How Can CMS Address Senior Poverty, Patient Healthcare Costs?

The agency has instituted numerous policies to address high patient healthcare costs and senior poverty.

By Sara Heath

February 06, 2019 - Cutting patient healthcare costs will be a key step toward addressing senior poverty, which is ultimately a high priority for the Centers for Medicare & Medicaid Services (CMS), the agency said in a blog post.

Late last month, the agency noted the importance of addressing poverty as a social determinant of health, or a social issue that impacts a patient’s ability to achieve health and wellness.

Poverty is a critical issue that impacts senior patients, CMS said. Approximately 25 percent of Medicare beneficiaries has less than $15,000 in savings. Nearly one in 12 beneficiaries has no savings or is even in debt.

What’s more, there are considerable racial disparities across senior poverty levels. Median per capita savings for white Medicare patients is over six times greater than for black or Hispanic patients.

These high poverty levels are a cause for concern as more Medicare beneficiaries incur high out-of-pocket healthcare costs.

For those Medicare beneficiaries with incomes below the federal poverty level – $12,000 per person per year – nearly 40 percent spend one-fifth of their incomes on healthcare. This is because despite Medicare coverage, some beneficiaries face extraordinary out-of-pocket healthcare costs.

Central to addressing the issue of senior poverty and high out-of-pocket patient costs is addressing the actual cost of healthcare. And right now, CMS said this must start with lowering prescription drug costs.

This is a high priority for the public, as well. A 2018 Morning Consult poll conducted on behalf of the National Community Pharmacists association revealed that most Americans want to see drug costs go down for seniors. Specifically, 93 percent of the 2,000 survey respondents said they would like to see pharmacy benefit managers (PBMs) pass along drug discounts to seniors.

HHS is making headway on that, CMS noted. Earlier this year, the agency proposed changes that would create anti-kickback safe harbors and prohibit drug rebates between PBMs and drug manufacturers. Ideally, this would reduce the raw cost of a drug, in turn reducing the out-of-pocket price a senior patient may incur.

Additionally, the proposal outlined provisions allowing seniors access to some of those cost-cutting rebates, further reducing their financial responsibility.

In November, CMS also proposed changes to Medicare Advantage and Medicare Part D which would ideally cut out-of-pocket spending for patients. These changes would give the Medicare program more negotiating power when determining drug prices. Savings would be passed along to patients, CMS said.

These changes would specifically address prices for protected class drugs, which include antidepressants, antipsychotics, anticonvulsants, immunosuppressants for treatment of transplant rejection, antiretrovirals, and antineoplastics. Changes would maintain these classes but allow Part D providers to negotiate different prices for the drugs.

The proposal would also allow some Medicare Advantage providers to institute step therapy policies for patients.

While CMS said it intends all of these changes to reduce out-of-pocket spending for patients, critics say they could limit patient care access due to higher costs and prohibitive approval processes.

CMS is also making it clearer how much individual healthcare services will cost. The newly-launched What’s Covered app allows seniors to see which services they may access with their specific health insurance plans. This tool is intended to be used at the point-of-care and help seniors and other caretakers make better healthcare decisions.

Outside of their own actions, CMS addressed the role that community groups play in helping to connect seniors to cost-cutting resources. The Medicare Savings Program and Extra Help are state programs that help support seniors with exceptional out-of-pocket costs.

“Through innovation, partnership and a strong focus on making health care more affordable, we have the tools to further reduce senior poverty across the country,” CMS concluded its post. “States interested in promoting access to programs, or learning more about how to streamline administrative processes for the Medicare Savings Programs should contact their CMS Regional Office.”

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