State variation cornerstone of reform says HCFA's Vladeck. _

Healthcare Financial Management, Jan, 1994 by Wendy Herr

The Health Care Financing Administration (HCFA) is the Federal agency within the Department of Health and Human Services (HSS) that administers the Medicare and Medicaid programs at the Federal level. Bruce C. Vladeck was appointed to the position of administrator of HCFA by President Clinton; that appointment was confirmed by the U.S. Senate on May 24, 1993, and Vladeck was sworn in two days later.

Prior to his appointment, Vladeck was president of the United Hospital Fund of New York in New York City for 10 years. From 1986 to 1993, Vladeck was also a member of the Prospective Payment Assessment Commission. Vladeck is a former member of the New York State Council on Health Care Financing and served as New Jersey's assistant commissioner for health planning and resources development from 1979 to 1982. He also has held positions with the Robert Wood Johnson Foundation and Columbia University.

HFMA policy services group executive Wendy Herr, FHFMA, CMPA, interviewed Vladeck in August 1993 for HEALTHCARE FINANCIAL MANAGEMENT.

Herr: This is probably one of the toughest times to be the administrator of HCFA. What role do you see yourself playing in helping shape healthcare reform?

Vladeck: Obviously the Medicare and Medicaid programs are central to the healthcare reform process. My principle role will be to protect the beneficiaries of those programs and to see to it that whatever comes out of the healthcare reform effort has as positive an effect on Medicare and Medicaid beneficiaries as possible. HSS Secretary Shalala, however, feels quite strongly that all her senior colleagues should work together collegially and is very much at the center of the internal executive branch discussion of healthcare reform. So in that sense, I am involved in all the areas of reform.

Herr: What about the issue of variation among the states and state flexibility?

Vladeck: There is no question that there is a major commitment within this administration, from the President on down, to the position of state flexibility and state variation being the cornerstone of healthcare reform. The longer I spend in this job, the more amazed I am at the remarkable heterogeneity in the healthcare system and the way the healthcare system has evolved in one part of the country compared to another. This is one of the major reasons why flexibility is so important.

Also, much of what healthcare reform is intended to accomplish is very new (at least to healthcare). Any prudent policy maker or public official would hope for some variation in the way states go about reform in order not to have all their eggs in one basket and also to have an opportunity to learn from a number of alternative approaches. The reality is that you cannot micromanage the healthcare system from Washington. And although people sometimes find this hard to believe, we do not want to micromanage the healthcare system from Washington.

There are, however, problems inherent in having a Federal policy administered to a considerable extent by the states, as we are learning in the course of trying to make Medicaid more flexible. Some of this is not as straightforward and as direct as it might seem, but it has to be done. We are very much committed to that. We have learned a lot in the course of recent experiences with the Medicaid program and we are going to build on that learning as we plan heathcare reform.

Herr: What about the various types of providers? What about home health care and nursing facilities, for example? Will you be trying to coordinate all healthcare services?

Vladeck: There is a lot of talk, as you may know, about a long-term care benefit. The beginning "down payment" long-term care benefit is part of the healthcare reform plan. Frankly, the substance of it is not as well specified as I would like it to be or as it should be at this stage of the process. It obviously will be the subject of considerable debate over the next few years, but clearly this is an opportunity to rethink the definition of the Medicare skilled nursing facility benefit, and the definition of the Medicare home care benefit, and to determine how they relate to the rest of the system. And we are going to try to do that.

Herr: One of the concerns I hear from HFMA members around the country is that will not only healthcare reform dictate significant change, but that quick implementation of programs necessary to achieve that change will be required. Financial managers are very concerned about the transition -- particularly with respect to such things as bond obligations and contracts they have with physicians. What are your thoughts on the transition period?

Vladeck: There is still some discussion as to the exact timing of transition. Ideally a lot of time should be allowed for the evolution of a reformed healthcare system and for many of the system changes that reform is going to require. And the implementation of reform should be as sensitive as possible to variations that exist from one community to another. On the other hand, there are two critical issues that healthcare reform must address immediately. The first critical issue is cost. No matter what the long-term plan for reform is, something must be put into place right away that will begin to affect rising costs.