Center for Beneficiary Choices Business Owner for Medicare Advantage, Prescription Drug Program, and Associated Products Presented to the Northern Virginia Technology Council C. Mark Loper, FACHE, FAHM Deputy Director Center for Beneficiary Choices (CBC) Centers for Medicare & Medicaid Services February 12, 2008
Overview Organizational Context My Observations From the Administrator s View Program Management Current Issues Future
Organizational Context Centers for Medicare & Medicaid Services Administrator Deputy Administrator Chief Operating Officer Center for Beneficiary Choices Center for Medicare Management Center for Medicaid and State Operations Drug Benefit Group Medicare Advantage Group Employer Policy & Operations Group Enrollment & Appeals Group Plan Payment Group Program Oversight & Accountability Group Directorates & Staff Offices Four (4) regional consortia: Medicare Health Plans Operations Financial Management & FFS Operations Medicaid & Children s Health Operations Quality Improvement & Survey and Certification Operations
My Observations After one year Lean, expert health policy team at CMS Completing final throes of Part D start up Transitioning to more operational context Policy, quality and contracts closely linked to operations Very smooth transition from 2007 to 2008 benefit year CMS is transforming America s health system
Medicare Advantage Enrollment (includes employer plans, excludes Cost and Demo plans) # Enrolled (000) 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008
Medicare Advantage Plans (A/B, Non-employer Plans) # Plans 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2000 2001 2002 2003 2004 2005 2006 2007 2008
Medicare Advantage Program (Based on plan bid data submitted prior to plan year) 100 90 80 70 60 50 40 30 20 10 $B 0 2000 2001 2002 2003 2004 2005 2006 2007 2008
Prescription Drug Program Early Phase (000) PD Enrollment (All Plans with Drugs) PD Plans (Non-Employer Plans) 30,000 5,000 25,000 22,479 24,093 24,930 4,500 4,000 20,000 3,500 3,000 15,000 2,500 10,000 2,000 1,500 5,000 1,000 500 0 2006 2007 2008 0 2006 2007 2008 PDP Only MA Plans with Drugs
National Prescription Drug Spending by Source of Payment, 2005 and 2006 Out-of-pocket spending as a share of all prescription drug spending decreased in the first year of the Medicare drug benefit. 2005 ($203 Billion) 2006 ($219 Billion) Medicare, 2% Other Public, 6% Medicaid, 19% Private Health Insurance, 48% Out-of- Pocket, 25% Other Public, 6% Source: Borger, et al., Health Spending Projections Through 2015: Changes on the Horizon, Health Affairs web exclusive, February 22, 2006. Medicare, 27% Medicaid, 11% Out-of- Pocket, 16% Private Health Insurance, 40%
Total Projected Spending Under Part D, A Comparison of 2006-2008 Estimates Total spending under Medicare Part D is projected to be lower than previously estimated. $184 $166 $167 $60 $38 $85 $61 $49 $93 $73 $60 $102 $81 $68 $112 $90 $76 $122 $102 $89 $135 $105 $95 $150 $133 $120 $122 $109 ($B) $146 $136 $158 $34 2006 2008 2010 2012 2014 2016 FY 2006 budget mid-session review FY 2007 budget mid-session review FY 2008 President's budget Note: Data are from the FY 2006 Budget Mid-Session Review, FY 2007 Budget Mid-Session Review, and FY 2008 President's Budget Source: Office of the Actuary, CMS.
2008 Premium Analysis % 40 PDP MA-PD 35 Percentage of Contracts 30 25 20 15 10 5 0 $0 <$10 >$10 >$20 >$30 >$40 >$50 Premium Amount Note: Excludes Employer, PACE, SNP, and Part B only plans.
Standard Drug Benefit 2008 Catastrophic Coverage Medicare Reinsurance 80% Plan Pays 15% Beneficiary Liability Total Spending Coinsurance 5% $5726.25 Coverage Gap $4050 True Out of Pocket ( TrOOP ) $2510 $833.75 Plan Pays 75% Coinsurance 25% $275 Deductible $275
2008 Gap Coverage Analysis PDP MA-PD % 80 70 Percentage of Contracts 60 50 40 30 20 10 0 None Some Generics All Preferred Generics All Generics Other Gap Coverage Type Note: Excludes Employer, PACE, SNP, and Part B only plans.
From the Administrator Competition works demonstrated in both Part C and D lines of business Sensible payment reform essential US spends over $2T annually on health care By 2017, ~$4T, or 21% of our GDP Unsustainable: Trust Fund bankruptcy in 2019 Secretary s Four Cornerstones * Transparency in Price Transparency in Quality Health Information Technology Value-Based Purchasing *Report Cards
www.medicare.gov Plan A (H0000-02) Plan B (H0000-003) Plan C (H0000-004) Plan D (H0000-005) Plan E (H0000-006) Plan F (H0000-007) Plan G (H0000-008) Plan H www.medicare.gov
Program Management Governance development (policy; operations; technology) Fiscal conditions and dynamic political context Advancing our line of business approach Streamlining our five-year business cycle (planning year contract closure) Assuring consistent communications with industry Optimizing business/it integration Applying our line-of-business framework
Line of Business Framework Medicare Parts C and D Beneficiaries and Stakeholders Plans and Business Partners CMS: The Agency Health and Business Sectors Elements Short Title Beneficiaries Plans CMS Business System Design Development (Change Management) Current Operations Confident, Informed Consumers Collaborative Partnerships Skilled, Committed & Highly Motivated Workforce Affordable Health Care System High-Value Health Care Accountabilities * CMS Strategic Action Plan
Current Issues Increasing Low Income Subsidy enrollment Challenged to identify and reach out to them Increasing quality measurement in Parts C and D Supporting transparency and value Transitioning to sustained operations Make it Happen Make it Better Make it Last!
The Future Fulfill vital role in Nation s health system evolution Apply advancing strategies, technologies, and methods Partner constructively with the private sector Sustain accountability in major public programs