Blum Latest Leader to Exit HHS

As the clock winds down on the Obama administration's final term, CMS Principal Deputy Administrator Jonathan Blum joins what is becoming a steady stream of top federal officials leaving for new career opportunities.

In its third high-level departure this spring, HHS has announced the resignation of Jonathan Blum, principal deputy administrator at the Centers for Medicare & Medicaid Services.

Blum, a former Office of Management and Budget program analyst, was the White House's first political appointee at CMS, serving as director of the Center for Medicare from 2009 to 2013. As principal deputy administrator over the past year, he concentrated on payment reform and cost reduction efforts across the agency.

In a memo to CMS employees Tuesday morning, CMS Administrator Marilyn Tavenner said Blum "has decided to leave CMS to pursue new opportunities." His last day on the job will be May 16.

Blum's departure follows the April 11 resignation of HHS Secretary Kathleen Sebelius, the administration official most closely associated with reforms under the Patient Protection and Affordable Care Act. Gary Cohen, director of the Center for Consumer Information and Insurance Oversight at CMS, announced his resignation last month. Cohen had led the troubled launch of the new public health insurance exchanges.

A Champion of ACOs
Blum has led several Medicare reform initiatives linked to the PPACA, including development of accountable care organization rules, quality framework implementation for Medicare Advantage plans, and helping to craft value-based payment strategies.

"Under Jon's leadership, the Medicare program has served as one of our primary drivers to shift our health care system to reward quality, care improvement, and value," Tavenner wrote. "Medicare per-capita cost growth has remained at the lowest sustained period under Jon's tenure, while quality of care has increased and new benefits have been added to the program."

CMS came under fire this spring over proposed cuts to Medicare Advantage plans that the agency pegged at 1.9 percent but insurers forecast at 5.9 percent. Republicans in Congress accused CMS of pilfering Medicare to pay for Obamacare.

In a conference call with reporters on April 7, Blum defended the final CMS calculation of anticipated 2015 MA payment rates, which the agency has set at a 0.4 percent gain. "CMS has a very good track record," he said. "We've been pretty spot-on over the past four years on predicting the markets."

Exodus in Motion
In email exchanges Wednesday, a pair of analysts noted that the departures at HHS present both opportunities and risks.

Nicholas Manetto, director at DC-based FaegreBD Consulting and a former congressional press secretary, said the exits of Blum, Cohen, and Sebelius present more risk than potential for gain.

"Like in most situations, too much change at once can be destabilizing and presents a certain amount of risk, particularly given the complexity of ACA implementation and related issues," he said.

"While there can also be some opportunity in new blood, new approaches and new thinking, I think the risks could be significant, particularly given the number of challenges that still very much exist and lay ahead with the ACA."

Kevin Coleman, head of research and data at Sunnyvale, CA-based HealthPocket Inc., said the timing of the HHS departures could be good for the Obama administration's political standing and efforts to drive healthcare reform.

"By waiting to depart after the administration's [public exchange] enrollment goals have been met and exceeded, Sebelius and Blum have prevented their departures from being cast as key leadership abandoning a very troubled inaugural enrollment period," Coleman said.

Opportunity
The departures present the White House with several opportunities, Coleman added. "These recent HHS departures represent an opportunity for the administration to increase implementation process transparency for the public as well as improve its management of supporting technology and service vendors," he said.

"The new secretary of HHS can review those vendor management practices that culminated in the federal exchange roll-out problems and monitor the management of the new exchange vendor to confirm mistakes are not repeated as various aspects of the exchange software system are modified. With respect to transparency improvements, HHS can provide ongoing updates regarding the testing status of exchange functionality, load performance, and data security prior to the commencement of the next Open Enrollment Period."

Manetto cautioned that observers should not read too much into the HHS turnover.

"Transitions of this kind at this point in time in any administration are certainly not uncommon," he said. "Blum and Sebelius in particular were in their very demanding positions for quite lengthy periods of time, so it is not surprising to me that they are looking to transition, and I would think we will only see more changes of this kind as the administration moves into its final two years."

Other high-ranking administration officials who have resigned this year include Customs and Border Protection Commissioner David Aguilar, Small Business Administration chief Karen Mills, and White House Counsel Kathryn Ruemmler.