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FY 2019 Annual Performance Plan and Report - Goal 1. Objective 1








  
  
    

  
      



Fiscal Year 2019

Released April, 2018



**Topics on this page:** Goal 1. Objective 1 | Objective 1.1 Table of Related Performance Measures

Goal 1. Objective 1: Promote affordable health care, while balancing spending on premiums, deductibles, and out-of-pocket costs

Affordability is a key component of accessible health care. For individuals and families, high costs of care create economic strain.  Americans often have to choose between spending a higher proportion of wages on health care and paying for other household essentials.  Without timely access to health care services, Americans risk worsening health care outcomes and higher costs. Yet for many, costs make health care out of reach.

In 2016, the Federal Government accounted for 28 percent of health care spending; households, 28 percent; private businesses, 20 percent; and State and local governments, 17 percent.  National Health Expenditure data show that growth in spending is due to expanded coverage and increased utilization of health care.

HHS is committed to lowering health care costs for Americans to affordable levels and minimizing the burden of government health care spending.  By increasing consumer information, offering lower-cost options and innovation in payment and service delivery models, and promoting preventive care and market competition, HHS is working with its partners to reduce the burden of higher health care costs.

The Office of the Secretary leads this objective.  The following divisions are responsible for implementing programs under this strategic objective: AHRQ, CMS, and FDA.

Objective 1.1 A Table of Related Performance Measures

Reduce the average out-of-pocket share of prescription drug costs while in the Medicare Part D Prescription Drug Benefit coverage gap for non-Low Income Subsidy (LIS) Medicare beneficiaries who reach the gap and have no supplemental coverage in the gap (Lead Agency - CMS; Measure ID - MCR23)



FY 2012
			FY 2013
			FY 2014
			FY 2015
			FY 2016
			FY 2017
			FY 2018
			FY 2019Target
			58.0%
			55.0%
			53.0%
			50.0%
			48.0%
			43.0%
			37.0%
			32.0%Result
			57.0%
			52.0%
			53.0%
			49.0%
			April 30,
			2018
			Feb 28,
			2019
			Feb 28,
			2020
			Feb 28,
			2021Status
			Target
			Exceeded
			Target
			Exceeded
			Target
			Met
			Target
			Exceeded
			Pending
			Pending
			Pending
			PendingThe Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA) amends Title XVIII (Medicare) of the Social Security Act by adding a Voluntary Prescription Drug Benefit Program (Medicare Part D).  Since its inception, Medicare Part D has significantly increased the number of beneficiaries with comprehensive drug coverage, and enhanced access to medicines.

While Medicare Part D offers substantial insurance coverage for prescription drugs, it does not offer complete coverage.  Prior to 2010, a beneficiary was responsible for paying 100 percent of the prescription costs between the initial coverage limit and the out-of-pocket threshold (or catastrophic limit).  Only once the beneficiary reached the catastrophic limit, did Medicare coverage recommence.  This is known as the coverage gap (or “donut hole”).  For 2017, this “gap” in coverage was above $3,700 in total drug costs until a beneficiary spent spends $4,950 out-of-pocket.

Since 2011, brand-name pharmaceutical manufacturers have been required to provide a 50 percent discount on the negotiated price of their drugs while a beneficiary is in the coverage gap.  The discount is applied at the point of sale, and 100 percent of the negotiated price counts toward the annual out-of-pocket threshold (known as True Out-of-Pocket Costs or TrOOP).  Since 2013, Part D Plans have been required to cover a portion of the costs of brand drugs in the coverage gap as well, with this coverage increasing over time from 2.5 percent in 2013 to 25 percent for 2020 and beyond.  Since 2011, Part D Plans have also been required to cover a portion of the costs for generic drugs in the coverage gap, starting with 7 percent in 2011 and increasing to 75 percent for 2020 and beyond.

This performance measure reflects CMS’ effort to reduce the average out- of-pocket costs paid by non-Low Income Subsidy (LIS) Medicare beneficiaries while in the coverage gap and to ensure that the coverage gap is closed completely by 2020 as required by law.  For 2020 and beyond, the beneficiary, on average, will only be responsible for 25 percent of the costs of both generic and brand name drugs while in the coverage gap, making this coverage equivalent to coverage prior to reaching the gap.

CMS’ implementation and management of the coverage gap discount program has, in most years, meant that non-LIS OOP costs have decreased beyond what is required by statute.  This has occurred without any meaningful decreases in plan participation in the Part D market.  As generic utilization in the Part D program has remained static, and very high, that is not a strong contributor to the success of this goal.  Rather, CMS’ application and management of the coverage gap discount program, coupled with the strong incentives for manufacturers to participate in the Part D program, are the primary drivers of this goal’s success.

Increase the percentage of Medicare Fee-for-Service (FFS) Payments tied to Alternative Payment Models (Lead Agency - CMS; Measure ID - MCR30.1)



FY 2012
			FY 2013
			FY 2014
			FY 2015
			FY 2016
			FY 2017
			FY 2018
			FY 2019Target
			N/A
			N/A
			Set Baseline
			26%
			30%
			40%
			50%
			TBDResult
			N/A
			N/A
			22%
			26%
			31%
			Nov 30,
			2018
			Nov 30,
			2019
			Nov 30,
			2020Status
			N/A
			N/A
			Baseline
			Target Met
			Target
			Exceeded
			Pending
			Pending
			PendingHealth care costs consume a significant amount of our nation’s resources.  In the United States, one source of inefficiency is a payment system that rewards medical inputs rather than outcomes, has high administrative costs, and lacks focus on disease prevention.

HHS and CMS, through the Center for Medicare and Medicaid Innovation (CMMI), identifies, tests, evaluates, and expands, as appropriate, innovative payment and service delivery models that can reduce program expenditures for Medicare, Medicaid, and Children’s Health Insurance Program, while improving or preserving beneficiary health and quality of care.  Under this authority, CMS is testing a variety of alternative payment models that create new incentives for clinicians to deliver better care at a lower cost.  In addition, CMS is implementing payment reforms that increasingly reward quality and efficiency of care.

These alternative payment models and payment reforms that increasingly tie FFS payments to value are currently moving the health care system in the right direction, but increased alignment across payers would be beneficial.  To encourage alignment, Medicare is leading the way by publicly tracking and reporting payments tied to alternative payment models.  Moving payments to more advanced payment models in an aligned fashion and on an aligned timeframe increases the overall likelihood that new payment models will succeed.

CMS uses the following framework to describe and measure health care payments through the stages of transition from pure FFS to more advanced alternative payment models.  This framework classifies payment models into the following four categories according to how clinicians and organizations are paid:

Category 1—fee-for-service with no link of payment to quality;
	Category 2—fee-for-service with a link of payment to quality;
	Category 3—alternative payment models built on fee-for-service architecture; and
	Category 4—population-based payment.To encourage alignment between public and private payers and to help move payment reform along the continuum described above, CMS set a target for Medicare to have 40 percent and 50 percent of Medicare FFS payments tied to alternative payment models by the end of Calendar Years 2017 and 2018, respectively.

<< Return to Topics in this Report

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Goal 1. Objective 2 >>

                    
  


Content created by Office of Budget (OB) Content last reviewed September 19, 2022 Back to top
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