Payment Reimbursement and Managed Care

CMS Principal Deputy Administrator Jonathan Blum discusses price transparency, surprise billing and the future of value-based payment

May 17, 2022 3:26 pm

HFMA President and CEO Joe Fifer interviews Jonathan Blum, principal deputy administrator and COO at CMS. In this interview, Blum discusses how CMS plans to phase out the public health emergency, how price transparency and surprise billing legislation are being received by provider organizations, and the effect the pandemic will have on CMS’s value-based care strategy.

Jonathan Blum: I think there has been a loss of confidence that continuation of direction toward more value-based care is the right course for the country. And it’s not lack of confidence within CMS, but I sense there is growing fatigue and growing distrust that value-based payment systems will lead to better cost results, quality results.

Erika Grotto: Price transparency, surprise billing and other significant areas of focus for CMS, today on HFMA’s Voices in Healthcare Finance podcast.

Hello, and welcome to the podcast. I’m your host, Erika Grotto. Today, we’re thrilled to share this conversation between HFMA President and CEO Joe Fifer and Jonathan Blum, principal deputy administrator and chief operating officer at CMS. It’s not every day we have an opportunity to hear directly from CMS on their initiatives, so if you’ve been watching things like price transparency, surprise billing or even value-based care, there’s a lot in this interview that you’ll want to hear. Here’s Joe.

Joe Fifer: Well, I am really excited today to be speaking with Jonathan Blum, who is the principal deputy administrator and chief operating officer at CMS, overseeing CMS’s program policy planning and implementation and day-to-day operations of the agency. Previously, he served as deputy administrator and director of CMS from 2009-2014. Welcome to the podcast.

Blum: Thank you very much for having me. It’s a really great opportunity. I look forward to the conversation.

Fifer: Yeah, it’s so important that we have that good dialogue between the industry and CMS. So as I mentioned in the intro, this is your second time serving in a senior leadership role at CMS. How is the second time different from the first?

Blum: Well, I think it’s a rare opportunity to come back to a job twice. You get to correct mistakes. You get to do things a second time. That’s a really kind of rare opportunity in life. But thinking about CMS today compared to where it was, say, 10 years ago, it’s a much different agency and just the size, the scope to our work. What’s changed dramatically is how we cover people. It used to be that the Medicare program was the largest program. Today, it’s Medicaid, and we have seen shifts in population. We have seen shifts in spending. We are doing far more of our work through project managed care plans than direct fee-for-service payments, and that causes us to really think differently for how we drive impacts, for how we drive change throughout the healthcare system. The other change that I think needs to be acknowledged is that we are operating now in the current COVID pandemic, and CMS has become a viable part of the overall public health response system. So we’re not just a payer, we’re not just a program that serves the Medicare population. We are serving many more people, scope is so much bigger, and we are front and center to the overall pandemic response right now.

Fifer: Yeah. You know, it’s interesting. I bet your people sometimes don’t think about the fact that you’re delivering many of your services through either private insurance or Medicaid that’s run by states, so that’s really an interesting model. Part of it is through regulation, but part of it must be through a management-by-influence model because you’re delivering it secondhand in a way.

Blum: I think that’s right. I think if you were to look at the agency, say 25 years ago when I first came to Washington, the work of the agency would be primarily focused on the traditional Medicare fee-for-service program—how we set payment rates, how we set the DRGs, how we program the systems to pay claims. That’s still part of the CMS mission and takes a lot of time, but we spend much more time thinking about how we shape the healthcare system through our state Medicaid programs, through private insurance, through private Medicare managed care plans, through private Part D plans. And so, the CMS leadership who was hired, say, 25 years ago would have to be experts in how we set payment rates and today, the scope, the breadth of what CMS does today requires us to use different tool sets. Our clinical standards group, the group that sets quality standards, quality metrics, that sets the CoPs that govern hospitals, nursing homes—that today is CMS’s biggest staff division, which says that the CMS mission—not just the Medicare program but how we govern the whole healthcare system—is by far where the agency is going and a huge locus of our thought process and how we shape healthcare policy going forward.

Fifer: Sure. You know, I’ve never worked in any government agency, same thing with most of our members. I don’t know what the day to day looks like at CMS, but what are some of the pressures and challenges that our members wouldn’t know of that happen at CMS?

Blum: Yeah. I mean, I think one thing is day-to-day life for CMS is a string of continuous decision making and throughout the day, we are setting policies, setting decisions. I think for the CMS leadership team, day to day is really making decisions. The other thing I think is really different from working in government than, say, in the private sector is, we have a constitutional structure that sets many different bosses, many different decision makers. So we have to work through the Health & Human Services secretary, his team, the White House, the OMB, the Congress. And so while those decisions get made, we are constantly having to review, clear, check. Very appropriate, it’s how our government works, but we have very diffused governance, which requires our CMS team to make decisions based upon data and what’s right, but also in the context of how the White House thinks about things, how the Congress thinks about things. I think your span of decision making is much bigger than, say, a CEO for a private organization.

Fifer: Yeah. You know, I used to maybe laugh a little bit or make a comment in jest when I worked in the healthcare environment, if you worked for a hospital, you couldn’t make a decision without 20 people in the room because it’s so complicated, and you’re describing the same thing, just from a public perspective rather than the private sector. Well, let me shift gears. You mentioned your role in terms of the pandemic and, gosh, who would have guessed way back when that we’d still be under this public health emergency, but it’s here, it’s still here. It has lingering impacts on the healthcare system. How is CMS planning to phase out the public health emergency and ensure a smooth transition to a new normal, whatever that new normal is?

Blum: Well, I think the first principal is, we are planning for whatever state comes our way. And so I think don’t see the world as going back to the pre-pandemic but really thinking about three states. The first state is, how do we continue to support healthcare providers now, given where we are. Second state that we’re thinking about is, how do we think about the post-pandemic state, whatever it is. And the third is, how do we really think about how to support healthcare systems, how we support Medicare, Medicaid patients to become much more resilient for the future. Just to give a couple examples, we’ve spent a lot of time thinking about what has happened to those who are in nursing homes during the first phase of the pandemic to where we are now, to wanting to get to a point where nursing home residents are safe if we ever get back to the state that we were in two years ago. So we are thinking about how to make sure that nursing home residents, for example, are safe now and giving support to nursing homes, communities, states, to keep them safe, thinking about how we ensure that never happens again and thinking about how we really give more direction, more leadership to prepare communities to ensure that we never go back to the state we were in two years. We’re thinking about how to transition payments for therapies, payments for vaccines, to a more normal health insurance payment system approach. Today, vaccines, COVID treatments are paid directly by the federal government. That is going to transition, and so we have to think about that transition. We have to think about the transition of those who are covered by state Medicaid programs that one state’s began to go to the normal processes. Some of those individuals won’t qualify for coverage, won’t qualify for state Medicaid coverage. So we have teams thinking about, how do we ensure that every individual that could potentially lose state Medicaid coverage has the opportunity to get covered through Medicare, private insurance, their employer. This is just another example. So very right to point out, this transition is going to be challenging, but the transition that we’re planning for is a more resilient healthcare system, a more resilient Medicare/Medicaid population and really ensuring that we have the regulatory framework, the reimbursement framework, and the support framework to help communities transition to this next phase.

Fifer: Yeah, it’s so important. There’s so many lessons that we can all learn, right? And I’m grateful that this is part of what you’re talking about. Let me shift gears a little bit here. Health equity is an important topic for many of our members and something we’ve been focusing on quite a bit, and I know it’s a focus for CMS. What are CMS’s goals when it comes to health equity, and then maybe to add onto that, what should hospitals do to help address this issue?

Blum: Yeah, I think that’s a great question, and we’re just having this conversation today of what this means for us to have a healthcare equity agenda. First principle is, this is not a side project for CMS. This is not a team who is thinking about ways for us to promote better access to care. The way that we have really set the framework is, this is the fabric for the whole agency. So what the administrator has challenged CMS to do is every policy decision that we make, every operational decision that we make from how we contract with vendors, for how we set reimbursement policy, for how we set coverage policy, needs to be brought through a lens of how will it shape healthcare delivery, how will it promote better access to care for all populations. So we really see this as a, first and foremost, a policy framework. Second, management framework. And also a key operational framework for how we operate. And when CMS makes decisions and CMS reviews policy options, every decision that we make brings in criteria. Will the policy, the contract that we’re signing help promote better access to services, better access to coverage, closing gaps in care, for example? But that’s how we set the agenda. We believe that this should be a similar framework for every hospital, health plan, nursing home should operate going forward. And we’re trying to set the example and set what we think is the right framework going forward for how CMS operates that we hope that others begin to mirror. But to us, this is a fabric of the agency—policy, operations, management—it really distills throughout the agency not as a separate team, separate thought process. It is front and center for everything that we do.

Fifer: Yeah. It almost sounds like you have to start out with some structure or almost the mechanics of making it important and hopefully after awhile it just becomes part of who we all are…

Blum: Yeah

Fifer: …and second nature of what we do. That’s what I’m hearing from your answer.

Blum: Yeah, I think that’s right. We really challenge the CMS team to say, let’s define what the current state is, let’s define what our future vision is, and map out the very tactical steps for how we set payment rates, for how we set our coverage criteria, for how we contract with health plans and begin to be very tactical, very operational, for how we transition from the current state to what we believe the desired state should be. And that desired state definition is still evolving and still being refined. But we’re really translating it to a set tactical, very operational framework that we believe will promote access, promote quality, promote better healthcare outcomes and just taking some of the pandemic lessons of who was harmed the most, really make sure that we are building more resilient systems, care systems, going forward.

Fifer: Yeah. I’ve been speaking about that quite a bit myself, and it’s not limited to the pandemic. I mean, health equity issues have been here, and just like a lot of things, the pandemic put a bright spotlight on it. I’ll shift gears one more time. Our members are dealing a lot with consumer-facing regulations that have come up—price transparency, the implementation of surprise billing. I just wonder how all that’s going from your perspective, the enforcement of price transparency regulations, that whole world.

Blum: Yeah, so I think—let’s take No Surprises first. We’re very early in the overall program, but we’re starting now to see data. We’re starting now to get requests for arbitration going through the systems. And so from that perspective, the system is working, and we’re now getting requests for the first time for the arbitration process. But I think what it tells us is, there’s still a real kind of market challenge and a real consumer challenge. So the good news is, the systems, the rules that we have response to the challenges that healthcare consumers face, the downside is, there’s still challenge, and there’s still friction in the system, and there are still people who are receiving surprise bills. So I personally was hopeful that once the rule went into place, we would see fewer surprise bills going through the system. The data is showing that the program’s working, policies were meant to design are meant to respond to market failure. The reality is that there are still surprise bills going through the system. Price transparency, I think, is a real area that you’ll see the agency think through more of. We are certainly getting better compliance today than, say, maybe six months ago, but still more work to do. I think some of the challenges that we see day to day is maybe hospital leadership not fully understanding what the requirements are. So for example, we find hospitals are out of compliance. Our team calls the CEO and says, “By the way, you’re out of compliance, did you know that?” The common response is, “No.” And then we see action. So I do think we need to do more collectively, really that kind of senior hospital management teams, they understand what the responsibilities are. They understand that CMS is fully committed to ensuring compliance. There will be fines, but I think what our team is discovering is that it’s not bad will that is causing some of the compliance issues. It’s just lack of senior leadership recognizing what the current requirements are.

Fifer: Yeah. I appreciate that last comment, because I personally think that you’re right. You know, HFMA has had a long history of price transparency and consumer-facing issues. I would just be public in saying, we’re here to help as well.

Blum: Right, right.

Fifer: I appreciate that. Another thing about HFMA you may not be familiar with, but HFMA and then I myself are focusing on cost-effectiveness of health—not healthcare, but health, trying to keep, the whole idea of having an industry trying to keep people out of the hospital, keeping them healthy to lower the overall cost of health. So I’m interested in your thoughts—where would you like to see CMS focus the most attention to drive up quality, drive down costs and truly impact their cost-effectiveness of health?

Blum: I think it’s a great question. I think it’s something that our team, particularly in the Center for Innovation but also throughout the agency, Center for Medicare, Center for Medicaid Services. This is what I think is one of the fundamental questions that all those teams right now are really taking a hard look at. And I think there has been a loss of confidence that continuation of direction toward more value-based care is the right course for the country. And it’s not lack of confidence within CMS, but a sense there is growing fatigue and growing distrust that value-based payment systems will lead to better cost results, quality results. And so what we have challenged ourselves to do is to really re-energize the conversation and to really kind of elevate the narrative for why our country needs to continue the journey and really elevate it and bring more speed and bring more urgency. And going back to where we started the conversation, going back to the pandemic, what we discovered is those that had higher incidence of severe chronic illness, those who were more reliant on hospital care, nursing home care, they suffered the most, both in morbidity, death. And that’s where I think we really need to take the conversation. And if we believe in value-based care, and if we believe in continued transformation toward different payment mechanisms, different quality outcomes, those efforts should be precisely focused on those that have multiple chronic conditions, those who are more reliant on traditional hospital care, nursing home care, figuring out strategies to care for them in much more safer settings. That’s where I think we really need to drive the conversation. How can we use value-based payment tools toward building more resilient healthcare and changing the narrative from how do we preserve business models to how do we create safer communities, how do we protect those that are most vulnerable. I’m personally hopeful that we can change the conversation from a business focus to a more outcome focus, more people focus, more consumer focus, more patient focus, where I think we need to go.

Fifer: And frankly, I think that you could do both. There could be a business focus as well as a focus on people and focus on health, and ultimately, everybody can win. So I really do appreciate that. Exit question: Not long ago—in fact it was on April 28, HHS had an announcement out that came under CMS news about making coverage more accessible and affordable for Americans. Any comment on that, anything that you think our listeners might be interested in from that recent announcement, just because I have you and it’s so recent?

Blum: Well, I think what you’re referring to is how we’re setting the contract terms for the marketplace plans going calendar year 2023. I think we’re at a real state of maturity with the marketplace plans. When I first started at CMS, the Affordable Care Act had just passed, we were building the overall marketplaces. We had a few bumps along the way. The program was in kind of a nascent state. Today it’s in a far mature state. We have very strong competition. We have growing enrollment, we’re at an all-time high. And really from the premise that when you make healthcare more affordable, create more competition, you get more enrollment. And so we’re at a pivot point, where, say, for the past 10-12 years—we’re at the 12-year anniversary of the Affordable Care Act—we’re at a pivot point where building a market, building a program to really shaping it going forward, to produce better outcomes for consumers. This is precisely the same journey that the Medicare Managed Care Program took, a very small, growing market to a very mature market, that you begin to start really shaping delivery reform strategies. You can really begin to shape more market strategies, and really begin to think about ways that health plans can deliver better value to their consumers. And a big focus for us going forward in 2023 here is to begin to standardize benefit designs that we think will really drive competition, will drive consumers to be able to evaluate plan choices, plan options, begin to drive competition harder, begin to set higher standards for how health plans build their networks. One of the key points is for us to tighten the rules and promote access for primary care services, for example, to create some of the similar standards that we have in the Medicare program. And so I think this rule can be interpreted in two ways. One is, we want to drive more value, drive better choices to those consumers that receive the coverage to the marketplaces. But I think also a huge credit that for the state of maturity where we’re no longer building a market, we are now shaping a market that is very mature and very robust.

Fifer: Well, and it’s so important, as you mentioned earlier. There will be millions of people, at some point, rolling off these state Medicaid rolls, hopefully into the marketplace. And so those rolls could become that much more important. And so, gosh, I have to laugh. It’s amazing to think about 12 years, that it was 12 years ago—makes me feel old, Jonathan. I don’t know if I like that comment.

Blum: I mean, I think it is a huge credit to the whole healthcare community. I think for the CMS team, it’s so gratifying that we’re at a state of now being able to really kind of shape programs going forward, and that’s the other change regarding today’s CMS versus, say, 10-12 years ago. We’re really at a much more mature state with our operation and our programs. It just gives us so much more opportunity for us to partner and help transform healthcare for the better, working with all healthcare stakeholders.

Fifer: Yeah. Well, count us in as an organization that will help.

Blum: Thank you.

Fifer: I’ll keep constantly making that offer.

Blum: Thank you very much.

Fifer: I just want to thank you. I know your time is precious. I see how you folks work. Your days are packed, and your schedules are busy. It just means a lot to me and to our members that you took time to spend with me today, so thank you very much.

Blum: Thank you, and I think one of the things that I should have started off saying is, we greatly value all healthcare stakeholders, and helping us shape better healthcare policy by definition, that our programs are reliant on healthcare providers, healthcare systems to do our work. And so a huge thanks for the opportunity and we look forward to the continued partnership.

Fifer: That sounds great, and we do as well. Well, thank you again for your time.

Blum: Thank you very much.

Grotto: Voices in Healthcare Finance is a production of the Healthcare Financial Management Association and written and hosted by me, Erika Grotto. Sound editing is by Linda Chandler. Brad Dennison is our director of content strategy. Our president and CEO is Joe Fifer. We always want to hear your thoughts, so send us an email if you’d like to reach out. You can get us anytime at [email protected].

On this episode of HFMA’s “Voices in Healthcare Finance” podcast, HFMA President and CEO Joe Fifer talked with Jonathan Blum, principal deputy administrator and COO at CMS.

The evolution of CMS

This is Blum’s second time at CMS. He also served as deputy administrator and director from 2009-2014. Fifer began by asking him how things have changed.

“It’s a much different agency — the size, the scope to our work,” he said.

Medicare used to be the largest program CMS ran, but today, Medicaid is the largest. Spending has shifted as well, with CMS doing more work through managed care plans than fee-for-service (FFS) payments. The pandemic also has changed CMS, Blum said.

“CMS has become a viable part of the overall public health response system,” he said. “So we’re not just a payer. We’re not just a program that serves the Medicare population. We are serving many more people, the scope is much bigger, and we are front and center to the overall pandemic response right now.”

Commenting further on how the shift away from FFS has changed CMS’s day-to-day work, Blum said much of what the agency does is shaping the healthcare system through state Medicaid programs and private insurance.

“The CMS leadership who was hired 25 years ago would have to be experts in how we set payment rates,” he said. “Today, the scope, the breadth of what CMS does, requires us to use different tool sets.”

CMS’s role in the pandemic

Fifer noted the long-lasting impact of the pandemic on the U.S. healthcare system, asking how CMS plans to phase out the public health emergency and transition smoothly into the next phase of the pandemic. According to Blum, there are three key areas to work on:

  • Supporting healthcare providers today
  • Planning for a post-pandemic state
  • Supporting Medicare and Medicaid patients, who have been among the most vulnerable during the pandemic

Some examples of challenges CMS is working through include helping the millions of people set to fall off the Medicaid rolls when the public health emergency ends and how COVID-19 vaccines and treatments will be paid for once the federal government no longer covers them.

Price transparency and surprise billing

Blum also provided an update on compliance to CMS rules around price transparency and surprise billing. The latter program is in its early days, but data are starting to come in through requests for arbitration. Blum said that indicates to him that the current legislation addresses the correct problem but that the problem still exists.

On price transparency, Blum said compliance is improving, but many hospital leaders do not realize they aren’t in compliance.

“I think what our team is discovering is, it’s not badwill that is causing some of the compliance issues. It’s just lack of senior leadership recognizing what the current requirements are,” he said.

Future initiatives

Fifer also asked where Blum would like to see CMS focus in the coming years to drive up quality and drive down costs. Blum said those are key areas the agency is currently looking at.

“That’s something that our team, particularly in the Center for Innovation but also throughout the agency, Center for Medicare [and] Center for Medicaid Services,” he said. “I think there has been a loss of confidence that continuation of direction toward more value-based care is the right course for the country. And it’s not lack of confidence within CMS but a sense there is growing fatigue and growing distrust that value-based payment systems will lead to better cost results [and] quality results.”

Continued transformation toward new payment mechanisms will require a focus on patient populations that will benefit the most, such as those with chronic conditions and those who are reliant on nursing home care, Blum said.

“I’m personally hopeful that we can change the conversation from a business focus to a more outcome focus, more people focus, more consumer focus, more patient focus,” Blum said.


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