CMS nominee expected to stay the course on Medicare agenda

If Congress confirms President Bush’s nominee to be administrator of the Centers for Medicare and Medicaid Services (CMS) in the coming months, he will find a full plate of issues waiting for him.

Bush this month nominated Kerry Weems to take over at CMS, an agency that has a major impact on every corner of the healthcare industry and every facet of the healthcare system.

Hospitals, physicians, nursing homes, pharmaceutical companies and medical-device manufacturers all depend to a large extent on Medicare, Medicaid and CMS’s nearly $600 billion annual budget for their livelihoods.

“It really is amazing when you think about it, how much they are responsible for,” said Mary Grealy, the president of the Healthcare Leadership Council, a coalition of healthcare company chief executives.

“CMS has huge implications” not only for companies directly doing business with Medicare and Medicaid, but downstream in the private marketplace, said Alissa Fox, vice president of legislative and regulatory policy at the BlueCross BlueShield Association.

Medicare, for one, will take enormous attention.

The Democratic-led Congress has been agitating to change the Medicare Part D prescription-drug benefit and place limits on the expansion of Medicare Advantage, a program through which private health-insurance companies administer benefits for Medicare enrollees.

The political fighting over Medicare this year has barely begun and the CMS administrator — if confirmed — will be at the center of those debates, alongside Health and Human Services (HHS) Secretary Mike Leavitt.

Currently the HHS deputy chief of staff, Weems would be responsible for overseeing the budget and staff of a massive agency if he were confirmed. That means he will have to pick up the ball on the administration’s agenda for Medicare and Medicaid, which already has been on course for six years.

Healthcare industry groups are not expecting Weems to unveil large initiatives but instead to carry out the implementation and management of Bush administration priorities already under way.

“The opportunities to really do something new and bold are going to be limited,” said American Hospital Association (AHA) Executive Vice President Rick Pollack. “As a practical matter, how many months [in this administration] are really left?”

“I think it’s a follow-through period,” said Mark Merritt, the president and chief executive of the Pharmaceutical Care Management Association, which represents pharmacy benefit management companies.

But Pollack said that Weems would still try to make his mark on the program. “You usually do have people who come to this job who want to leave some legacy,” he said.

Weems would serve as a steward of the Bush administration’s legacy in Medicare and other areas, chief among them Part D.
“The primary focus will be on making sure that the Part D program and the policies that are already in place … are continuing to function,” said Scott Whitaker, the chief operating officer of the Biotechnology Industry Organization.
“The administrator has a unique role in guarding the integrity of this program,” Merritt said.

Whitaker, who served stints as HHS chief of staff and assistant secretary for legislation in the Bush administration and worked directly with Weems, said that Weems is well suited to managing the agency and keeping the administration’s policies on course. “He knows the issues very well, he knows the department very well, he knows the agency very well,” Whitaker said.

Outside the political debate over Part D and other Medicare issues, CMS has to deal with a number of controversial matters.

Under this administration, CMS has been ambitious in reconfiguring the payment systems that provide billions to all classes of healthcare providers, and it is still in the process of implementing those changes.

At present, atop the list is the regulation setting next year’s payment rate for inpatient hospital services under what is known as the inpatient prospective payment system (IPPS).

The hospital industry has been trying to fend off proposed 2.4 percent cuts each year over the next two years, which the AHA estimates would cost hospitals $25 billion over five years. “The IPPS cuts are a very big deal,” Federation of American Hospitals spokesman Richard Coorsh said. “This is a backdoor cut of huge numbers,” Pollack said.
The agency has proposed expanding the number of billing codes of hospital services to more accurately direct payments for more severely ill patients. CMS anticipates that hospitals would respond by “upcoding” to maximize their payments, so it is seeking the cuts to compensate for that.

CMS also is developing new payment policies for “post-acute” care provided at places such as nursing homes, long-term-care hospitals and inpatient rehabilitation facilities. “That whole area begs for some sort of more orderly system,” Pollack said.

Fox said that CMS also will soon begin accepting new bids from health-insurance companies for contracts to administer the payments CMS makes to healthcare providers under traditional Medicare. Blue Cross and Blue Shield plans around the country have historically fulfilled this role, but the agency is looking to consolidate from the roughly 50 companies currently under to contract to about 15, she said.

Other issues on CMS’s agenda through the end of this administration include expanding the use of information technology in the healthcare setting and improving access to information on the price and quality of medical services. Leavitt and the White House have been very active on these long-term priorities.