CMS Readies Framework, Funding for Eventual COVID-19 Vaccine

Original Medicare and Medicare Advantage beneficiaries will get the vaccine at no cost.

The federal government on Wednesday laid the groundwork for funding and distribution of an eventual coronavirus vaccine that policymakers say will allow providers, states, and payers to "act swiftly" when a treatment becomes available.

The interim final rule released by the Centers for Medicare & Medicaid Services mandates that any vaccine that receives Food and Drug Administration approval will be covered under Medicare as a preventive vaccine at no cost to beneficiaries.

"The rule removes any existing ambiguity surrounding Medicare's coverage to the COVID-19 vaccine," CMS Administrator Seema Verma said Wednesday.

"(This) allows us to focus on the paramount goal of ensuring that all of Medicare 62 million beneficiaries, including those enrolled in a Medicare Advantage plan can receive the vaccine at the provider of their choice again, at no cost."

"And while the federal government is paying for the vaccine, insurers including Medicare, Medicaid and private plans must cover the cost of administering it," Verma said.

Medicare will pay directly for COVID-19 vaccines for Medicare Advantage beneficiaries in 2020 and 2021.

"If you're in Medicare Advantage, providers are just going to build a traditional program and essentially beneficiaries can go wherever they want to whatever provider to get their vaccine," Verma said.

Under the final rule, Medicare will pay $28.39 to administer single-dose vaccines, and $16.94, and $28.39 for a vaccine requiring two or more doses. These rates will be adjusted for geography and will take into consideration administrative costs, public outreach, patient education, and reporting requirements.

Verma estimated the cost at about $2.6 billion "if everybody got vaccinated in the Medicare program."   

"And obviously, with Medicaid and the private insurance companies, it depends on how much they're going to reimburse for the administration of the vaccines. The federal government is covering the cost of the actual vaccine," she said.

CMS is recommending that state Medicaid programs and commercial payers use the Medicare reimbursement as a benchmark in their vaccine payment plans.

"Using the Medicare strategy as a model would allow states to match federal efforts in successfully administering the full vaccine to the most vulnerable populations," CMS said.

CMS also activated CARES Act provisions that mandate vaccine coverage by most commercial payers with no cost sharing for both in-network and out-of-network providers during the public health emergency. 

Therapies

The interim final rule creates additional and automatic Medicare hospital payments for authorized COVID-19 therapies during the public health emergency to mitigate potential losses incurred to make the therapies available, and includes reimbursements for outpatient treatments outside of bundled arrangements and are paid separately.

Verma said the interim final rule on therapies "will eliminate financial disincentives that hospitals may face for furnishing potentially life-saving treatments to America's seniors."

"Traditionally, when a hospital costs for a particular patient exceeds Medicare payments, the hospital can qualify for additional outlier payments, but only after their costs exceed a threshold of about $30,000," Verma said.

"Under this rule, Medicare will pay an additional 65% of the cost for innovative COVID therapies authorized by the FDA provided in an inpatient hospital setting when treatment costs exceed the Medicare payments up to that $30,000 threshold," she said.

If a hospital's costs exceed the threshold, Verma said, they can still qualify for the traditional outlier payments.

"In short, we are bridging the gap between the standard payment and the outlier payments," she said.