(Story updated at 5:10 p.m. ET)
Marilyn Tavenner, the former head of the CMS who stepped down just six months ago, will now lead the country's dominant health insurance lobbying group.
The board of America's Health Insurance Plans on Wednesday named Tavenner as the group's next president and CEO. She replaces Karen Ignagni, who served as AHIP's top lobbyist for 22 years before deciding to leave for New York-based insurer EmblemHealth this year.
“There is no better individual than Marilyn to lead our industry through the increasingly complex healthcare transformation that is underway,” Mark Ganz, AHIP board chair and CEO of Cambia Health Solutions, said in a statement. “She has the respect and trust of policymakers and stakeholders from all sides, and a personal commitment to advance meaningful solutions for improving access to quality, affordable care for all Americans.”
Tavenner, 64, was a nurse and a former executive of HCA, an investor-owned hospital company based in Nashville, before entering the federal government. Her decision to head to AHIP raises uncomfortable questions about the dynamics between Washington politics and business. Tavenner will now be representing and lobbying on behalf of some of the country's largest health insurers—the same companies who are regulated by the CMS and are devoting more of their business to Medicare and Medicaid in the form of privatized managed care.
Medicare Advantage, in particular, has been one of the fastest-growing components of the insurance industry. Private payers have publicly stated their desires to grow that side of the business. A pending merger between Aetna and Humana would create the largest Advantage plan in the country with about 4.4 million Medicare beneficiaries.
Tavenner will not be able to lobby the Obama administration health agencies for a short period of time, said Kip Piper, a former CMS official who now serves as a health insurance consultant in Washington. “AHIP already has a large, Beltway-savvy lobbying team, and this will allow her to get acquainted with AHIP internally and with member needs,” Piper said.
As administrator of the CMS, an agency with a budget of $881 billion, Tavenner was responsible for the two largest healthcare payers in the country, Medicare and Medicaid. She also oversaw the disastrous inaugural rollout of the Affordable Care Act's insurance exchanges two years ago and was tasked with implementing major delivery reforms, such as Medicare's forays into accountable care organizations and bundled payments.
Many Washington observers say Tavenner's move makes sense. “With exchanges and Medicare Advantage being a growth driver for plans, the managed-care industry needs someone to navigate Washington, and that includes Tavenner's alma mater, CMS,” said Ipsita Smolinski, managing director of Washington-based healthcare consulting firm Capitol Street.
John Gorman, a former CMS official during the Clinton administration who now consults with insurers, thought AHIP made a “very smart hire” and that Tavenner is an “experienced insider.” But he said Tavenner will have her work cut out for her, especially considering AHIP recently lost the membership of UnitedHealth Group, the largest private health insurer in the country.
“This is no picnic,” Gorman said. “I think running AHIP is one of the toughest jobs in D.C., period.”
Congress confirmed Tavenner's nomination in May 2013 after she took over for Dr. Donald Berwick in an interim capacity in late 2011. She was the first confirmed CMS administrator since 2006, bypassing political hostility to gain support from both Republicans and Democrats. Insiders think her reputation with Congress will help the insurance industry as it continues to implement the ACA's provisions.
“She's extremely trustworthy, responsive, well-respected and well-liked,” said Dan Elling, a healthcare policy adviser at Alston & Bird, a lobbying firm in Washington. “Given the delicate position that AHIP can sometimes be in—trying to implement a law that isn't popular with the Republicans who control the Congress—I think she's a great choice to lead AHIP at this time.”
Tavenner is primed for a big pay raise as the top leader of AHIP. Ignagni made more than $2 million as AHIP's CEO in 2013. Tavenner made $165,300 last year, according to government records. She is also expected to make more than $300,000 in cash and stock as a board member of LifePoint Health, a for-profit hospital chain based in Brentwood, Tenn. Tavenner joined LifePoint's board in April.
Earlier this year, the insurance industry tapped another prominent Democrat for a top lobbying position. Former U.S. House Rep. Allyson Schwartz of Pennsylvania was ">named CEO of the Better Medicare Alliance
">named CEO of the Better Medicare Alliance, a new advocacy group funded by health insurers, providers and business groups with direct stakes in Medicare Advantage.