Is Steele the Man for CMS?

The rumor mill has President Obama naming Geisinger Health System CEO Glenn Steele as the new chief of the Centers for Medicare and Medicaid Services, a position that has been vacant since before the Bush administration left office. At this point it's still only a rumor, and most people close to him are denying it, but some were speculating the President would even announce the nomination during his State of the Union address.

That didn't happen, but things change fast, and if he's planning on making Steele the nominee, it could happen as soon as the vetting process is complete. People have been wondering what Obama has been waiting for, assuming he was thinking Congress would pass a health reform bill that a new director could help implement. That justification doesn't hold much water for me. I don't think any argument could justify why an agency that controls 20% of the entire federal budget has been vacant for a year, but none of our elected leaders—even those in the opposition—are making a big deal about it.

Though the healthcare reform bills have little to do with cost control and much to do with expanding coverage, Obama has long touted the type of clinical integration offered by systems such as Geisinger and other systems that are vertically integrated. That such systems often do a good job of providing quality coordinated care at low cost is not the key question, rather, the issue is whether such systems are duplicable under the current or even under a reformed healthcare payment system.

But now that the healthcare bills are in serious jeopardy because the Democrats lost their congressional super-majority, many are speculating that the president will now focus on pushing his value agenda through CMS, since Congress has so far failed to act in any dramatic way on healthcare reform, on either the coverage or the value front—and time is growing short.

Steele would be an excellent choice from the perspective that a health system CEO who has implemented the types of integration that drive down cost and boost quality. So from that point of view, Steele should be attractive to the administration as well as to many others (myself included) who want better value for what we spend as a nation in healthcare. However, one big concern is that the Geisinger model is difficult, if not impossible, to duplicate on a large scale.

I talked to Steele last summer for a HealthLeaders magazine cover story on so-called "bundled payments” that are aimed at better coordinating care, which many think is a key step to better value in healthcare. What he said to me a year ago might offer some insight to how he would work to improve value as the head of CMS. An excerpt:

"Right now there are legal issues that would have to be changed in order to do so-called bundled payments and there would have to be very precise tools, not [yet] in existence . . . to figure out how to distribute components of payment," he says. "So it's pretty complex, and most of us have argued although it is the right kind of change, we probably ought to have a system where we can innovate rather than a defined set of new rules."

Steele argues that doing trials that experiment with a wide variety of payment and quality initiatives outside of "very special places like Geisinger" to a much more fragmented real-world situation would ensure a greater chance of reducing costs and increasing quality.

"You don't want to screw everything up all at once," he says.

There's the matter that a payment system would require a massive overhaul that would be beyond the scope of even the power of the CMS head to implement and would likely require congressional action. Additionally, how would Congress react to what could be perceived as an end-run around the admittedly excruciating legislative process? They would have to confirm him, after all.

It will be interesting to see how all of this shakes out. If Steele is the nominee, it's about time.