When the Medicare and Medicaid Act was signed into law in 1965, the path to entrepreneurship and retirement was more straightforward than it is now. Today, Americans are working longer and many are starting businesses later in life. In fact, the number of people starting businesses after the age of 50 has jumped by 50% since 2007. Many of those entrepreneurs go on to run their businesses while on Medicare.

Nearly 60 million Americans are covered by Medicare, making it one of the largest health insurance providers in the United States. As such a dominant payer, innovations and actions taken by Medicare often influence the broader healthcare market, including private and employer-sponsored insurance coverage options.

Provisions in the Inflation Reduction Act are projected to lower healthcare costs for Medicare beneficiaries, most notably by giving the Centers for Medicare and Medicaid Services (CMS) the authority to negotiate the prices of drugs.

As Director of the Center for Medicare within CMS, Meena Seshamani, MD, PhD, is leading these efforts. A head and neck surgeon trained at the Johns Hopkins University School of Medicine with a PhD in health economics from the University of Oxford, she is uniquely positioned to oversee the agency.

I recently spoke with Dr. Seshamani about her leadership of Medicare and the changes being implemented. I am grateful to her for taking the time and below is our discussion.

Rhett Buttle: You have been a practicing physician and a leader in a very large practice. How have those experiences prepared you for leading the Medicare program?

Dr. Seshamani: I have had the incredible opportunity to work across many aspects of the health care system, from caring for a person at the bedside, to leading care transformation programs at a large health system, to leading the Office of Health Reform at the Department of Health and Human Services. I bring the stories of the individuals and communities that I have had the privilege of serving to the work that I do every day. Having led change in the private sector has also given me a keen awareness of the importance of partnering with the private sector in my current role – with employers, plans, providers, patients – so that we can make sure that the change that we can drive through our payment models and regulations becomes a reality on the ground when caring for our communities.

Rhett Buttle: While the majority of Medicare recipients are 65 and older, many own their own businesses and are still working. Can you describe what Medicare means to the population that is still in the workforce?

Dr. Seshamani: Medicare is a health coverage option for anyone age 65 or older. Generally, individuals who are still working and are covered through employer group health coverage have the option to either enroll in Medicare, or keep their employer group health coverage and delay Medicare enrollment until retirement. Individuals should explore all coverage options and make the decision that best fits their health care needs and budget.

Individuals who are still working and self-employed should verify with their insurance provider whether or not their current coverage is employer group health plan coverage (as defined by the Internal Revenue Service.) If it is not, they should sign up for Medicare when they turn 65 to avoid a monthly Part B late enrollment penalty.

Rhett Buttle: The Inflation Reduction Act capped many costs for Medicare beneficiaries. How will these caps improve the lives of people on Medicare?

Dr. Seshamani: The Inflation Reduction Act takes significant concrete steps to lower drug costs in the near term – as soon as January 1 – and improves health care affordability in the long-run. It expands Medicare benefits, stabilizes prescription drug premiums and improves the sustainability of the Medicare program.

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Starting in January 2023, people with Medicare drug coverage will pay nothing out-of-pocket for recommended adult vaccines – such as the shingles vaccine — and won’t pay more than $35 for a month’s supply of each covered insulin. Beginning July 1, 2023, people with Traditional Medicare who take insulin through a traditional pump will not pay more than $35 for a month’s supply of insulin. In addition, people with Medicare will have their Part D out-of-pocket costs capped at $2000 in 2025, ensuring that people with Medicare have certainty in their healthcare financing and see meaningful improvements in their healthcare costs.

These critical improvements make healthcare more accessible, equitable, and affordable, and ensure a stronger Medicare program for current and future enrollees.

Rhett Buttle: Much of the discussion around the Inflation Reduction has been that Medicare will be able to negotiate the prices of drugs for the first time ever. Where are you in this process, and when will beneficiaries begin to see lower costs?

Dr. Seshamani: Work at CMS is well underway. In 2023, Medicare will select and announce the first 10 drugs selected for price negotiation. The law requires that those 10 are chosen from a list of the highest expenditure, brand-name Medicare Part D drugs that don’t have generic or biosimilar competition. Also, under the law, the maximum fair prices negotiated for these first 10 drugs will be available starting in 2026. 

Medicare’s new authority to negotiate drug prices directly with drug manufacturers will improve access to innovative, life-saving treatments and ensure people with Medicare pay lower costs on some of the costliest prescription drugs.

Rhett Buttle: Medicare is the largest purchaser of healthcare in the United States. How are you driving innovation around healthcare prices within the Medicare program, and how will those changes impact the private sector?

Dr. Seshamani: Because Medicare is the largest payer in the U.S., making a change in Medicare has ripple effects throughout the entire system. A key lever for driving higher-quality, whole-person care is through innovative care models. For example, CMS is working to grow participation in Accountable Care Organizations, where groups of providers come together to provide more holistic care of their populations, taking accountability for the quality and cost of care. As I have traveled across the country and met with healthcare providers, plans, investors and entrepreneurs, a common theme is that these models form a key way to drive needed change in the system so that we provide better care that leads to smarter spending and healthier populations. And importantly, these care models are only successful through the active participation and partnership of all aspects of the healthcare industry. I recently co-authored an article inHealth Affairs discussing our efforts. By growing participation in these alternative care models, CMS can facilitate partnerships across health care sectors and encourage innovation and entrepreneurship.

Rhett Buttle: Is there anything else that you would like to add?

Dr. Seshamani: As we evaluate lessons learned from the pandemic, we know that we must advance health equity, drive high-quality, whole-person care, and promote affordability and sustainability of the Medicare program and the health care system writ large. And we know that we cannot do this important work alone. It is so critical for us to be able to partner with the private sector as we drive needed change in the system, and that doing so will not only impact the health of our communities but also their economic security and prosperity.

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