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Top Medicare Official to Step Down May 16

By John Reichard, CQ HealthBeat Editor

April 22, 2014 -- Jonathan Blum, the principal deputy administrator at the Centers for Medicare and Medicare Services (CMS) and President Barack Obama's first political appointee to the agency, is stepping down May 16.

CMS Administrator Marilyn Tavenner wrote in an email to staff last week that Blum is resigning after five and a-half years at CMS to pursue other opportunities. There was no immediate word on who might succeed Blum, or on his post-CMS plans.

"Jon was the first political appointee to come to CMS under the Obama administration in March 2009," Tavenner wrote. "He spent most of his time at CMS as deputy administrator and director of Center of Medicare. Under Jon's leadership, the Medicare program has served as one of our primary drivers to shift our health care system to reward quality, care improvement and value."

Although CMS announced no replacement for the principal deputy slot, the agency recently appointed Sean Cavanaugh as director of the Center for Medicare and as a deputy CMS administrator. Cavanaugh had been deputy director of the Center for Medicare and Medicaid Innovation. Before that he served as director of health care finance at the United Hospital Fund, a New York City based health policy research organization that also has pioneered various programs and organizations including the National Quality Forum, which rates quality performance measures. Cavanaugh served on the staff of the House Ways and Means Health Subcommittee and held posts at the Maryland Health Services Cost Review Commission and Lutheran HealthCare, a Brooklyn, New York-based medical center and health care delivery network.

Blum brought a knowledge of industry, Capitol Hill, and specifically, the Senate Finance Committee to his job overseeing Medicare and implementing Medicare provisions of the health law. An aide in 2001-2004 to Max Baucus when the Montana Democrat was chairman of Senate Finance, Blum most recently oversaw the release of Medicare physician billing data. He was seen as bringing a generally pragmatic approach to his post, drawing on the depth of his knowledge of Medicare payment policy and his experiences as an industry consultant with Avalere Health from 2004 to 2009.

"The Medicare team's accomplishments are too many to list, but include developing the ACO regulations, implementing our quality framework for Medicare Advantage plans, implementing our competitive bidding program for durable medical supplies, and developing many of our value-based payment strategies," Tavenner wrote of Blum's tenure. "Medicare per-capita cost growth has remained at the lowest sustained period under Jon's tenure while quality of care has increased and new benefits have been added to the program."

Blum helped implement various payment innovations. They included bundled payments for dialysis facilities, and the Value Based Purchasing program, which varies payment according to the quality and efficiency of care. Another key change was the adoption of payment penalties when a hospital readmitted a Medicare patient who had to return to the facility because of substandard care during the first visit.

Accountable care organizations (ACO), which aim to bring team-based care to the relatively unmanaged Medicare fee-for-service program, got off to a rocky start under the health law but more recently under Blum's direction have shown promise in controlling Medicare costs.

"We are tremendously surprised with the overall growth of the program," Blum said in an upbeat assessment of the program early this year. "We are adding about a hundred new ACOs each year," he said. If "these growth trends continue, then it's going to be a continued phenomenal story for the Medicare program."

Paul Ginsburg, formerly president of the Center for Studying Health System Change, said the results were encouraging enough to begin pursuing refinements to the ACO model. He added that they brought a sense of relief.

"I say relief because we have to get this to work," Ginsburg said. He is now advocating that ACOs be changed so that beneficiaries have an incentive to pick an ACO and be more subject to its arrangements for controlling costs while improving quality. Ginsburg said in a commentary published in the recent issue of the Journal of the American Medical Association that the absence of such arrangements "may severely undermine the potential of this approach to improve care and control costs."

Blum also has been immersed in the details of administering other highly contentious cost control programs. For example, he helped implement, against intense industry opposition, the nationwide expansion of a bidding program for wheelchairs and other forms of "durable medical equipment" that independent analysts say Medicare has paid too much for in the past.

Blum also was involved in responding to a fierce campaign by the health insurance industry to lessen cuts to Medicare Advantage program. CMS recently made regulatory moves to lessen ease the reimbursement hit to private health plans in the program while sticking to a long term program of reductions ordered by the health law.

The CMS official came under fire at a recent House Energy and Commerce Health Subcommittee hearing on an agency proposal to no longer require antidepressant and immunosuppressant drugs to be included on all Part D plan formularies as two of six protected drug classes, effective in 2015. Blum said CMS has concerns with overprescribing or inappropriate use of the drugs but lawmakers on a bipartisan basis objected that beneficiaries would lose access to essential medications.

While the announced departures of senior HHS officials like Secretary Kathleen Sebelius and Blum command more attention, some newcomers are entering leadership slots at CMS. In addition to Cavanaugh, they include Shantanu Agrawal, who on March 3 was appointed a deputy CMS administrator and as director of the CMS Center for Program Integrity. He replaced Peter Budetti, who left last fall. Agrawal, who served as Budetti's top medical officer, has degrees from Brown and Cambridge University and a medical degree from Cornell.

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