Federal Medicare Head Says Action Is Needed To Ensure Program’s Financial Future

Nov 8, 2017

President Trump has pledged to not make cuts to Medicare, the federal insurance program for seniors, but Seema Verma, administrator of the Centers for Medicare and Medicaid, acknowledges that changes are needed.

One of the program’s main funds, the Hospital Insurance Trust Fund, is expected to be depleted in 11 years.

On Monday, Verma was in Olathe, Kansas to talk with seniors about Medicare and encourage them to take part in Medicare open enrollment, which runs from October 15 through December 7.

In a rare interview with KCUR 89.3, the administration is now looking at ways Medicare can save money.

I know that one issue that you’re particularly interested in is financial future of Medicare – that in eleven years, we’ll run out of funds in the [Medicare] trust fund for hospital care. How do we address that?

We want to make sure that we are protecting the program, and that seniors will have access to this program for many years to come. This is something that people have paid for their whole lives, and they want to make sure when they get to that age that the program is around for that. So we’re doing lots of things across the Medicare program, but everything we do – we want make sure that we’re focusing on outcomes – producing good healthcare outcomes and making sure we’re actually increasing access to beneficiaries, so we’re doing things like thinking about how we pay our doctors and our providers, and instead of paying them for every little procedure they do, we’re thinking about how can we pay them in a way that holds them accountable for delivering positive health outcomes. So we’re looking at different ways to hold providers accountable. So we feel like we can build some efficiencies into the program.

You’ve suggested that some of that might be creating incentives for consumers to be more cost conscious. And some people have heard that and thought that sounds like seniors needing to pay more in the form of deductibles, co-pays…is that something they should be concerned about?

No, not at all. We want to make sure that seniors always have choices. So, just for a today example, I talked to a senior, Fred, and he was shopping around for a plans, and because he had shopped around, he’s gonna save a thousand dollars this year on his drug coverage. And so when people have some skin in the game, when they have that incentive to save money, they are going to take those steps, so that’s all we’re taking about – opportunities for people to be more involved in their healthcare.

When you came on, you suggested to states that in their Medicaid programs, they might introduce copays, deductibles, those kinds of things – but that’s not an approach that you advocate for Medicare?

I think the idea is empowering patients. We want to empower patients to make choices that are going to work best for them and giving them opportunities to figure out what’s gonna work best for them. So copays and deductibles or incentives – again, that might work for some seniors. It might not work for others. But I think that if we're looking at sustaining this program over the long term, we’re all gonna have to work together, right? It can’t just be the doctors and the pharmaceutical companies and insurance companies. We as individuals all need to work together to make sure that we’re getting value.

One of the things I think our seniors on the program can be very helpful [with] is helping us with fraud and abuse. You know, a lot of times we have our seniors that are looking over their statements and saying, “Hey, I didn’t get this service.” So I think when people are engaged and when they have some skin in the game, then they are working with us as a partner is identify how dollars can be used in the most appropriate way.

Something that came up in the discussion here was Medicare negotiating directly on drug prices – not the companies that administer Medicare, but the agency itself. The president has said he supported that. Is that something this administration will pursue?

I think the President is most focused on making sure that Americans are getting the best deal. He’s concerned about the increase that people are feeling when they go to the pharmacy, and they’re actually having to pay more for prescription drugs. And it’s a tough balancing act cause at the same time, our pharmaceutical companies have delivered some of the most innovative treatments and therapies coming out on the market – different types of therapies that are saving lives and are curing people from illnesses. And so we want to encourage that innovation that’s going on, but at the same time we want to make sure that drugs are affordable for people when they go to the pharmacy.

We do know that drug companies spend a lot on advertising. That’s something that we end up paying for indirectly when we pay drug companies. That seems like something we don’t necessarily want to fund through Medicare payment.

The goal is that seniors are paying the lowest possible costs, so we want to make sure we are looking at everything across the board. The president has many parts of the entire administration working on this. We’ve got our folks at FDA that are working on making sure that there is competition in the marketplace and having generics and other alternatives go through a lot quicker. So we’re looking at this from many different angles, and everything’s on the table, because we’re committed to making sure that people can afford their medications.

Alex Smith is a health reporter for KCUR. You can reach him on Twitter @AlexSmithKCUR.