Medicare, Medicaid Changes Won’t Come Easy for New Agency Official

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By Matthew Loughran

Dec. 13 — Seema Verma, President-elect Donald Trump’s designated CMS administrator, will have a difficult task in making any large-scale changes to the Medicare and Medicaid programs, according to former officials of the Medicare agency.

“The team that will come in will be faced with difficult decisions from day one,” Jonathan Blum, executive vice president, medical affairs at CareFirst Blue Cross Blue Shield, told a gathering of health lawyers Dec. 13. Blum was a deputy administrator for the Centers for Medicare & Medicaid Services from 2009 through 2014 and served on President Barack Obama’s transition team in 2008.

Thomas A. Scully, a senior counsel at Alston & Bird LLP in Washington who served as the CMS administrator under President George W. Bush from 2001 through 2004, said Verma should be ready for a fight, particularly when it comes to potential Medicaid changes. “There is going to be a complete and total policy war in Congress over the next few years,” he said.

Leslie Norwalk, a strategic counsel at Epstein Becker & Green LLP in Washington who took over as the acting CMS administrator after Scully resigned in 2004 and served in that capacity until 2007, added that any changes to the government programs would have to take into account Trump’s campaign focus on jobs.

“If you look at what Donald Trump was saying about trade, manufacturing and jobs, there was not a lot of focus on the fact that the health-care sector is one of the largest employers in any given state,” she said.

Norwalk said any changes to Medicare and Medicaid to conform with fiscal responsibility campaign promises would have to take into account the effect those changes would have on the jobs the program payments support.

The Dec. 13 panel discussion was part of the American Bar Association’s Washington Health Law Summit.

Transition Ahead of the Game

Scully said the Trump administration’s focus on changes to the Affordable Care Act places it far ahead of where previous administrations have been at this point.

“Repeal and replace of the ACA is one of the top three issues on the national stage,” he said. “I am not sure where they are going to go with it, but with [HHS] Secretary Thomas Price’s nomination and a new administrator’s nomination, they are way ahead of the game.”

As an example, Scully pointed to the process that went into the creation of Medicare’s Part D drug program while he was the CMS administrator. “The first time that I talked to [Secretary of Health and Human Services] Tommy Thompson was late January [2001],” he said. “And then we didn’t talk about Part D until probably April.”

Meanwhile, Norwalk said Verma would be well served to get industry participants on board with any changes she wants to make to the programs. “If I had to give her advice, it would be to listen to the industry, listen to your staff and be prepared for what will come at you from all sides,” she said.

Proposed Medicaid Changes

The panelists all agreed that changes to the Medicaid program would come with substantial difficulties. “The problem is the past,” Scully said. “A lot of ‘magic money’ has been floating around in the Medicaid program for a while now,” he added, indicating that the actual sources of Medicaid funding for state programs had been obscured over the years.

Scully predicted most of the fight about Medicaid funding would involve those states that turned down Medicaid expansion funds available under the ACA. “They will likely try to do a per capita cap program because that has more popular support,” he said. “But that would set up a massive state by state formula fight.”

He added that placing a cap that would lock in the current funding levels would result in the states that declined expansion ending up on the short end of the formula.

Blum agreed the effects of any Medicaid changes would differ drastically from state to state. “The choice [of Verma] tells me that CMS will be working closely with state governors,” he said. Verma is credited with helping to develop Indiana’s Medicaid program under Vice President-elect Mike Pence while he was governor of the state.

Norwalk pointed to the Indiana program, known as Healthy Indiana 2.0, for evidence of what could be expected from Verma for Medicaid. “The first thing could be to develop model waivers for different programs and to inject a lot more personal responsibility into the program,” she said.

However, Scully warned that any changes would be gradual. “Nothing in the law is probably going to change for about two years,” he said.

He reiterated that the CMS will have to decide what to do with those states that didn’t accept Medicaid expansion. “Are you going to let those states all come in and get their shares, or are you going to tell them sorry, the bank is closed and move on,” he said.

CMS Innovation Center

All of the panelists agreed the incoming administrator will have to decide what to do about the CMS Innovation Center, which was created by the ACA and allows the Medicare and Medicaid programs to test models that improve care, lower costs and better align payment systems to support patient-centered practices.

“The Innovation Center provides tools that are incredible and powerful,” Blum said. He said the center allows the CMS the flexibility to make changes to the Medicare and Medicaid programs without having to go through Congress.

Norwalk predicted Republicans would realize the power of the Innovation Center and not go through with efforts to eliminate it. “Republicans may not have liked it because they didn’t like who was controlling it,” she said. “But they may change their minds when they see the concepts that CMS is testing.”

Scully agreed. “A lot of what [the Innovation Center] has done are things that Republicans have been pushing for years, bundled payments and different payment systems,” he said. “Once they are aware of that I wouldn’t be surprised if they want to keep it.”

To contact the reporter on this story: Matthew Loughran in Washington at mloughran@bna.com

To contact the editor responsible for this story: Peyton M. Sturges at PSturges@bna.com

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