: The CMS Rural Health Council Solution Summit

By Cara James, Director of CMS Office of Minority Health and John Hammarlund, Regional Administrator 

In 1909, President Theodore Roosevelt’s Country Life Commission issued a report finding that in rural populations, “the physicians are further apart and are called in later in cases of sickness, and in some districts, medical attendance is relatively more expensive.” We have made progress in closing some of the access gap in recent years. Since the Affordable Care Act was signed into law by President Obama in 2010, uninsured rates in rural America have dropped by nearly 40 percent with corresponding improvements in access to care. Nevertheless, rural Americans are more likely to live in states that have not expanded Medicaid, more likely to live in areas with fewer physicians per capita, and more likely to have difficulty accessing timely emergency care.

To address these issues, earlier this year CMS established the CMS Rural Health Council. Made up of experts from across the agency, the Rural Health Council has been thinking about three strategic areas – first, ways to improve access to care for all Americans in rural settings; second, ways to support the unique economics of providing health care in rural America; and third, making sure the health care innovation agenda appropriately fits rural health care markets.

Supported by the Council, CMS has undertaken a number of efforts to reach out to stakeholders to hear about ways to improve access to services for rural Americans. CMS has rural health coordinators at each of our Regional Offices, who meet monthly with the Health Resources and Services Administration (HRSA) to discuss emerging issues. During the Rural Health Open Door Forums, CMS engages with stakeholders to provide current information on CMS programs, answer questions, and learn about emerging rural health issues.

Through our rural health coordinators and the Rural Health Council, CMS has conducted nearly two dozen listening engagements nationwide on key rural health issues, such as telemedicine, hospice, and hospital support. We’ve heard directly from physicians and hospitals who are treating their patients while juggling the unique challenges of rural health care.

In recent years, CMS reformed Medicare regulations that were identified as obsolete or excessively burdensome on hospitals and rural health care providers, which will save providers nearly $660 million annually and $3.2 billion over five years.

Going forward, we’re continuing to embed a rural focus into new programs. For example, with the proposed new Quality Payment Program, we’re making a special effort to reach clinicians in rural areas. Through technical assistance and other activities, we’ll help them transition to the proposed Quality Payment Program’s new approach for paying clinicians for the value and quality of care they provide.

We hope that all of our ongoing efforts, including the work of the CMS Rural Health Council, will give us a better understanding of how our policies and programs affect rural communities.

But we can’t address the challenges of rural communities alone. That’s why we recently announced we will be conducting the CMS Rural Health Solutions Summit on October 19, 2016, at CMS headquarters in Baltimore, Maryland. The CMS Rural Health Council will be bringing in stakeholders from all sectors of the health care industry as we engage in in-depth discussions about ways to improve access to care in rural America and support local innovation in care delivery. We’re excited to bring together national, state, and local leaders to discuss innovative strategies for improving rural care, access, and cost. This discussion will help us work together towards rural health policy and implementation that drives high-value, high-quality health care. If you’d like to join our conversation on October 19, please register at https://register.mitre.org/CMS_Rural_Health_Solutions_Summit/index.html


Remarks by Andy Slavitt: Talking with the industry about the future of health care in America

Talking with the industry about the future of health care in America

Below are the remarks as delivered by CMS Acting Administrator Andy Slavitt on October 5, 2016 at the forum on Marketplace Year 3: Issuer Insights and Innovations at the HHS Humphrey Building in Washington, D.C.


Thanks a lot Kevin and I really want to thank you all for being here today and for those of you watching on live stream. And as you return from lunch, I’m sure you’re ready for a good speech about SEPs and DMIs and other acronyms and other changes we are embarking on to keep improving the risk pools. Or the very exciting young adulting campaign.

But instead I’m going to talk about my commute to work.

When I fly into D.C. every Monday morning, there used to be long lines of us waiting for yellow cabs. More recently now, what I often see long lines of yellow cabs waiting as people walk, heads in their phones, across the street and directly into Ubers. In a short time, my experience was improved and a whole industry has radically changed. I saw something parallel happen in the early 2000s with online banking and brokerage. You used to need a broker to buy a stock, so only people who were really well-off really did it. As soon as E-Trade started offering trades for $8, it changed for better some might say for the worse– because everyone can buy stock now.

What’s been interesting is not just to see the innovation, but to see how incumbent players who have spent decades as undisputed leaders in their industries, make up their minds to adapt.  Big companies like Fidelity followed the online companies and brought their own unique scale and services into the mix. The biggest taxi company in Minnesota where I live that I used to use to get to the airport just put together an app called iHail so now I have two better choices.

For a lot of us, service has rapidly improved in our day to day lives and affordability has increased as industries have been disrupted by events– events like the digital and cloud based-economies—has seen new competition and new innovation.

It’s not just digital. There’s been regulatory disruption as well, which is a little closer to what we are talking about here. In 2003, when the FCC mandated mobile phone companies allow for phone number portability, this was considered a really big deal at the time, one industry executive predicted it would doom the industry as customers would become fickle and change mobile phone carriers every month for even slight decreases in price.

But you know that didn’t happen, the rampant churn and race to the bottom that many predicted ended up not happening as one carrier after another built loyalty programs– buying iPhones and Android upgrades for their long-term customers and integrating new “stickier” services and entertainment packages.

Another example, as emission standards moved up on American auto makers, the very demise of the auto industry was predicted. There was even a New York Times article written in 2009 entitled “Does the U.S. Need an Auto Industry?” There were similar headlines in other places.

Yet, just two years later came the story “How Ford went from losing $30 billion to posting big profits.”

Fast forward to today. If you look at the most recent auto sales from 2015 in the area where U.S. manufacturers have been historically least competitive– high end luxury sales– here’s what you’d find. Overall, industry sales were about flat, but it wasn’t a good year for a lot of companies.

Audi, down 8%
BMW, down 5%
Jaguar, down 16%
Lexus, down 16%
Mercedes, down 13%
Porsche, down 13%

So if sales were flat, where did those car buyers go?

The luxury brand that grew in 2015 was actually an American company– Tesla, which grew by more than 50 percent, and moved to #1 in market share. How? They brought a new vision of environmental consciousness to the luxury market. In fact, for those who thought the auto industry was doomed, we have seen that companies have come along and reinvented it, 2015 was U.S. manufacturers’ best year of sales ever, with a Chevy winning car of the year and with another all-electric Chevy one of the most anticipated new cars for 2017.

So, the answer to all the newspaper headlines is indeed, yes. American companies can transform and lead.

Over the past four decades, we’ve seen over and over again how new regulatory systems, new technologies, and new approaches change industries in America. And dating back to when the airlines were deregulated and the baby bells were broken up to the examples I just talked about, virtually every industry has under gone this type of a transformation– lowering costs in the end, expanding markets in the process, and delivering better services to people — now often out of necessity, but eventually leading to real success.

Now going through the process wasn’t necessarily easy and there was turmoil, but as any of the headlines that have alternatively doomed the auto industry, the financial services industry, Internet companies, and many others have proclaimed. But the thing we know is when the rules of the game change, winners emerge. It’s not just the “disrupters”– the Southwest’s airlines, the Tesla’s, the E-Trade’s of the world that have been successful.

The incumbent companies who saw that what was coming or adjusted to the new environment by bringing their own strengths turned out to be big winners. There are plenty of examples we know of that history can point us to that are fairly well known. Fidelity opened retail outlets and used its asset base to take on e-trade; H&R Block went on line and used its bricks and mortar to take on TurboTax. Wal-Mart used its buying power to adjust to Amazon and online retail.

Ok, why am I giving one of my last speeches of this term about industries in transformation instead of the more topical topics like the risk pool, Special Enrollment Periods or Open Enrollment? It’s really just to ask the question . . . Has health care’s turn to transform finally come?

Let’s start with what is the major disruption to American health care. Major disruption is this, for the first time in our country, we are promising our fellow citizens that even if they get sick or even if they have ever been sick, even if they lose their job, even if they have a lower income, we will insure them against their future care needs. And, by the way unlike in the auto industry, where we had dramatically shrinking markets and under-capitalized companies, what we see here is the opening up of a new $40 billion and growing market with lots of capital. So we are taking better care of people, we got the wherewithal to do it.  As disruptions go, this is a pretty great one.

We’ve chosen to address the need to transform in most traditional American way possible– through the private sector. Which means we’re relying on innovation and competition to serve consumers best. And as a country, we will all have to figure out what that looks like–what needs to change and what needs to stay the same. If critics want to pretend it happens automatically, just looking at other industries tells you that it doesn’t. If critics think we should abandon consumers and go back to the old way because it’s not all figured out just yet– the same way some that many predicted the demise of the auto industry– that misses the fundamental premise of: 1) how progress is actually made in our country; and, 2) your ability to innovate.

What are the biggest sources of current angst in the media? Rates are increasing. Many plans in many markets were underpriced over the first several years of the exchange. Why? What can we learn from this? I think it’s pretty simple. Nobody knew what it would cost to cover sick people. We’re still learning that.

Intellectual honesty requires us to say that rates are right now about 18 percent below what was originally projected. Would we all have preferred to be 10 percent higher say from the start with more gradual increases? Of course. You bet we would. But rates will adjust, and as they do the ACA will protect consumers with tax credits and with rebates if rates go up too much.

It’s also important to know that new disruptions require us to learn and adjust. If anyone’s premise was that by passing one law, we would fix the affordability of health care all at once, that’s just not how it works. We’re here because the law sets a path in motion.

Can things be improved with the law? Can we and the Administration and Congress continue to make the Marketplace better? Without question. But while some will want to spend their time hoping to roll back the rules or go back to the old way, leaders– many in this room, many who we have visited with– are looking at this time as an opportunity of competitive advantage; they are spending this period scrupulously experimenting– and profiting.

So forgive me if I’m not persuaded by the headlines or the Wall Street analysts predicting doom and gloom for the health care Marketplace.

I’ve had conversations with senior leaders at some of the companies I have talked about at Fidelity Investments, Delta Airlines, Intuit and others about that time in their lives in their industries when things were changing rapidly. And as you would expect, these were uncertain times with pressures from boards and Wall Street; a lot of uncertainty, the only certainty came from the doom and gloom they read about in the media.

Now the Secretary, Kevin Counihan, Mandy Cohen and I have also made it a point to personally talk to many of the CEOs and management teams about your experiences– what’s working, what’s not– and what both the data and your  own leadership instincts are telling you. Through this, we’ve compiled a list of five questions that I would suggest every organization might want to ask to be successful in this space.

First, what’s your vision and cultural reference point for serving this population?

It may seem like a strange question to start with, but in almost every conversation with the highest performers in the Marketplace, they start the conversation with an explicit reference to how this business relates to their mission and to what their employees believe. The missions aren’t always the same– some describe a focus explicitly on meeting the retail needs of consumers some see this as a transitional moment ahead moving from a business-to-business world to business-to-consumer world, some are focusing on providing care to under-served populations, others have a data-oriented culture, some deep community relationships that they know how to work through and some pride themselves on having nimble culture. The cultural focus in all those cases allows them to not only perform well, it’s actually helped them to galvanize their employees from across their organizations to meet the new opportunities of the Marketplace far more easily.

Second, how well do you know your customer?

Universally, we hear more than ever before, that you have to microscopically understand how consumers choose to buy, pay, seek care, and decide to persist. We all tend to think we know our customers’ needs, but do you know their health needs the same way Google knows your search needs? Do you know who’s most likely to misuse the ER because they have never had primary care relationships? Do you know what millennials want in a health care relationship? Do you know which diabetics are compliant and do you know which ones are most likely to respond to interventions.

An emerging best practice in the Marketplace from a number of you is to conduct health risk assessments at the time ID cards are activated to begin the relationship and the segmentation and stratification process that is so crucial to answering these questions. Now I would remind you, these skills that require you to do this exist everywhere in our economy they are the same consumer skills that have made each and every one of the industries I have talked about successful.

Third, can you build a relationship with consumers around things they need and value?

Particularly if you see churn in your book– as people move in and out of jobs and struggle with affordability, how do you build loyalty? Are you building on-boarding processes, monthly touch points, and other initiatives that create “stickiness.” Remember, consumers don’t like churning any more than you do. They are asking for reasons to stay in everything they do consumer have demonstrated they want to build relationships. We have to give them a reason.

Progressive Auto Insurance famously measures how safely people drive and allows them to earn points for safe driving which lowers costs and creates loyalty. I think there’s a misconception that you can’t have loyalty programs in the exchange. Not true. There are a number of successful ones. Using best practices is also delivering real bottom line results. Let me give you some rough numbers here, for most companies, something on the order of 25-30 percent of consumers don’t make timely binder payments.[1]

But for the top five companies in this category that number looks more like 10-15 percent.[2] What do they do differently? Well starting with they ask people why they weren’t paying. In many cases, a concern with credit held them back. One company began offering a program call Cashtie so payments could be made at local drug stores; one added a MoneyGram option; one added a smartphone app. And when one customer showed up at a company’s corporate headquarters with a check in hand, they started taking checks.

Fourth, have you created a product that meets the needs of your customers both for service and affordability– not a commercial product, not a Medicaid product– but a Marketplace product?

That’s not just a question of a tiered network and formulary or the question of broad or narrow network. It’s also how that network is engaged. Southwest Airlines had far fewer destinations than other airlines, but they turned that into a distinct advantage, turning “narrow” into “focused” as they targeted specific customers for the unique experience.

One area I have heard about from a number of plans is that some newly insured members continue to use the ER four or five times a year for services that they should get elsewhere. So here is an example, do you have your first tier hospitals contracted to manage aggressive ER utilization so people can get care in the right setting? Have you set up telemedicine, nurse lines, and other convenient forms of both coaching and steerage? Is there free primary care and other incentives to detect health concerns early? How financially engaged can you make your physician network to manage and reduce bed days? The broader point her is that if we think people many of whom have gone without insurance for years and years and years to automatically know how to use the system or behave like any of your other members, we are learning that is just not true.

Fifth, and finally, when you find what works how do you replicate it into a growth strategy?

A number of companies have told us they went too headstrong into too many markets and grew too fast before they had the opportunity to see how things were really working. Before they landed on consumer targeting, network and product strategies. Before they had models to replicate. Almost everyone, including those who are contracting this year, have told us they want to find a way to grow into this market and are still committing significant capital to getting their models right. One commercial plan is using Medicare Advantage physician collaborative to grow. Another, their Medicaid contracts. A third told me that step by step they see this as a chance to become a more national plan.

Mission, understanding the new customer, building relationships, designing the right products and turning that all into a growth strategy. These are some commonalities that we are hearing emerge in this Marketplace. But there is something else that I’ve observed the great companies in this room do well—and that is really simple.  It’s appreciate the joy and the meaning of delivering health and security to people. They tend not to describe people as “populations” or “pools” or “diabetics”; they understand that in the new world, the job is taking on sicker people and doing it better. They are not only committed to making people healthier every year, but they actually see greater financial opportunity in reducing acute episodes, in getting individuals to the right clinic, in making sure babies are born healthy, in bringing peace of mind to families, and in helping people get health issues  diagnosed early. They are actually winning because, in the new world, they see how to replace underwriting with care management.

No, none of this is not to take away from challenges that remain, as the President has said, in the “growing pains” of this new enterprise. The President specifically pointed to the “real problems” that remain to be addressed in making the ACA work better. Now it’s not because he’s pessimistic, but because he’s optimistic that the “growing pains” would actually be the time when we Americans make great progress. We at CMS and in the Administration are committed to taking these problems head on with you in what I see very much in the context of the classic American story of innovation and renewal.

Thank you all for your leadership. I look forward to an exciting open enrollment season.

[1] 2016 CCIIO Effectuation Rates
[2] 2016 CCIIO Effectuation Rates

The Medicare Current Beneficiary Survey: Celebrating Our 25th Anniversary and a Bright Future Ahead

By Niall Brennan, Chief Data Officer, CMS

This year marks the 25th anniversary and the one millionth beneficiary interview for the Medicare Current Beneficiary Survey (MCBS), a survey that the Centers for Medicare & Medicaid Services (CMS) first fielded in 1991. This in-person survey of 15,000 Medicare beneficiaries collects valuable information about aspects of the Medicare program that cannot be analyzed based on CMS administrative data alone.  In particular, the MCBS gathers information on self-reported health status, satisfaction with care, and functional limitations.  The MCBS also collects information on beneficiaries that is key to understanding patient-centered care.   Beneficiary’s out-of-pocket spending and source of payment for medical services received outside the Medicare program provides a window into the “invisible” and missed costs of health care. One unique aspect of the MCBS is that it includes beneficiaries who reside in institutional settings, such as a nursing home, as well as those in the community.

The MCBS is used across CMS to provide important insights that support internal program analyses.  For example, over the past several years, the MCBS has become a key resource for evaluating the impact of CMS Innovation Center demonstration models as well as for approving Medicare Advantage and Prescription Drug Plan benefits.

The MCBS also serves as the foundation for thousands of health policy analyses across a diverse external user community.  To date, we know of more than 1,000 peer-reviewed papers based on MCBS data in leading publications such as the New England Journal of Medicine, the Journal of the American Medical Association, Journal of Health Economics, and the Journal of the American Geriatrics Society.

Today, I want to acknowledge a number of important efforts CMS has undertaken to ensure the MCBS remains a valuable resource for the agency and external stakeholders.  We have made the data more accessible, releasing the first ever MCBS public use file in May of this year.  While MCBS data files have always been available for a relatively nominal fee, we heard that this fee was a barrier to entry for certain users such as students.  We believe that increased access through this freely available public resource will expand the MCBS user community, and thus help cement its importance as a critical tool in the evaluation of systemic changes in the US health care delivery system.

We are also implementing changes to the MCBS questionnaire and survey design.  Revising and improving the survey questions is underway.  We have added new relevant content including an updated dental utilization module, a module on care coordination, and new questions on food security.   Enhancing the sampling methodology to include newly enrolled beneficiaries in the first year of their Medicare enrollment, conducting an oversample of Hispanic beneficiaries, and, beginning in 2017, conducting an oversample of low-income beneficiaries increase our ability to conduct disparities research and improve our survey estimates.

We are also committed to a more rapid data release schedule, with improved user documentation and file structure.  The 2015 MCBS files will be the first to have many of the improvements discussed above. We anticipate releasing the 2015 data file in the 2nd quarter of 2017, more than one year earlier than the previous file release schedule.   The release of the 2015 data will also include improved chart books to accompany data releases and more intuitive naming conventions and file layouts with modern file formats for SAS, Stata, and R use.  However, to accommodate these long overdue innovations, we had to make the difficult decision not to release 2014 data files.

As we celebrate our 25th anniversary of the MCBS, we are renewing our commitment to providing the most useful and relevant information about the Medicare program and, more importantly, the health and satisfaction of its beneficiaries.

We hope that you’ll visit us on our MCBS webpage at https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/MCBS/index.html where you can also subscribe for important updates and announcements.


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Commitment to Person-Centered Care for Long-Term Care Facility Residents

By: Andy Slavitt, Acting Administrator and Kate Goodrich, M.D., M.H.S., Director, Center for Clinical Standards & Quality, CMS

Commitment to Person-Centered Care for Long-Term Care Facility Residents

It’s an experience millions of Americans go through each year, the difficult decisions we face when considering a long-term care facility for a loved one. We want to know that our family member will be safe, properly cared for, and receive the highest quality of care.

We are committed to doing everything we can to increase the knowledge and power that can help families undergo these transitions, particularly with regard to the rights of residents to high quality safety and care. Last year, CMS began offering consumers and families the ability to easily compare facilities based on successful discharges, unplanned emergency visits, and re-hospitalizations through a five-star website. However, the rules of the road for long-term care facilities haven’t had a comprehensive update since 1991. Today, we are pleased to announce that we have finalized new rules to protect and empower residents of long-term care facilities.

Today’s rules are a major step forward to improve the care and safety of the nearly 1.5 million residents in the more than 15,000 long-term care facilities that participate in the Medicare and Medicaid programs. These new rules set high standards for quality and safety, while providing facilities with important flexibilities that will assist with the preservation of quality of life and quality of care, and are grounded in the concepts of person-centered care. These changes are an integral part of CMS’s commitment to transform our health system to deliver better quality care and spend our health care dollars in a smarter way, setting high standards for quality and safety in long-term care facilities.

Since proposing to update these rules in July 2015, as part of the White House Conference on Aging, we have received and reviewed nearly 10,000 comments from the public. Many of the comments highlighted an important topic: concern about the use of required binding arbitration agreements that many prospective residents must sign before they are admitted to a long-term care facility. We took all of the comments into careful consideration as we developed the final rule we released today.

Protecting Residents Rights

The rule makes important changes to strengthen the rights of residents and families in the event that a dispute arises with a facility. Historically, many facilities require residents to agree to binding arbitration clauses when they are admitted to these facilities. These clauses require the resident to settle any dispute that may arise using arbitration rather than the court system. Effective November 28, 2016, our final rule will prohibit the use of pre-dispute binding arbitration agreements. This means that facilities may not require residents to sign pre-dispute arbitration agreements as a condition of admission to that long-term care facility.

Facilities and residents will still be able to use arbitration on a voluntary basis at the time a dispute arises. Even then, these agreements will need to be clearly explained to residents, including the understanding that these arbitration agreements are voluntary, and that these agreements should not prevent or discourage residents and families from talking to authorities about quality of care concerns.

This is part of our ongoing commitment at CMS to making sure that health care becomes more person-centered for Medicare and Medicaid beneficiaries and their family members. These changes further that goal by protecting the health and safety of residents, particularly during vulnerable and critical times like when moving into a long-term care facility. Together, the new requirements in today’s final rule set high standards for quality and safety in long-term care facilities and will provide residents – and their families – with greater protections.

For more information on today’s announcement, please visit the CMS website at: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2016-Press-releases-items/2016-09-28.html.


Affordable Care Act has strengthened Medicare Advantage and Prescription Drug Program

By Sean Cavanaugh, Deputy Administrator and Director of the Center for Medicare

Medicare Advantage is yet another area where the promise of the Affordable Care Act – saving money and improving care – has been fulfilled. When Congress passed the landmark Affordable Care Act six years ago, some critics claimed the law had fatally undermined the Medicare Advantage program. Yet, each year since then, the Centers for Medicare & Medicaid Services (CMS) has reported data showing this doom and gloom scenario was wrong. In spending taxpayers’ and beneficiaries’ dollars more wisely, the Affordable Care Act’ reforms resulted in a rejuvenated Medicare Advantage program that has grown every year while premiums have been stable and quality has improved.

First, the Affordable Care Act stopped the systematic excessive payments to Medicare Advantage plans. Before the Affordable Care Act, Medicare Advantage plans were being paid 114 percent of Original Medicare costs on average. This translated into an extra $1,280 of spending per Medicare Advantage enrollee or $14 billion in higher aggregate payments in 2009. The Affordable Care Act gradually reduced these payments but offered Medicare Advantage plans an opportunity to earn additional funding by improving the care they provided to Medicare beneficiaries through the Quality Bonus Payment program.

Rather than resulting in the demise of Medicare Advantage, these changes sparked a resurgence in the program. Enrollment in Medicare Advantage has increased every year since the Affordable Care Act passed and next year is expected to reach an all-time high of about 18.5 million, a 60 percent increase from 2010. In 2017, one-third of all Medicare enrollees will be in a Medicare Advantage plan. And these beneficiaries are receiving better care.  In 2009, only about 17 percent of Medicare beneficiaries were in four and five star plans; in 2016, over 70 percent are enrolled in four and five star plans.

Access to the Medicare Advantage program remains strong, with 99 percent of Medicare beneficiaries having access to a Medicare health plan, which has remained relatively constant since 2010. And in every county of the United States, seniors can choose to remain in Original Medicare.

This improved quality, increased enrollment, and stable plan availability has been accomplished while maintaining stable – or even lower Medicare Advantage premiums paid by enrollees. The average Medicare Advantage premium in 2017 is projected to be 13 percent lower than the average Medicare Advantage premium prior to passage of the Affordable Care Act. In 2017, Medicare estimates that the average Medicare Advantage monthly premium will decrease by 4 percent compared to 2016.

Other key improvements the law made to Medicare Advantage and the Part D prescription drug program are:

  • Closing the Medicare Part D “donut hole” over time. Because of this improvement to the law, people with Medicare are seeing reduced costs through savings on both covered brand-name and generic drugs. Through July 2016, more than 11 million seniors and people with disabilities have received savings and discounts in the coverage gap of over $23.5 billion on prescription drugs, an average of $2,127 per beneficiary.
  • Adding coverage of an annual wellness visit and eliminating coinsurance and the Part B deductible for certain recommended preventive services covered by Medicare, including many cancer screenings and other important benefits. Medicare Advantage plans are required to cover all services that Original Medicare provides. By making certain preventive services available with no cost sharing under Original Medicare, the Affordable Care Act removed barriers to prevention, helping Americans take charge of their own health and helping individuals and their providers better prevent illness, detect problems early when treatment works best, and monitor health conditions. CMS extended that zero-cost-sharing protection to enrollees in Medicare Advantage plans after passage of the Affordable Care Act.
    • An estimated 39.2 million people with Medicare (including those enrolled in Medicare Advantage) took advantage of at least one preventive service with no copays or deductibles in 2015.
    • Nearly 9 million Medicare beneficiaries (including those enrolled in Medicare Advantage) took advantage of an annual wellness visit in 2015.
  • Requiring that all Medicare Advantage plans spend at least 85 percent of revenue on quality and care delivery and not on overhead, profit or administrative costs. This means that 85 cents of every dollar earned by Medicare Advantage plans must be used on quality and care delivery. Enrolled seniors and individuals with disabilities will get more value and better benefits as plans spend more on health care. This requirement keeps Medicare Advantage in line with private insurance.

As CMS works to further strengthen the Medicare Advantage and Part D prescription drug programs for current and future Medicare beneficiaries, the Affordable Care Act’s reforms have built a foundation that will continue to provide greater protections for beneficiaries and value for taxpayers.


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Delivering coordinated, high quality care for patients

By Dr. Patrick Conway, Acting Principal Deputy Administrator and Chief Medical Officer

In July 2016, CMS proposed new bundled payment models that continue the Administration’s progress to shift Medicare payments from rewarding quantity to rewarding quality by creating strong incentives for hospitals and clinicians to deliver better care to patients at a lower cost. These proposed new bundled payment models focus on heart attacks, heart bypass surgery, and hip fracture surgery. They would reward hospitals that work together with physicians and other providers to avoid complications, prevent hospital readmissions, and speed recovery. This proposal follows the implementation of the Comprehensive Care for Joint Replacement Model that begin earlier this year, which introduced bundled payments for certain hip and knee replacements.

Patients want the peace of mind that comes with knowing they will receive high quality, coordinated care from the minute they are admitted to the hospital through their recovery. Bundling payments for services that patients receive across a single episode of care – such as a heart bypass surgery or hip replacement – encourages better care coordination among hospitals, doctors, and other health care providers. Providers participating in bundled payments must work together when patients are in the hospital as well as after they are discharged, which should improve their recovery and avoid preventable complications and costs by keeping people healthy and at home.

Doctors, patient advocates, and health care experts across the country support these models because they have seen firsthand their potential for delivering better quality and more cost-effective care. Public and private-sector bundled payment models have already shown promise in improving patient outcomes while lowering costs, including for cardiac and orthopedic care. In Medicare, more than 1,400 providers are currently participating in bundles through the Bundled Payments for Care Improvement initiative. Early results are encouraging: orthopedic surgery bundles, in particular, have shown promising results on cost and quality in the first two years of the initiative. These models keep the patient at the center of care delivery and focus on well-coordinated, high quality care.

Today, CMS is releasing the second annual evaluation report for Models 2-4 of the Bundled Payments for Care Improvement initiative, which include both retrospective and prospective bundled payments that may or may not include the acute inpatient hospital stay for a given episode of care. This report describes the characteristics of the participants and includes quantitative results from the first year of the initiative. Future evaluation reports will have greater ability to detect changes in payment and quality due to larger sample sizes and the recent growth in participation of the initiative, which generally is not reflected in this report. Key highlights include:

  • 11 out of the 15 clinical episode groups analyzed showed potential savings to Medicare. Future evaluation reports will have more data to analyze individual clinical episodes within these and additional groups;
  • Orthopedic surgery under Model 2 hospitals showed statistically significant savings of $864 per episode while showing improved quality as indicated by beneficiary surveys. Beneficiaries who received their care at participating hospitals indicated that they had greater improvement after 90 days post-discharge in two mobility measures than beneficiaries treated at comparison hospitals; and
  • Cardiovascular surgery episodes under Model 2 hospitals did not show any savings yet but quality of care was preserved. Over the next year, we will have significantly more data available, enabling us to better estimate effects on costs and quality.

While there is more work to be done, CMS continues to move forward to achieving the Administration’s goal to have 50 percent of traditional Medicare payments tied to alternative payment models by 2018. The 2016 goal of tying 30 percent of Medicare payments to alternative payment models was met eleven months ahead of schedule, and we are committed to keeping that momentum. Bundled payments – including the ongoing Comprehensive Care for Joint Replacement Model – continue to be an integral part of transforming our health care system by creating innovative care delivery models that support hospitals, doctors, and other providers in their efforts to deliver better care for patients while spending taxpayer dollars more wisely.

To view the evaluation report, please visit the CMS Innovation Center website at: https://innovation.cms.gov/Data-and-Reports/index.html.

New data: 49 states plus DC reduce avoidable hospital readmissions

By Patrick Conway, M.D., principal deputy administrator and chief medical officer, CMS; and
Tim Gronniger, deputy chief of staff, CMS

Affordable Care Act reforms helping Medicare beneficiaries
experience better care at lower cost

The unfortunate experience of having to return to the hospital after recently being treated—or watching the same thing happen to a friend or family member—is all too common. Potentially avoidable hospital readmissions that occur within 30 days of a patient’s initial discharge are estimated to account for more than $17 billion in Medicare expenditures annually.[1]  Not only are readmissions costly, but they are often a sign of poor quality care. Many readmissions can be avoided through improvements in care, such as making sure that patients leave the hospital with appropriate medications, instructions for follow-up care, and follow-up appointments scheduled to make sure their recovery stays on track.

To address the problem of avoidable readmissions, the Affordable Care Act created the Hospital Readmissions Reduction Program, which adjusts payments for hospitals with higher than expected 30-day readmission rates for targeted clinical conditions such as heart attacks, heart failure, and pneumonia. The Centers for Medicare & Medicaid Services has also undertaken other major quality improvement initiatives, such as the Partnership for Patients, which aim to make hospital care safer and improve the quality of care for individuals as they move from one health care setting to another.

The data show that these efforts are working. As described below, between 2010 and 2015, readmission rates fell by 8 percent nationally. Today, CMS is releasing new data showing how these improvements are helping Medicare patients across all 50 states and the District of Columbia. The data show that since 2010:

  • All states but one have seen Medicare 30-day readmission rates fall.[2]
  • In 43 states, readmission rates fell by more than 5 percent.
  • In 11 states, readmission rates fell by more than 10 percent.


Across states, Medicare beneficiaries avoided approximately 100,000 readmissions in 2015 alone, compared to if readmission rates had stayed constant at 2010 levels. That means Medicare beneficiaries collectively avoided nearly 100,000 unnecessary return trips to the hospital. Cumulatively since 2010, the HHS Assistant Secretary for Planning and Evaluation estimates that Medicare beneficiaries have avoided 565,000 readmissions.

The Hospital Readmissions Reduction Program is just one part of the Administration’s broader strategy to reform the health care system by  paying providers for what works, unlocking health care data, and finding new ways to coordinate and integrate care to improve quality. Other initiatives include Accountable Care Organizations, as well as efforts by Quality Improvement Organizations and Hospital Engagement Networks, which fund quality improvement expert consultants to work with provider and hospital communities to improve care. The goal of all of these efforts is to spend our health care dollars more wisely to promote better care for Medicare beneficiaries and other Americans across the country.


[1] Jencks, S. F., Williams, M. V. and Coleman, E. A. (2009). ‘Rehospitalizations among patients in the Medicare fee-for-service program’. New England Journal of Medicine, 360 (14), 1418-1428.

[2] The readmission rate in Vermont was virtually unchanged, increasing slightly from 15.3% in 2010 to 15.4% in 2015. This change correlates to 21 additional readmissions compared to if the state’s rate had remained constant.

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