If new HCFA Administrator Thomas Scully thought his confirmation process wasn't exactly smooth sailing, he must have felt like he was capsizing during his first series of public appearances last week.
In just three days Scully went from the freewheeling character he was as chief executive of the Federation of American Hospitals to a tight-lipped political foot soldier after disclosing administration plans to publish outcomes data on all Medicare providers and nearly double Medicare HMO enrollment rates in four years.
He revealed those plans in a luncheon speech to a U.S. Chamber of Commerce conference in Washington. But just two days later, after a closed-door meeting in Washington with state hospital association executives, he wouldn't take questions from reporters seeking clarification on his earlier statements.
His uncharacteristic refusal to talk to reporters came after the disclosures were covered in major television and newspaper outlets. Between the two Washington appearances, he acknowledged in a speech at the Texas Hospital Association annual meeting in Austin that his revelations had put him in the White House doghouse.
"This may be my last speech for a while," Scully quipped to the friendly Texas crowd.
Scully added that rather than return to Washington, he might keep heading West. "I might just be administrator of the Chinese healthcare system when I get finished," he said.
One hospital lobbyist who has worked closely with Scully said he wasn't surprised.
"In this first week, we've seen his style," said Herb Kuhn, vice president of the Premier hospital alliance. "He brings lots of enthusiasm to the job. He's saying things that cause the healthcare community to think. He challenges us."
Many of Scully's former colleagues from provider groups and the healthcare policy world forecast such conflicts as he awaited confirmation from Congress (May 21, p. 40).
Industry sources said the loudest reaction to his latest remarks came from new Senate Finance Committee Chairman Max Baucus (D-Mont.) and the committee's senior Republican, Sen. Charles Grassley (R-Iowa), who were caught off-guard by Scully's announcements on Medicare managed-care enrollment, publishing outcomes measures and other HCFA reform measures.
Speaking a day later in Texas, Scully blamed the media in part for blowing the speech out of proportion, but he also blamed his own shoot-from-the-hip style.
Scully said his comments were part of an "off-the-cuff, back-of-an-envelope" speech and were "the same points I've made for four or five years, and nobody cared."
"Having been out of the government for eight years, I forgot how careful you have to be when talking to the press," he added.
Competing on quality
The announcement that drew the most attention was the outcomes reporting plan. In his speech to the U.S. Chamber of Commerce audience, Scully said the proposal aims to force hospitals and other providers to compete on the quality of care they provide.
"Collecting data and publishing it changes behavior," Scully said.
After that speech, he told reporters that HCFA and Medicare peer-review organizations already collect data that could be used to rate providers.
"My argument is that we ought to get (a single measure) quickly and use it across all fields," he said.
Hospital lobbyists had a cautious reaction to the proposal, remembering an annual mortality report HCFA set aside in 1993. Hospitals complained that it gave an inaccurate picture of hospital performance because it didn't take into account the severity of cases.
The outcomes reporting plan was one of a number of new initiatives that Scully said would be in a HCFA reform package due out later this month. They will include:
* Instituting regulatory reform measures to allow nursing homes that score consistently high in annual inspections to be inspected less frequently.
* Easing fraud-enforcement measures for providers that have shown themselves to be trustworthy.
* Changing the agency's name. He said a new name probably would incorporate the words Medicare and Medicaid because enrollees are happy with the two programs.
* Making the agency more efficient and consumer-friendly.
A reversal on payment increases
Scully also wouldn't rule out the possibility that legislation to raise Medicare payments would be enacted this year. Such a move would be based on soon-to-be-published hospital profit data from the Medicare Payment Advisory Commission and other sources. The aggregate hospital Medicare profit margin in 1999 was 5.6%, while overall hospital profit margins were 2.8%, according to MedPAC.
"It all depends on what's in (the legislation) and what the numbers are at the time of the legislation," Scully said.
That's in contrast to a speech last month in which Scully predicted that Congress would not pass another set of Medicare payment increases after two previous packages worth some $50 billion to providers over six years. The previous payment increases reversed provisions of the Balanced Budget Act of 1997, which aimed to trim projected Medicare spending by about $112 billion from 1998 to 2002.
Speaking out on fraud
Scully had some even more welcome comments for providers weary of the former Clinton administration's get-tough approach to healthcare fraud. Scully told the Texas audience that the pendulum may have "swung a little too far" toward aggressive investigations of providers under the Clinton administration.
"Too many (administrators) wake up in the middle of the night worried that somebody is going to blow in the door from the FBI and investigate their hospital the next day," he said. Nevertheless, HCFA will be "incredibly aggressive" in pursuing deliberate overbilling, he said.
One hospital association executive lauded Scully for saying HCFA will lessen the regulatory burden on providers.
"The agency has always been known for the high talent that it possesses, but also for creating processes that are cumbersome," said Kenneth Raske, president of the Greater New York Hospital Association. "A name change is more than a name change. It's a commitment to change the agency."