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CMS has made a lasting imprint on the healthcare system

Thought Leader: Seema Verma
January 15, 2021
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America has the best healthcare system in the world, one capable of providing top-notch care and driving innovative new treatments. Nevertheless, too many people lack access to care, in large part because of its high cost.

When we came into office, we inherited a quagmire of government policies that created $200 billion in annual administrative costs, ever-growing insurance premiums and deductibles, and a bureaucratic system that forced doctors to spend more time on paperwork than with patients, too often causing the early retirement from the medical profession, known as physician burnout.

Our goal from the start was to ensure all Americans have access to affordable care while improving or maintaining the world-class standard of quality they are used to receiving. We worked to infuse free market principles at every turn, drove competition, empowered doctors and patients, and cut regulation to unleash innovation. Undeterred by special interests when the good of the American patient was on the line, we devoted ourselves to protecting and preserving Medicare and Medicaid for our most vulnerable.

In departing from Washington’s stale policy script, we have tackled long-standing problems that prior administrations had allowed to fester for decades and trained our attention on the needs of patients. Taken together, our reforms represent a turning point for the healthcare system.

While our accomplishments are numerous, the list below represents the most significant. These– changes that will transform the health care system for years to come.

  1. Lowering Premiums and Stabilizing Markets

Instead of Washington meddling, CMS has promoted reforms that spurred competition instead in all our programs. The results are tangible: in both the individual market and in Medicare, beneficiaries enjoy lower premiums and more options.

The estimated average monthly premium for Medicare Advantage plans in 2021 has plummeted by 34% since 2017 to a 14-year low. Crucially, this price reduction has come with an explosion of options for beneficiaries. There are now over 4,800 Medicare Advantage plan options nationwide, a 77% increase since 2017.

There has been a similar price plunge in Part D, which offers prescription drug coverage: average basic premiums have dropped over 12% since 2017, one of the lowest levels since 2013. Combined, beneficiaries have saved approximately $3.4 billion in Medicare Advantage and Part D premium costs since 2017. More than 1,600 plans 1,600 are offering insulin to diabetic seniors for no more (and sometimes a lot less) than $35 a month, a savings of more than 65% a year.

When we came into office, the individual market set up by Obamacare, was in crisis, plagued by double digit price increases as insurers fled in droves. But even this market, once in crisis, has stabilized after we quickly implemented changes to promote competition, integrity, new flexibility for states and reinsurance programs that directly lower premiums.

Average premiums for a benchmark plan on have now dropped for the third consecutive year, totaling an eight percent drop from 2018 to 2021. At the same time, issuer participation grew, which reduced the proportion of counties with only one issuer available from 50 percent to 9 percent, giving people more plan options. While this law remains liable to bankrupt the average middle class family, these policies have delivered sorely needed relief to those in the individual market.

The individual market will be stronger in the future because of policy changes the administration made to increase the use of individual coverage health reimbursement arrangements (HRAs). CMS worked with the Departments of Labor and the Treasury to make individual coverage HRAs available beginning in 2020, which gives businesses the ability to make defined contributions into an HRA and allow their employees to pick an individual health insurance coverage plan of their choice. We estimate this rule will bolster enrollment in the individual market by 11 million employees, drawing more plans to the market and increasing competition to reduce costs.

Finally, for people who continue to find the individual market too expensive and need to fill a gap in coverage, in 2018 the Departments expanded the availability of short-term, limited duration insurance. A Congressional Budget Office analysis shows premiums for these plans can be as much as 60 percent lower than premiums for the lowest-cost bronze plan, offering an alternative option to many Americans.

  1. Empowering Patients

Free market principles can only work effectively if patients are empowered, armed with the information necessary to be better consumers. This allows them to evaluate value, cost and quality when making healthcare decisions.

In perhaps the most patient-oriented reform of the last half century, CMS has issued new rules to require price transparency in the healthcare system. For years, prices have been intentionally hidden from patients at the point of purchase, inhibiting the competitive forces that drive down costs. This year, our sweeping hospital transparency rule went into effect and that unacceptable state of affairs is now changing. Next year, our requirements for health insurance companies will begin to go into effect, requiring most health insurance issuers to provide their enrollees with a customized tool that provides them with cost-sharing information unique to their plan, and to publicly post certain payment rates.

We have paired price transparency with another transformation equally momentous: data transparency. In the 21st century, there is no reason why the fax machine should remain the primary means of obtaining one’s health record from providers.

Under our policies, a large portion of American patients will be able to travel from insurer to insurer, or from provider to provider, and to take their medical records with them right on their phones. Rather than having to jump through interminable bureaucratic hoops to obtain their own data – data that belongs to them – they will be empowered to share it directly with their doctor with the click of a button – and enjoy the coordinated, high-quality care that will result.

  1. Infusing Free-Market Competition into the Healthcare System

We used our outsized role in the Medicare program to overhaul long standing policies that thwarted competition and encouraged the development of health care monopolies that were driving up costs. Across the board, our policies promoted competition among providers on the basis of cost and quality by removing government’s thumb from the scale. Such changes usher in a new era of competition for hospitals and reduce medical monopolies, which for too long have gobbled up smaller independent physicians and drive up prices.

Our policies allow surgery centers and hospitals to compete fairly by providing payment for a range of procedures in surgery centers– rather than limiting payment for such procedures to an outpatient hospital setting. As a result, doctors and patients can be the primary decision-makers about where care is administered without unnecessary government meddling. The result will be hospitals and surgery centers vigorously competing for patients’ business on the basis of cost, as well as more affordable, high-quality alternatives for patients that reduce their out of pocket costs.

We made changes to Medicare payment for hospital outpatient drugs to account for discounts that hospitals receive through the 340b drug discount program.  This not only reduced costs for patients but also leveled the playing field between large hospitals and their competitors, who were buying up physician practices to extend the reach of the drug discounts while billing Medicare for the full price.

Similarly, we removed the significant payment disparity between Medicare payment for clinic visits in certain off-campus hospital outpatient departments versus the physician office setting, so one care setting is not favored over another. Patients also benefit from lower cost sharing. And we revamped the Medicare Shared Savings Program, Medicare’s main program for Accountable Care Organizations, to encourage participation by ACOs led by physician practices, an option that can provide practices with an alternative to consolidating with hospital systems.

To advance our commitment to improving kidney health in our country, we updated our requirements for Organ Procurement Organizations (OPOs) to improve the current transplant system and bring competition to bear. For many Americans, an organ transplant represents the best avenue to avoid serious complications from conditions like kidney disease.

But our system has long lacked a meaningful market incentive by which OPOs – the entities authorized to procure transplantable organs – can maximize their effectiveness for these vulnerable patients. Under a policy finalized just last month, OPOs will finally be expected to perform their function well or risk being replaced by a competitor. This influx of competition will increase the number of organs procured and transplanted – and result in longer, healthier lives for millions of Americans.

  1. Value-Based Transformation

America’s healthcare system too often operates on an ineffective fee-for-service payment model, under which providers are reimbursed for the number of procedures they administer. Value-based care, which bases payment on results – maintaining or restoring patients’ health while rewarding providers for lowering cost is widely considered to be the solution to this problem. Over the past four years, CMS has made unprecedented advancements to promote value based care across our healthcare system.

We have released a range of new payment models to improve areas of our healthcare system that desperately need transformation, from kidney care and rural health, to reducing the price of insulin for our seniors, and more.

The Geographic Direct Contracting Model and Global and Professional Direct Contracting Model have the potential to wholly transform the traditional Medicare program.  The Geographic Direct Contracting Model, in particular allows health care entities to test taking financial risk for the cost and quality of care across an entire geographic region.  Both models allow participants to offer beneficiaries access to enhanced benefits and lower cost-sharing.

The Global and Professional Direct Contracting model enables entities to focus on the most vulnerable and at-risk beneficiaries. It also allows Medicaid Managed Care Organizations and their corporate affiliates to take risk and coordinate care for Medicare fee-for-service as well as Medicaid spending. These bold new models will save money and improve quality for patients for years to come.

But what truly makes CMS’ work on value distinctive is how we have promoted it across our programs, rather than limiting our efforts to new payment models. Through the Pathways to Success final rule, we also redesigned the participation options available under the Medicare Shared Savings Program to encourage transition to performance-based risk.

Likewise, our efforts to promote the seamless flow of medical data between providers, patients, and plans promises to inaugurate a new era of value-based care. That’s because with the free flow of information comes seamless, coordinated care, a prerequisite for a healthcare system that prioritizes outcomes.

In addition, we have updated CMS’ regulations under the Stark Law, a 1989 law designed for a fee-for-service world. Our update preserves the important purpose of the law– to prohibit self-interested referrals — while rendering it less of an obstacle to the value-based transformation our healthcare system needs, as well as reducing costly administrative burden.

Importantly, we have also sought to integrate Medicaid into the shift to value. For too long, the program had been mostly neglected in such efforts, but no longer. We released guidance replete with value-based strategies state Medicaid directors can use to drive value in their programs and to address the social determinants of health. CMS’ changes to the Medicaid drug rebate program will forge a path forward for value based payment for the new generation of curative treatments in the private market as well as Medicaid. That’s because we recognize how important it is for the healthcare system to march in lockstep together down the road to value.

Taken together, CMS’ policies have resulted in historic strides away from a fee-for-service system that limits reimbursement to what can happen between the four walls of a doctor’s office. They have brought us closer to a payment structure that rewards lower costs, and better health outcomes.

  1. Patients over Paperwork

Studies have shown that doctors spend two hours on paperwork for every hour they spend with patients. Small wonder then that doctors were pointing to this staggering administrative burden when citing reasons for early retirement or “burnout.” No administration has done more to reset the healthcare system’s priorities and give providers more time to do the work they entered medicine to do: treat patients.

And it’s important to note that burden is more than just a hassle. The cost of complying with regulations is often staggeringly high – sometimes too high for small, independent physician practices to bear. That means that they are forced to give up their independence and become employees of hospitals, driving consolidation and monopolization that reduces competition and drives up costs in the system.

By slashing time-consuming regulations, we have saved the medical community $6.6 billion and 42 million burden hours. As part of this “Patients over Paperwork” Initiative, we have reduced time-consuming metrics used to measure physician quality that had become onerous and unhelpful for physicians, often requiring them to pour over confusing metrics that were irrelevant to their specialty. With the help of specialty societies, we have replaced them with a streamlined system that are actually meaningful for physicians.

In addition, we have made the first comprehensive updates to payment for the outpatient/office Evaluation and Management (E&M) codes – used to bill Medicare for common office visits – since the early 1990s. The update makes it simpler and less burdensome to bill the codes, once again simplifying physicians’ work and allowing them to care more effectively for patients.

Meanwhile, our update to the regulations implementing the Stark Law isn’t just about value; it also reduces burden for weary providers. With the clarity provided by our new Stark policies, many of these burdens will soon be a thing of the past.

We have also taken action to tackle one of the foremost problems for providers and patients alike: prior authorization. While it has a rule in utilization management for health plans, prior authorization has become an onerous source of burden and burnout among physicians. The new CMS policies impose requirements on health plans to simplify the process and make it easier on providers.

Finally, the CMS Office of Burden Reduction & Health Informatics will embed a culture of burden reduction across the agency and will be tasked with continuing this historic effort for years to come.

  1. Investments in Primary Care and the Social Determinants of Health

Health policy experts have long bemoaned the long term underinvestment in primary care that has led to more procedures, less coordinated care and higher healthcare costs. Building on our efforts to promote value based care, CMS made sweeping changes to support primary, preventative care with a focus on the social determinants of health.

First, our changes to payment for the E&M codes also reflect CMS’ unprecedented commitment to investing time spent with patients. The updates didn’t only reduce burden for clinicians; they also boosted payment for these common office visits to more appropriately compensate for the time doctors spend with patients. With more Medicare beneficiaries joining the program every day, many with multiple complex chronic conditions, such face-to-face time has never been more important. It helps catch dangerous conditions early, avoid costly hospitalizations, and promote attention to the social determinants of health.

Similarly, we improved Medicare payment for clinicians who take care of patients who are chronically ill, as this population frequently uses the healthcare system and benefits from care coordination. We introduced new billing codes to pay for care management of patients with a single, high-risk chronic condition such as diabetes or high blood pressure. We also increased Medicare payment for care coordination of beneficiaries with multiple chronic conditions and for patients who transition from the hospital to ensure their follow-up care is coordinated.

We launched the CMS Primary Cares Initiative, which consists of several value-based models designed to improve primary care and promote risk-sharing and value-based arrangements for physicians and health systems. First, Primary Care First tests capitated payment arrangements for primary care practices, allowing them to spend more time with patients and less time with paperwork. Second, the Global and Professional Direct Contracting Model offers two risk arrangements: Professional and Global. These risk arrangements allow health care entities to take total cost of care risk on Medicare beneficiaries giving providers and suppliers greater control to manage care and improve quality.

Finally, our new flexibilities provided to Medicare Advantage plans offer seniors innovative new benefits such as meal delivery, transportation to the grocery store, or home installations that make it easier for people to get around their house. Such benefits address the social determinants of health — factors which may not be strictly medical, but nevertheless have major implications for people’s health – as well as the price of care.

  1. Unleashing Innovation

Innovation can make the entire healthcare system run more efficiently, improve the patient experience, and drive more treatments and cures. That’s why CMS has made fostering innovation a top priority. We have cleared the cobwebs from the great innovative machine that is the American healthcare system.

The reforms we have made to drive an interoperable healthcare system also promise to inaugurate a new era of medical innovation as researchers have more complete patient medical records which will allow for a more rapid development of new cures and treatments. It will also promote more personalized medicine.

We have also promoted access, worked to lower costs of new therapies and treatment in Medicare and to encourage private sector investment in medical innovation. Using its significant financial levers, CMS increased Medicare add-on payments to hospitals known as the new technology add-on payment (NTAP) for cases with high costs involving eligible new technologies. The increase promotes patient access and reduces uncertainty that innovators face about Medicare payment for new medical technologies. We approved a record number of 24 products for the NTAP that went into effect October 1, 2020.

CMS also reorganized internally to improve the process for innovators, and the results show. In recent years CMS has approved coverage and payment for a flurry of groundbreaking drugs, biologics, and medical devices, such as novel heart valves and therapies to combat antimicrobial resistance.

But our reforms go far beyond simply extending Medicare coverage and payment for particular treatments for particular diseases, important as that work is; rather, we are tackling the institutional, bureaucratic obstacles standing in the way of access to innovation for American seniors.

CMS’s Medicare Coverage of Innovative Technology (MCIT) proposed rule sees to eliminate the so-called “valley of death”, the time lag between the end of FDA’s rigorous process for approving a breakthrough devices and the end of CMS’ own separate review to make Medicare coverage decisions. Because it is so expensive and time-consuming, this delay represents a severe disincentive for innovators, leads to a patchwork of inconsistent coverage across the county, and most importantly, stands in the way of senior’s access to live-saving devices.

MCIT provides immediate Medicare coverage for all devices approved by the FDA as a “breakthrough” for an initial period of four years. This time limit should incentivize manufacturers to develop a robust set of real-world evidence and data to bring to CMS, which will evaluate whether to continue full coverage. MCIT may permit the agency to review private sector coverage decisions in some circumstances as part of its coverage determination process, representing a sea change for innovators and seniors alike.

Our policies to promote innovation have also produced an explosion of Medicare telehealth. CMS had already begun paying for virtual check-ins long before the pandemic because it solved a variety of problems, including access to specialty treatment, mental health services, and various rural health challenges. But the Coronavirus pandemic drastically accelerated our efforts because patients needed to maintain access to care amid stay-at-home orders. On an emergency basis, we allowed Medicare telehealth services all over the country, rather than just in rural areas, expanded the list of providers eligible to provide it, and allowed for some services to be received from the comfort of one’s home. We also added about 145 new services to the Medicare telehealth list during the public health emergency.

Telehealth represented a lifeline, and our experience during the pandemic has demonstrated that there will be no stuffing this genie back in the bottle. Now, CMS has made a number of Medicare telehealth services permanent and is extending others temporarily beyond the end of the public health emergency, while continuing to evaluate what else should be made a permanent part of the program.

While Congress has acted to expand telehealth for mental health services, further work is needed to make Medicare telehealth permanently available outside of rural areas and to maintain our expansion of eligible providers, it’s no exaggeration to say that these policies are inaugurating a new era in healthcare delivery in our country.

In addressing the pandemic, CMS also opened up new innovative possibilities to expand hospital capacity through our Hospital at Home and Hospital without Walls initiatives. These flexibilities, many offered under our emergency authority, allowed hospitals to use technology to provide virtual visits or conduct remote patient monitoring outside the hospital. Such innovation could be the model for certain types of hospital care in the future and perhaps even be used to address healthcare challenges in rural areas where access to specialty care and transportation over long distances is often a challenge.

  1. Transforming Medicaid

CMS has improved and transformed the Medicaid program for its 75 million beneficiaries. Recognizing that Washington is not equipped to micromanage over 50 separate programs, we have brought about a new era of flexibility for states. We paired this new flexibility with transparency and a firm expectation that states improve outcomes for beneficiaries.

The agency applies a very different attitude to states than it has in the past, moving away from a CMS that plays “Mother May I” to one that empowers states to pursue the reforms necessary to improve quality for their beneficiaries.

Ultimately, 21 states submitted proposals to link Medicaid coverage to community engagement incentives for able-bodied adults. CMS provided a framework to test and evaluate this idea while providing strong beneficiary protections. We’ve seen states pursue this goal in different ways, but with common objectives: to help lift Americans out of poverty by providing a ladder out of public assistance, while enhancing states’ ability to provide Medicaid coverage by conserving resources and improving beneficiary health.

We’ve also used demonstration authority to permit coverage of residential psychiatric and addiction treatment services in facilities where coverage would otherwise be excluded, critical to increasing access to treatment. When we came to office, there were only four states with an approved substance use disorder or serious mental illness demonstration.  We rewrote the guidance and as a result, we now have 32 states approved with a substance use disorder demonstration and 7 states with a demonstration for people with serious mental illness. Far too many individuals are anxiously awaiting treatment and our new approach gives states immediate freedom and resources to unlock new treatment options and, ultimately, save lives.

In that same vein, after decades of calls from states to give them greater control of Medicaid in exchange for more accountability, we released our Healthy Adult Opportunity (HAO) initiative. The initiative is a test of the theory that, with clear accountability and beneficiary protections, states can deliver better outcomes for beneficiaries and value for taxpayers when government gets out of the way. HAO gives states new and unprecedented flexibility in managing drug costs and sharing savings that can be reinvested back into their Medicaid program. Tennessee became the first state to be approved by CMS for a demonstration project that includes an aggregate cap on funds made available under the demonstration, along with the ability to share savings under the cap, using HAO as the conceptual foundation of that effort. It brings the principles of value-based care to state Medicaid programs.

Across the board, we have sought to make CMS a better partner to states with great success: the percentage of state plan amendments approved on the first clock has improved from 64% in 2016 to 84%. Nearly every home and community-based waiver action is being approved on the first round. Managed care rates and contracts are being processed and approved faster. This allows states to focus on solving problems rather than pushing paperwork. I am hopeful that the culture change in the Medicaid program will long outlast my departure as Administrator.

Finally, Medicaid’s viability over years and decades to come is inseparable from our work on program integrity. We have worked to make sure that we are spending scarce resources on those for whom the program was intended. That’s why we’ve fought to increase oversight of program spending, clearing out a backlog of audit findings and improper claiming that have resulted in over $10 billion in state recoveries since 2017. We’ve stepped up our expectations on states to ensure they are only enrolling individuals who truly meet program eligibility. We are preparing guidance to ensure that states quickly return to normal eligibility operations once the COVID-19 public health emergency ends.

  1. Robust Coronavirus Response

Crucially, all these successes have proven a strong foundation on which CMS has built a highly effective Coronavirus pandemic response. We acted with unprecedented speed and vigor, pushing out no fewer than four rules related to Coronavirus during the public health emergency, waiving over a hundred Medicare regulations, and approving over 600 Coronavirus-related waivers, demonstrations and other state-designed and federally approved flexibilities in the Medicaid program.

In addition to Medicare telehealth (discussed above), we provided massive regulatory relief to healthcare providers on the frontlines that allowed them to expand hospital capacity and reduce time-consuming paperwork requirements when every available resource was needed for patient care. We also supported hospitals financially through our Accelerated and Advanced Payments program, which distributed $107 billion in loans to hard-pressed hospitals around the country in record time before Provider Relief funds became available.

In addition, we issued waivers that increased the nation’s workforce capacity by allowing providers to practice across state lines and operate at the top of their license. We also implemented new testing policies to encourage faster turnaround time for test results and increase testing capacity at nursing homes.

Given the elderly’s susceptibility to COVID-19, CMS has worked tirelessly to guarantee nursing homes have what they need to protect their uniquely vulnerable residents. We reissued and updated infection control guidance, visitation guidance, stayed in constant communication with the industry, focused surveys on infection control, developed training, supported efforts to deliver supplies and testing, and organized strike teams to support nursing homes dealing with outbreaks. We worked with the CDC to implement a nationwide reporting system in a matter of weeks, and more.

As a vaccine approached in record time thanks to Operation Warp Speed, CMS also laid the coverage groundwork ahead of time and ensured that it would be available to every American for free. We also ensured that new COVID-19 therapeutics would receive appropriate reimbursement to ensure that all Medicare beneficiaries could have access to life-saving medications.

It’s important to note that when the pandemic first made landfall in America, CMS had no meaningful pandemic plan to consult, meaning we had work from scratch. Because we didn’t want future administrations in future pandemics to find themselves in a similar predicament, we built out CMS’ pandemic plan into a robust document playbook for practical use. This historic document will be a boon should the agency ever have to respond to a pandemic again.

  1. Changing CMS

The historic reforms we have made over the past four years are a testament to the CMS team. They required the agency to think differently, take risks, and work together across divisions and components – to take full advantage of the authority Congress has given CMS to come up with creative solutions. Some solutions were obvious, but simply required moral courage to stand up to the industry to do it. The results was a transformation of the healthcare system of historic significance.

We have undergone reorganizations that integrated the agency’s regional offices and made us more productive and coordinated. We established new offices, including an Office of Stakeholder Outreach that helped us to stay in close contact with frontline providers and other key stakeholders. We implemented strategic planning for the agency and identified objectives and key results for all our initiatives and operating divisions. This led to better alignment throughout the agency on our goals, and encouraged robust use of data to drive decision-making, accountability, and strategy.

These internal reforms were challenging, but they allowed CMS to lead the healthcare system rather than merely to follow it – to set the agenda and drive change rather than react to it. This culture shift at CMS sets the agency up for a new era of partnership with stakeholders, leadership and innovation.


Taken in their totality, the actions CMS has taken over the last four years will revolutionize healthcare for generations to come and will transform healthcare for every American patient.  They represent a true turning point and will have an enduring effect.

We came here to challenge the status quo to do what’s right for patients. We were not afraid of special interest groups, and we consistently acted with a single purpose front and center: putting patients first.  We have made reforms with more than just immediate impacts in mind; we have acted with a view towards fundamental change, the legacy of which will long outlast our time in office and be felt for decades to come.

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