Whoever President-elect Obama names to lead the massive agency that manages Medicare and Medicaid will have to tackle major issues from day one, several of the agency’s former chiefs agreed.
The incoming Obama administration plans significant changes in the way Medicare, Medicaid and the State Children’s Health Insurance Program (SCHIP) are run, and the president-elect’s choice for administrator of the Centers for Medicare and Medicaid Services (CMS) will be the one tasked with putting those new policies in place.
{mosads}Moreover, the new CMS administrator, working under Obama and his as-yet-unannounced Health and Human Services (HHS) secretary, former Sen. Tom Daschle (D-S.D.), will also play some role in the new administration’s push to overhaul the entire healthcare system.
All the while, the new Medicare chief will be responsible for the day-to-day operations of an agency with 4,400 employees, a $676 billion annual budget and a duty to provide healthcare to 44.6 million people enrolled in Medicare, 51 million in Medicaid and 6.3 million in SCHIP.
“That’s going to be an extremely, extremely important position,” said Tommy Thompson, who was HHS secretary during President Bush’s first term and now is a partner at Akin, Gump, Strauss, Hauer & Feld.
“The wonderful and terrifying thing about running CMS is that you never know what’s lurking around the corner,” said Nancy-Ann DeParle, who ran the agency during President Clinton’s second term, when it was known as the Healthcare Financing Administration. “There’s just so many things that can go wrong,” said DeParle, an investment adviser at J.P. Morgan.
“The challenges of running that place are unbelievable in a slow time. It’s just a huge place,” said Tom Scully, who was Bush’s first CMS administrator. Scully is a senior counsel at Alton & Bird and a general partner at the investment firm Welsh, Carson, Anderson & Stowe.
Obama and Daschle will look for a candidate who has experience managing a large organization, knowledge of the healthcare system and good political relationships, the former officials agreed.
“It’s a terrific job because it marries policy and operations in a way almost no other position does,” said Gail Wilensky, who ran the agency during the George H.W. Bush administration and now is a senior fellow at Project HOPE.
Speculation has centered on a handful of Obama insiders, Clinton White House veterans and longtime Democratic healthcare experts.
Among the names thought to be under consideration are: Obama transition team member and Center for American Progress senior fellow Jeanne Lambrew; Avalere Health President Dan Mendelson; Urban Institute scholar Robert Berenson; Georgetown University Professor and failed congressional candidate Judy Feder; and Emory University Professor Ken Thorpe.
{mospagebreak}Scully and DeParle cautioned against putting too much stock into such speculation, saying their names were not on any public “short lists” before they were nominated. “You just never know,” DeParle said.
“You need management skills and leadership skills … [and] experience in leading reform efforts” in the government or private sector, said Mark McClellan, who succeeded Scully at CMS after helming the Food and Drug Administration for two years.
“You really need to keep the entire agency staff moving along,” said McClellan, the director of the Engelberg Center for Healthcare Reform at the Brookings Institution.
{mosads}Good relationships with key people on Capitol Hill are vital, DeParle said. “You spend well over half your time working with Congress,” she said.
A keen understanding of how the healthcare system works is also essential, Thompson said. “You’ve got to have somebody that knows healthcare,” he said.
“This administration’s going to want someone with a deep understanding of what beneficiaries are experiencing,” DeParle said.
One of the busiest areas of ongoing business will be devising the payment rates for physicians, hospitals, nursing homes and other medical providers that serve beneficiaries.
“That’s not the sexy, transformational stuff,” DeParle said. “Those are difficult management challenges.”
The former administrators all noted that doctors present a particular challenge: Without congressional action, their payments face a 20 percent cut in 2010. CMS will be tasked with helping Congress figure out how to fix that problem without breaking the bank.
More fundamentally, McClellan predicted that the Obama administration would continue with the Bush administration’s efforts to reform the payment system to reward more efficient, higher-quality care. “There’s a lot of momentum now … to put more emphasis on paying for value in Medicare,” he said.
Obama and congressional Democrats also are eager to rein in the private health insurance plans that operate under Medicare Advantage and Part D. Insurers could see their Medicare Advantage payments slashed by up to $50 billion and could face more stringent oversight of their activities in both programs.
States already are angling for new federal money to shore up their Medicaid budgets during the recession, and CMS will have to address other thorny Medicaid and SCHIP issues, such as how much flexibility to give states to redesign their benefits.
States also will clamor for CMS approval to make changes to their Medicaid and SCHIP programs, especially in cases where the Bush administration rejected their applications. “There’s always that sort of holdover,” McClellan said.
On SCHIP, Congress is expected to act soon after the new year to reauthorize the program, which expires on March 31. That reauthorization will also include a significant expansion of the program, which would bring millions of new children onto the rolls.
Under the Democratic health reform plans circulating, CMS could see its responsibilities greatly increased.
Some want to enable people aged 55 to 64 to purchase Medicare benefits, for example, and Obama has proposed creating a government-run health insurance plan people could purchase instead of private insurance.
One major advantage Obama’s CMS administrator is likely to have is Senate confirmation, Wilensky noted.
Since McClellan resigned in October 2006, CMS has been run by caretaker administrators; Kerry Weems has been acting administrator since August 2007.
The agency “does not function well without a confirmed political appointee,” Wilensky said.