Editor’s Note: The Centers for Medicare and Medicaid Services has been deprived of needed resources and authority by Congresses and Presidents of both parties, former CMS acting director Kerry Weems said in a recent Health Affairs interview with the journal’s founding editor, John Iglehart. To follow up on this interview, the Health Affairs Blog convened a roundtable discussion involving Weems and three other former senior officials in CMS’ predecessor agency, the Health Care Financing Administration: Urban Institute Senior Fellow Robert Berenson, who directed Medicare payment policy and managed care contracting at HCFA from 1998 to 2000; Bruce Vladeck, a senior advisor at Nexera Consulting, a firm associated with the Great New York Hospital Association, who led HCFA during the administration of Bill Clinton; and Project HOPE senior fellow Gail Wilensky, who led HCFA during the administration of President George Herbert Walker Bush. Highlights of the roundtable appear below, and the full transcript is also available.

Fighting Fraud: Inadequate Resources, And A Misguided Emphasis On Recovery Over Prevention. All four roundtable participants agreed that CMS and its predecessor agency, the Health Care Financing Administration, had been consistently deprived of needed resources. In particular, participants criticized the failure of Congress and the White House to provide the agency with adequate resources to fight fraud and abuse. They also criticized the “pay and chase” model of fighting fraud. For example, Vladeck pointed out that a modest front-end investment in tactics such as claims review, profiling, and data mining “could probably save more money at the margin than any other forms of expanded expenditures for fighting fraud and abuse. But (a) that stuff doesn’t score nearly as well in the congressional budget process, and (b) it’s not nearly as sexy politically.”

Vladeck also noted that the practice of funding antifraud activities with the recoveries associated with those activities creates a perverse incentive not to prevent fraud but instead to catch perpetrators “because that’s what not only produces the headlines for the political leadership, but it’s also what produces the revenue to support a further expansion of the cops and robbers side of the house.”

The Consequences Of Contracting Out The Bulk Of CMS’ Work. Weems pointed out that CMS spends $640 billion a year but only has 4600 employees, reflecting the fact that the bulk of the work is contracted out. “That’s good in that you can take advantage of the latest technologies.  It’s bad in that there’s not a unitary strategy all around the Medicare and Medicaid programs.  Instead, it’s the strategies that the particular contractors might have,” Weems said.

“It also means that CMS is contracting out its intellectual capital,” Berenson added.  “A lot of the expertise doesn’t reside in Baltimore, it resides in various contractors who are relied upon.” Berenson cited research showing there were more employees at HCFA in 1980 than there are at CMS. “What’s happening is that, to the extent that work gets done, a lot of it gets done through contractors because there’s not an adequate staff and that’s a problem for the agency when it doesn’t have the expertise in-house, as we’re trying to evolve the health care system and need Medicare to be a more prudent purchaser,” he noted.

From Congress, Bipartisan Flip-Flopping On CMS’ Role. The roundtable participants described CMS as an agency that acts to satisfy Congressional demands, but then is brought up short when doing so affects entrenched stakeholder interests. Wilensky put it this way:

“On the one hand there are constant complaints about all of the things that CMS doesn’t do that the Congress sounds like it thinks it should do: being more creative in the implementation of the Medicare, changing the reimbursement structure and rewarding performance and quality. On the other hand, there is Congress’ actual chronic failure to provide the financial and political support to engage in these new activities.

If CMS is to be asked to play an expanded role as part of health reform, Congress must resolve this inconsistency, Wilensky said. But she and other roundtable participants express skepticism on this front. Weems opined: “If the agency is given discretionary authority that’s going to threaten some particular economic interest, especially one that’s as pervasive as DME providers — they’re everywhere — then ultimately I think that that discretionary authority is doomed to failure.”

Reforming CMS’ Personnel System: Creating A Less Insular Agency. All four roundtable participants lauded CMS’s talented and tireless workforce, but Vladeck and others cited the need to make it easier to bring in senior people from outside the agency who had not spent their entire careers in public service. Vladeck described observing “a certain lack of empathy for providers” among CMS’ senior staff “because none of them had ever been there.” He added: “The federal personnel system is still terribly slanted in that direction. The people at CMS are very talented, very bright, very committed, and very hard working, but their personal and professional experiences are limited because of the way the system works.”

This entry was posted on Wednesday, July 22nd, 2009 at 1:55 pm and is filed under All Categories, Health Reform, Medicaid, Medicare, Payment, Physicians, Policy, Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.