Berwick revisits ghosts of CMS past

The path that lies ahead for new CMS Chief Dr. Donald M. Berwick may be better divined not by looking at the agency's future, but its past.

November 1978 is a good place to begin. A young but ambitious assistant secretary of management and budget under President Jimmy Carter was appointed to head the Health Care Finance Administration, the predecessor to the Centers for Medicare and Medicaid Services.

Leonard D. Schaeffer served for only 20 months. However, that was long enough to make the then 35-year-old a coveted executive in the private sector. He accepted an offer to take over Group Health in Minneapolis, then an even larger health plan out West.

As Schaeffer once told me, he found Blue Cross of California a moribund place full of entitled executives. As CEO he quickly eliminated the deadwood. Within a few years its enrollment had ballooned. A few years later, it had converted to a for-profit, WellPoint Health Networks--now just WellPoint, Inc (NYSE: WLP). In the early and mid-1990s, the for-profit conversions of health plans that had operated for decades as not-for-profits became as ubiquitous as cell phone kiosks are in shopping malls today, and Schaeffer led the way.

Once he helmed a publicly-traded company flush with cash, Schaeffer practiced a precise brand of transactional healthcare. He placed a maximum value of about $3,000 apiece on a health plan enrollee. If he could acquire those lives for significantly less than that, he would. WellPoint went on a nationwide acquisition spree that eventually led to its marriage to Anthem--Schaeffer left WellPoint not long after engineering that deal, taking a nine-figure retirement package with him. Anthem Blue Cross of California became the lightning rod of the healthcare reform debate earlier this year when it unapologetically tried to raise the premiums on some of its enrollees by as much as 39 percent.

Berwick and Schaeffer, although of the same generation (the latter is a few months older than the former) are dynamically different people. Schaeffer holds an undergraduate degree from Princeton. The current CMS administrator is a Harvard-trained pediatrician who also holds a master's degree in public health. Berwick has served for years as the head of the Institute for Healthcare Improvement, an organization that has researched patient safety, quality and medical practice issues, helping to save hospitals and other providers billions of dollars. In 1995, near the height of Schaeffer's powers as a health plan executive, the National Committee for Quality Assurance declined to certify Blue Cross of California.

Berwick was a brainy no-brainer to head CMS, which will have an enormous say in keeping costs in line as the Patient Protection Act is phased in over the next decade. Yet he has been pilloried, particularly on the right.

"Dr. Berwick is a proponent of the British healthcare system and believes in rationing your healthcare and redistributing wealth," said Rep. John Carter, a Texas Republican, in a typical Berwick critique over the summer. It was in reference to Berwick's praising of the primary care component of healthcare delivery in the United Kingdom.

Seemingly nonsensical statements such as these make perfect sense when you follow the money, particularly the millions of dollars WellPoint's PAC has contributed to Congressional and other federal candidates over the past decade. Nearly three-quarters of that cash has gone to Republicans. A high-profile CMS appointee by a Democratic president will not fly with the likes of WellPoint.

Indeed, the health plans received a Pyrrhic victory of sorts: The thumping of Berwick was so incessant that President Barack Obama made him a recess appointment in August rather than put him through a Senate confirmation hearing (Schaeffer, by contrast, had such a short track record 32 years ago that he was a shoo-in as an appointee).

Berwick now has little more than a year to remake the practice and politics of healthcare delivery his long-ago predecessor has had a hand in molding for decades. I suggest as he embarks on a tenure that no doubt will be crammed with hardball, he follow advice attributed to Satchel Paige, the oldest man to play in the major leagues: Don't look back. Something might be gaining on you. - Ron