Woodlawn health agency could face a 're-invention'

WASHINGTON — WASHINGTON -- The president's health care reform plan would impose major new responsibilities on the Woodlawn-based Health Care Financing Administration and require "re-invention of the agency" to carry them out, says administrator Bruce C. Vladeck.

All of the agency's 4,000 workers -- and more -- will be needed, he said in an interview this week at his office in Washington, where many senior agency officials work.


"The net impact over the first five to 10 years of health care reform is substantially additive in terms of HCFA's responsibilities," said Mr. Vladeck.

Both Medicare, the health program for older Americans, and Medicaid, the program for the poor, are administered by his agency.


Nerve center

The Health Care Financing Administration would be at the nerve center of health reform under the president's plan, with more responsibility than any other existing agency. Its tasks would include starting new programs demanded by the president's plan and collecting information about the costs of the reformed health system -- data that Congress and the states would need to supervise the system.

Though the agency would need "additional resources," according to Mr. Vladeck, he wouldn't expect to get them in the short run. "We're going to have to do some considerable re-invention of the agency in order to keep up with additional expectations," he said, adding that it's "too early to say" what specific changes would be made at the agency, which is building a new headquarters on Rolling Road in Woodlawn.

The agency's primary duty now is to run the $230 billion Medicare and Medicaid programs, which serve 67 million elderly and poor people. Under the president's plan, the bulk of the Medicaid program would be folded immediately into a new system in which most Americans obtain insurance through regional purchasing groups. These "health alliances" would collect premiums from employers and individuals and negotiate for coverage with doctors, hospitals and insurers.

VTC Medicare would remain an independent program at the beginning but probably would be phased out eventually.

Although shorn of some of its current responsibility for Medicaid, Mr. Vladeck's agency would be asked to start a new program of benefits for poor children, which would supplement the benefits package all Americans would be guaranteed under the president's plan.

The Health Care Financing Administration also would launch a ++ new prescription drug benefit for Medicare beneficiaries, work with states that want to integrate Medicare into their alliances and increase the health care options of senior citizens by making available more group programs, such as health maintenance organizations.

Because the agency has "the best and most sophisticated health finance data system in the world," Mr. Vladeck said he expects the government would "draw very heavily on our capacity" to oversee costs in the new system and help develop standardized electronic claims billing.


Key research

The agency's health finance experts have already contributed key research to the development of the president's reform plan. Mr. Vladeck has been "captain" of that team since joining the agency last May, after serving as president of United Hospital Fund of New York, a health policy think tank.

Although health reform has dominated the agenda, Mr. Vladeck says his agency is making progress toward what he terms one of his top priorities: improving service for Medicare and Medicaid beneficiaries.

His favorite part of this effort is a "language improvement project" aimed at upgrading the quality of written communications with beneficiaries, who often complain about confusing materials they receive. "We're working on tone and substance and style . . . as well as things like type size, looking at color contrasts, general readability," he said.

It will take a while to finish this project because most of the materials come from contractors hired to pay bills and supply information on behalf of Medicare and Medicaid. These companies "have investments in pre-printed forms," which take time to replace, Mr. Vladeck said.

In addition, the Kaiser Family Foundation, a health philanthropy, is financing "focus group" interviews with beneficiaries around the country to find out what they don't like about dealing with the agency and its contractors.


"For the first time, HCFA is getting the input from the people we serve rather than folks up here sitting around a table and making decisions," said associate agency administrator Faye S. Baggiano.

Mr. Vladeck said the agency also is moving ahead on another problem he inherited: the loss of as much as $500 million a year in Medicare payments that private insurers, rather than the federal government, should be making.

The problem arises when patients have private insurance as well as Medicare. In these cases, the private insurer is supposed to pay the medical bills. Often, however, the bills are submitted to and paid by Medicare.