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May 11,
2010
To: Larry Summers
From: David Cutler
Subject: Urgent Need for Changes in
Health Reform Implementation
I am writing to relay my concern
about the way the Administration is implementing the new health reform
legislation. I am concerned that the personnel and processes you have in place
are not up to the task, and that health reform will be unsuccessful as a
result.
Let me start by reminding you that I
have been a very active supporter of reform. In addition to being the senior
health care advisor to the President’s campaign, I worked closely with the
Administration, helped Congress draft the legislation, met with countless
Members of Congress and interest groups to explain the reform effort, conducted
numerous radio and television interviews, walked hundreds of reporters through
health care, and wrote a number of op-eds and issue briefs supporting reform. I
am told that the President and senior members of the Administration valued my
input, though I was never offered a position in the Administration. I say this
to illustrate that I have thought about the issues a good deal and have
discussed them with many people.
You should also note that while this
memo is my own, the views are widely shared, including by many members of your
administration (whose names I will omit but who are sufficiently nervous to
urge me to write), as well as by knowledgeable outsiders such as Mark McClellan
(former CMS administrator) and Henry Aaron (Brookings). Indeed, I have been at
a conference on health reform the past two days, and have found not a single
person who disagrees with the urgent need for action.
My general view is that the early
implementation efforts are far short of what it will take to implement reform successfully.
For health reform to be successful, the relevant people need a vision about
health system transformation and the managerial ability to carry out that
vision. The President has sketched out such a vision. However, I do not believe the
relevant members of the Administration understand the President’s vision or
have the capability to carry it out. Let me illustrate the problem
you face and offer some solutions.
Problem Areas
A central concern is the Department
of Health and Human Services, the main implementation agency for reform. The
Department is making a good start on the immediate deliverables of reform: high
risk pools and coverage for young adults. But it is far behind the curve on the
key long-term reform efforts, most notably reforming the delivery system to
support higher quality, lower cost care. Let me give you a few examples.
1. A good deal of reform implementation
needs to occur at the Centers for Medicare and Medicaid Services (CMS). You
were dealt a bad hand here. The agency is demoralized, the best people
have left, IT services are antiquated, and there are fewer employees than in
1981, despite a much larger burden. Nevertheless, you have not improved the
situation. The nominee to head that agency, Don Berwick has never run a
provider organization or insurance company, or dealt with Medicare or Medicaid
reimbursement. On basic issues such as the transition from fee-for-service
payment to value-based payment, Don knows relatively little. Further, he has been
ordered not to be involved in anything at the agency until he is confirmed,
which will likely be in the fall. Don has a wonderful vision, but there
is no way he can carry it out in any reasonable time without substantial help.
Unfortunately, the senior staff at
CMS, which has been appointed, is not up to the task. For example, I recently
met with the senior CMS staff about how all the new demonstration and
pilot programs envisioned in the legislation might work. This is a
crucial issue because the current demonstration process takes about 7 to 10 years,
and thus following this path would lead to no serious cost containment for the
next decade. When engaged about the speed of reform, the staff expressed the
view that: (a) their fear was going too fast instead of going too slow; (b) we
ought to add a layer of university review to the existing process, to be sure
we are doing the right thing; and (c) the natural place to start demonstrations
is in end-of-life care (Death Panels notwithstanding).
As a result, you have an agency
where the philosophy of health system reform is not widely shared, where there
is no experience running a health care organization, and where the desire to
move rapidly is lacking. The result is that I have very little confidence that
the Administration will make the right decisions about the direction and pace
of delivery system reform.
2. The second major task of reform is
to set up and run insurance exchanges. I am not encouraged by what is occurring
there either. Running exchanges is a collaborative process. As just one
example, the person who ran the Commonwealth Connector in Massachusetts
estimates that he had 500 town meetings to discuss reform, the equivalent of
17,000 meetings nationally – and this was in a state where two-thirds of
people, along with insurance companies, supported reform. The person newly
appointed to head the insurance oversight office has a reputation as an
insurance bulldog, not a skilled facilitator. Remember that most people will get
their information about reform from their doctor and their insurance agent. If
you cannot find a way to work with hesitant states and insurers, reform will
blow up. I have seen no indication that HHS even realizes this, let alone is
acting on it.
3. A fundamental issue in making
reform work is explaining reform to providers and showing them how to respond
to it. The Department has done nothing along these lines. Most providers
know very little about reform, and they are universally surprised to hear a
positive philosophy about how they can benefit from health system
transformation. Their most common comment is ‘why hasn’t anyone explained this to
us?’ As Atul Gawande’s famous
New Yorker article
put it, you need the equivalent of an agricultural extension worker in every
community to make reform work. This does not appear to be on HHS’s radar
screen, however.
4. Above the operational level, the
process is also broken. The overall head of implementation inside HHS, Jeanne
Lambrew, is known for her knowledge of Congress, her commitment to the poor,
and her mistrust of insurance companies. She is not known for operational
ability, knowledge of delivery systems, or facilitating widespread change.
Thus, it is not surprising that delivery system reform, provider outreach, and
exchange administration are receiving little attention. Further, the fact that Jeanne
and people like her cannot get along with other people in the Administration
means that the opportunities for collaborative engagement are limited, areas of
great importance are not addressed, and valuable problem solving time is wasted
on internal fights.
All in all, the administration has
immense decisions to make about transforming health care delivery and coverage.
But no one I interact with has confidence that your current personnel and
configuration is up to the task.
Some Ideas
When a corporation needs to move in
a new direction, it sets up a new structure to focus on where it needs to go.
You can’t change the culture by piling new responsibilities onto a broken
system. I believe you need to follow this model. You need to bring in people
who share the President’s vision and who know how to manage health care or
other complex operations. These people then need to interact with existing
agency personnel to make reform happen.
You need to start with a strong team
at the White House. That team needs to lay out the milestone goals for the next
5 to 10 years, coordinate across various agencies, and communicate with the
public. To avoid the perception of secrecy, I would recommend an outside Board
of Overseers that would monitor progress and report regularly on whether health
reform is meeting its goals.
You also need a major change at HHS,
which I envision as a revamped and enhanced implementation group. That group
needs to share the President’s vision and have expertise in several areas:
- Managing large and complex enterprises
- Payment reform, including people who can work with existing employees to design and implement the necessary programs;
- Information technology systems, including how to update the IT structure in CMS and link that to the effort to computerize medical records;
- Outreach, including people who can lead an education campaign for medical care providers, insurers, and insurance brokers; and
- State coordinators, who can empower and work with state-specific groups to set up and manage insurance exchanges.
In each of these areas, you need to
take advantage of external experts as well as people inside the Administration.
I show below one way to organize
this. There may be better ways to organize things than what I have laid out.
But it is clear to me that these functions are vital and are not being met. I strongly
encourage you to make changes now, before you are too late to get the outcomes
we need.
(Couldn't copy the Cutler's organization chart)
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