CMS chief to leave agency; claims drug benefit top triumph

Washington -- Centers for Medicare & Medicaid Services Administrator Mark McClellan, MD, PhD, will resign his post at the agency within a few weeks, but that still leaves enough time for Congress to craft a long-term solution to the Medicare physician payment issue that he and the Bush administration can approve, he said.

Dr. McClellan, who has been in charge of CMS since March 2004, announced Sept. 5 that he would be leaving the job as soon as an acting chief can be put in place, no later than early October. That is about the time Congress plans to adjourn to prepare for this year's midterm elections, capping a jam-packed month on Capitol Hill in which many legislative priorities receive their last best chance for congressional approval.

"We are going to be working closely with Congress on trying to get to a better payment system for physicians, one that is more focused on quality and is more sustainable and gives physicians better payments for better care while keeping overall costs down," he said during a conference call with reporters following his announcement. "I think there's a good chance of making some real progress toward that system this month."

The American Medical Association called on Dr. McClellan to make one final push to convince Congress to block next year's projected 5.1% physician pay cut before lawmakers adjourn.

"It is our hope that, before leaving CMS, Dr. McClellan will intensify his efforts to help physicians provide the best possible care to Medicare patients by supporting congressional efforts to ensure that the 2007 Medicare physician payment update will reflect the increase in physicians' practice costs," said AMA Board Chair Cecil B. Wilson, MD.

The CMS chief, an internist by training, often expressed sympathy during his time in the post for physicians dealing with a Medicare payment system that he said was due for a major overhaul. But he also insisted that the federal government needed to start paying physicians based on the quality of care they provide, not just the amount of services. He implied that not all of the recent spikes in the volume and intensity of Medicare physician services were warranted.

The AMA disputed some of these assessments over the past 2½ years. Still, after the resignation announcement, the Association described the outgoing administrator as well-qualified for the position.

"During his tenure, Dr. Mark McClellan brought expertise and experience as a physician to CMS to address national health care policy," Dr. Wilson said. "We hope to see similar qualifications in his replacement."

President Bush said Dr. McClellan played a critical role in adding a prescription drug benefit to Medicare, the single biggest change to the program since its inception. He also started federal health programs down the road toward price and quality transparency that will allow the system to become more competitive and consumer-friendly, Bush said.

Not all of his accomplishments received high marks from observers. Some lawmakers and patient advocates were particularly critical of how the agency handled the implementation of the drug benefit during the opening months of the year. Medicare beneficiaries and their doctors expressed frustration with delays in getting medications through the new plans.

Dr. McClellan conceded that not everything went according to plan when it came to the launch of Medicare Part D, though he still listed the new benefit as one of his most important achievements on the job.

"In every single one of these programs, there are ways that we could have implemented them better," he said. He mentioned problems that some low-income beneficiaries experienced in transitioning from Medicaid drug coverage to Medicare as one example in which the agency could have done better.

The Medicare drug benefit continues to encounter bumps, including a recent incident in which the government mistakenly mailed nearly $50 million in premium refunds that it must now recoup from beneficiaries. Dr. McClellan took some flak from lawmakers for the glitches but assured them that he was addressing the errors.

"Dr. McClellan has worked to fix the problems," said Senate Finance Committee Chair Charles Grassley (R, Iowa). "I hope his departure doesn't cause delays in getting Part D snags fixed for beneficiaries and that he'll correct all known problems before he leaves."

What's next

The outgoing CMS chief said he had made his decision so he could spend more time with his family. He said he was looking into taking a policy analyst position at one of a number of Washington, D.C., think tanks that he declined to name.

He noted that he was still on leave from professorships in economics at Stanford (Calif.) University and medicine at Stanford Medical School.

At press time, the Bush administration had not named an acting replacement. CMS officials Leslie Norwalk, Herb Kuhn, Abby Block and Dennis Smith were mentioned by Dr. McClellan as examples of qualified senior staffers, one of whom might take the reins on a short-term basis.

The White House gave no indication of whom Bush might tap for the permanent post, which requires Senate approval. Grassley, who chairs the committee that recommends whether a candidate should be confirmed, said that he would like to see a nominee who will steer Medicare through its next critical years.

"It takes a skilled administrator to juggle the agency's competing interests of offering the highest possible level of service to beneficiaries while keeping down costs to preserve the programs for future beneficiaries," he said. "To meet these goals, I'd like to see the next administrator stay in the job as long as possible, through the end of the Bush administration."