FY 2022 Annual Performance Plan and Report - Goal 1 Objective 1

Fiscal Year 2022
Released June, 2021

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.

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.

In the previous administration, the Office of the Secretary led this objective.  The following divisions are responsible for implementing programs under this strategic objective: AHRQ, CMS, and FDA.  HHS has determined that performance toward this objective is progressing.  The narrative below provides a brief summary of progress made and achievements or challenges, as well as plans to improve or maintain performance.

Objective 1.1 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)

The Medicare Prescription Drug Improvement and Modernization Act of 2003 amends Title XVIII 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").  The Affordable Care Act began closing the coverage gap through a combination of manufacturer discounts and gradually increasing federal subsidies until it closed in 2020.  The discount applies at the point of sale, and both the beneficiary cost sharing and the manufacturer discounts count toward the annual out-of-pocket threshold (known as True Out-of-Pocket Costs).  This performance measure reflects CMS's effort to reduce the average out-of-pocket costs paid by non-Low Income Subsidy Medicare beneficiaries while in the coverage gap, reached once the combined amount a beneficiary and their drug plan pay for prescription drugs reaches a certain level.  For 2020 and beyond, this means that non-LIS beneficiaries, who reach this phase of Medicare Part D coverage will pay no more than 25 percent of costs for all covered Part D drugs.  For 2021, beneficiaries reach this phase when total drug costs amount to $4,130 and stay in this phase until they pay $6,550 in qualified out-of-pocket costs.  CMS's tracking of this measure has shown that that in most years non-LIS out-of-pocket costs have decreased beyond the targets required by statute (2019 exceeded the target goal).

Increase the percentage of Medicare health care dollars tied to Alternate Payment Models incorporating downside risk (Lead Agency  CMS; Measure ID - MCR36)¹

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

Medicare is leading the way by publicly announcing, tracking, and reporting payments tied to APMs that are taking on a downside risk, while working through the Health Care Payment Learning and Action Network (HCP-LAN or LAN) to ensure that its large group of papers, providers, purchasers, patients, product manufacturers, and policymakers across the United States also adopt aligned goals to move towards downside risk APMs.  The final CY 2019 baseline for this new downside risk APM goal is 20.21 percent.

¹ CMS is reporting the FY 2022 target and result availability date as "to be determined" (TBD) due to the unknown impacts of the Coronavirus (COVID-19) pandemic.  CMS cannot commit to specific future results date at this time.

<< Return to Topics in this ReportTop of pageGoal 1. Objective 2 >>