Embargoed Until:
June 18, 2009
12:01 a.m. Eastern Time



Christopher Fleming

Executive And Legislative Branches Of Both Parties Underfund The Centers For Medicare And Medicaid Services, Weems Says

In wide-ranging Health Affairs Interview, Former CMS Acting Administrator Also Praises ‘Coverage With Evidence Development' Approach

Bethesda, MD -- If Congress passes health reform legislation, the Centers for Medicare and Medicaid Services (CMS) may be given an array of new functions. But CMS is already straining to perform its current duties, because Congress and the executive branch, regardless of party, have chronically deprived the agency of needed managerial resources, a former acting CMS director says in a Health Affairs interview published today. http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.4.w688

“On the operational side, there is not enough money to be able to even pay the [Medicare] bills in a reasonable way," says Kerry Weems, acting CMS administrator from June 2007 through January 2009. The agency is still less equipped to perform other important functions, such as developing innovative approaches to health care and deterring fraud and abuse, Weems tells Health Affairs Founding Editor John Iglehart.

Members of Congress often criticize CMS, but congressional underfunding causes much of what senators and representatives complain about. “A major reason that Congress frowns on the ‘bureaucrats in CMS' is that the political interests of legislators are far better served by increasing the budget of the National Institutes of Health [NIH] or the CDC [Centers for Disease Control and Prevention] or protecting one of their threatened hospitals or nursing homes," Weems points out. The CDC, NIH, and CMS all derive their budgets from the same appropriations subcommittees, and “when the resources are limited, you can imagine which agencies win out. Frankly, bureaucrats don't compete that well in this environment."

But Congress is not the lone culprit. The executive branch is also at fault. Weems says that the Department of Health and Human Services and the Office of Management and Budget underfund CMS in administration budget requests “for the same reasons that the Congress underfunds it. Administration officials, like elected politicians, want to appeal to those specific constituencies that the administration in power wants to accommodate." In fact, Weems acknowledges, for a number of years he himself ran the budget office at HHS and participated in underfunding CMS. “I plead guilty in this case," he says.

Other interview highlights include:

A failure to fight fraud. “Right now we way way way underspend for fraud and abuse," Weems says. CMS has $720 million in antifraud money that is part of a mandatory appropriation that doesn't have to be reauthorized every year, but Congress has failed to adequately augment that amount because “fraud dollars don't compete well with NIH, with CDC, with the Department of Education." The failure of Congress to fund antifraud efforts doesn't stop federal legislators from “lacerating" CMS every time a new story about fraud comes out. The bottom line, according to Weems: “The agency is being denied the resources necessary to tackle a task where billions of federal dollars are at stake."

The importance of “coverage with evidence development." Weems praises the idea of “coverage with evidence development," in which CMS agrees to reimburse providers for a new drug or medical device, but in return requires the manufacturer to collect further evidence regarding how well the new product performs its intended function. “The really powerful thing" about this strategy “is that it is one of the few tools government has that can properly align incentives," he says. In traditional coverage decisions, the manufacturer simply submits whatever evidence it can muster in an attempt to gain coverage, but the “coverage with evidence development" approach forces the manufacturer to either stay involved and prove a new product's worth, or forgo coverage, Weems points out.

Praise for President Obama's competitive-bidding proposal for Medicare Advantage plans. Weems endorses President Obama's plan to have the private health plans in Medicare Advantage bid against each other to secure Medicare contracts. “Personally, I believe that private plans can offer better care at lower or the same costs" as traditional Medicare, Weems says. However, “Medicare Advantage did not demonstrate that" because, under its flawed payment mechanism, “plans didn't really compete on the basis of price." Rather than condemning private plans, President Obama has “correctly identified the flaw in Medicare Advantage's payment mechanism and has proposed to fix it."

Finding a new way to calculate Medicare reimbursement for physicians. Currently, a committee of the American Medical Association, the Specialty Society Relative Value Scale Update Committee (RUC) essentially determines how much physicians of different specialties will receive from Medicare relative to each other and relative to primary care physicians. “I think there is a general consensus that the RUC has contributed to the poor state of primary care in the United States," Weems says. Because the RUC process is so procedure-based, “it's prejudiced against just standard primary care evaluation and management [E&M] visits, because in an E&M visit it's hard to document what happens in the same way" a physician can when he or she removes a mole or performs some other procedure. Changing the RUC process will be a tall order requiring statutory changes, but reform in this area is important: “It's funny that we talk about better coordination of care and creating the medical home. Well, the place where this can occur is in an E&M visit, which has been highly undervalued by the RUC," Weems points out.

After the embargo lifts, you can read Iglehart's interview with Weems at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.4.w688


Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org.


©2009 Project HOPE–The People-to-People Health Foundation, Inc.