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September 11, 2000
"Reforming Medicare Governance:
Who Should Run Medicare in the 21st Century?"
AIM sponsored a September 11 briefing for Congressional
staff on HCFA's management structure for the Medicare fee-for-service and Medicare+Choice programs. Speakers included Dr. William Scanlon, Director, Health Financing and Public Health Issues Area, US General
Accounting Office (GAO), Mr. Bruce Fried, Shaw Pittman, and Mr. Jeff Lemieux, Senior Economist, Progressive Policy Institute (PPI).
Medicare, and HCFA's management structure, are no longer
compatible with today's medical technologies and methods of health care delivery. Replacing the current rigid and outdated management structure would allow providers more flexibility to offer better benefits,
more choices, and new innovations and technologies. Further, HCFA faces enormous fiscal challenges due to the projected doubling of the Medicare population and increasing benefit design pressures, including a
new prescription drug benefit. The briefing focused on concerns with HCFA's current management structure and existing proposals to help HCFA meet these coming challenges.
Dr. Scanlon outlined two challenges HCFA faces in
administering Medicare: that it is a large public, government program and that it cannot take advantage of the market because of its mandate to purchase services for Medicare beneficiaries.
Dr. Scanlon also discussed three problems which prevent HCFA from improving Medicare management: focus, continuity, and resources. First, HCFA has numerous other programs within its jurisdiction. HCFA also suffers from lack of continuity of leadership, having had 17 Administrators in the agency's 23 years. Finally, HCFA lacks the staff expertise and technological advancement to adequately meet the needs of today's beneficiaries. Dr. Scanlon proposed lengthening the HCFA Administrator's term of office and removing policy considerations from Medicare program administration responsibilities.
Mr. Fried, a former Director of HCFA's Center for Health
Plans and Providers, stated his belief that HCFA's managed care functions must be contained within a distinct, identifiable office with centralized staff and resources. He charged that HCFA's 1997
reorganization, which divided managed care management among several offices, has hindered the success of Medicare's managed care program, Medicare+Choice, and he acknowledged the existence of biases within HCFA
against the managed care program. Mr. Fried stated his belief that a consolidated managed care office should not be separated from HCFA. He envisioned two separate but equal offices for the traditional
fee-for-service and managed care programs with the directors of each program reporting to the HCFA administrator. Mr. Fried also cited the need to depoliticize HCFA.
Mr. Lemieux, former staff economist for the National Bi-Partisan
Commission on the Future of Medicare, outlined the Commission's recommendations for HCFA governance reform.
He said the Commission's primary goal in recommending changes to Medicare management was to encourage the evolution of Medicare to better meet beneficiary needs and provide up-to-date services. Mr. Lemieux reported that the Commission wanted to design a way to lessen Congressional micro-management and HCFA regulatory activities in order to allow the agency to evolve. He cited the Commission's recommendation for a separate Medicare Board to run the managed care program as an attempt to encourage the evolution and success of that program as well as to prevent HCFA from regulating its competitors.
Finally, the speakers agreed that Medicare governance
should be considered in the current debate on a prescription drug benefit for Medicare beneficiaries. Mr. Lemieux commented that a new prescription drug benefit, and the expected additional HCFA bureaucracy,
would result in greater management struggles for HCFA and adversely affect beneficiaries and providers.
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