The Centers for Medicare and Medicaid Services is the agency many providers love to hate.
CMS, which is an $800 billion bureaucracy with nearly 5,000 employees, is also the biggest payer of healthcare bills in the U.S. and arguably the most influential in health reform.
President Obama is reportedly on the verge of officially naming Don Berwick, MD, a highly regarded idealist in quality and efficiency, to lead the agency. CMS has been without an administrator since 2006 though Kerry Weems was the acting administrator during the final years of the Bush administration.
Berwick, a Harvard pediatrician who 20 years ago founded the Institute for Healthcare Improvement to remodel how doctors and hospitals treat patients, describes himself as "an extremist" in his advocacy of patient-centered care.
That concept of patient-centered care requires remodeling the entire healthcare delivery system, as many reform supporters have proposed.
On the heels of the Institute of Medicine report, "To Err Is Human," for example, he was the architect of a series of campaigns that encouraged hospitals to design systems to reduce medical errors. One encouraged hospitals to institute rapid response teams, which are strike forces that come to assist when hospitalized patients begin to fail when they are outside of an intensive care unit.
Whether Berwick will actually be named, and whether he will accept the challenge, remain unclear.
But whoever agrees to take the CMS administrator's desk will have to be a kind of dragon slayer from the start by confronting a host of issues and obstacles and overcoming long-held customs and practices.
Here are 10 issues the new administrator will have to face:
1. Survive Senate confirmation. Reports suggest that opponents of the new healthcare reform legislation may use the proceedings to whittle and pare the responsibilities and authority of the agency that will, in effect, whittle and pare the provisions of the law itself.
2. Fight to build up the agency's reputation from that of an overworked, struggling behemoth to one that sets goals and appropriately incentivizes providers to improve care, decrease morbidity, lower mortality, and improve quality of life.
This may mean fighting for a bigger budget, and somewhat different workforce.
"It's been seen as a bit of a downtrodden agency—understaffed, and never greatly appreciated," says Blair Childs, vice president of public affairs for Premier Inc., which now collaborates with Medicare on several pay-for-performance demonstration projects.
"CMS behaves like a resource-starved agency, which it is," noted Weems, in an interview with John K. Iglehart last June in Health Affairs. "CMS is a weakened organization. It has the capacity to pay bills and prepare the annual payment notices. But after that, there is little capacity, much less time, left to think through what a system of higher quality would look like."
3. Decide how accountable care organizations and medical homes will work, and how best to incentivize physicians to keep patients out of the hospital, putting them in direct competition with the hospitals that give them staff privileges.
This includes implementing a policy that reduces payments to hospitals with higher than average numbers of avoidable readmissions.
4. Create the new CMS Innovation Center, which will spend $10 billion through 2019 on finding ways to provide better care.
This will include selecting and presiding over the launch of dozens or hundreds of quality demonstration projects—some of them probably controversial and unpopular—and translate the best ideas into pilot projects or proceed to national programs or evidence based care. This is sure to make friends, as well as enemies.
5. Work with 56 state and territorial Medicaid programs, many of which has different coverage rules, shares of payments, and eligibility criteria for 60 million beneficiaries.
6. Repel what are sure to be Congressional efforts to modify authority over certain healthcare industries, including durable medical equipment suppliers and corporations that make imaging technology.
7. Beef up efforts to find fraud, waste, and abuse, and discourage practices that lead to it.
In the last year, CMS has responded to numerous criticisms from the Office of Inspector General and the General Accountability Office that it must do a better job in handling claims and pursuing the recovery of overpayments.
8. Oversee changes to the Medicare Advantage formula, which critics charge now pays private insurers $12 billion a year more than if the beneficiaries received care under the traditional Medicare fee-for service rules.
9. Increase capacity for an estimated 15 million to 18 million more people to receive Medicaid, a special challenge because many physicians are critical of Medicaid's low fee schedules.
More doctors are declining to see new Medicaid patients and some are closing appointments for existing patients because of Medicaid's payment level. The new director has to see a way to change that course and encourage physicians to reopen their doors to Medicaid patients.
10. Strengthen and perhaps increase frequency of on-site reviews of hospitals where mistakes, avoidable hospital-acquired infections, and other conditions or quality problems have become common and severe.
Hospitals now contract to treat Medicare patients by agreeing to provide certain quality of care, and if they consistently fail to meet those agreements, CMS may threaten to end the contract, resulting in the hospital's failure to receive federal reimbursement. Some 100 U.S. hospitals are regularly threatened with loss of revenue each year, but nearly all repair the deficiencies in time.
"He's going to have to bend the cost curve while improving quality, and that's the big yawning gulf that exists right now," says Childs. "He's going to have to implement changes in the payment structure that will shift the system from paying for quantity to paying for quality."