McClellan to Leave CMS

McClellan: Hard decisions.

Telling his staff that it was “a very hard decision,” Mark McClellan, administrator of the Centers for Medicare and Medicaid Services (CMS; Baltimore), has announced his intention to leave the agency in early October. Although not announcing his next move, it is widely believed that he will take a position with a Washington-area think tank and eventually return to academia. McClellan, 43, is still on official leave from Stanford University, where he is an associate professor in both economics and medicine.

McClellan has held the top post at CMS since March 2004, and is highly regarded as a skilled and effective administrator by the device and drug industries, healthcare policy analysts, advocacy groups, and members of Congress across the political spectrum. Seen as a strong advocate for advanced medical technologies that can demonstrate their healthcare benefits and cost-effectiveness, his tenure at CMS was marked by a commitment to streamline the process of coverage, coding, and payment for innovative devices.

As CMS administrator, McClellan headed an agency that provides healthcare insurance and services to almost 90 million Americans with an annual budget of more than $590 billion. Prior to his appointment as CMS administrator, where he succeeded Tom Scully, McClellan was FDA commissioner, and earlier served on the President’s Council of Economic Advisors. Both a physician and an economist, McClellan received his MD degree from Harvard and a PhD in economics from the Massachusetts Institute of Technology.

Many believe that McClellan’s legacy at CMS will be linked especially to his effective implementation of Medicare’s drug benefit plan , which helps more than 3 million seniors pay for their prescription medications. Congress enacted the program in 2003 after a heated debate, and it got off to a contentious and rocky start during its first year. In part because of McClellan’s influence, however, most beneficiaries now view the program in a generally favorable light. T he program is expected to cost the government $720 billion over its first 10 years.

Grassley: Juggling interests.

“Starting up the drug benefit was the federal program equivalent of a Mars landing,” observed Senator Charles Grassley (R–IA), chairman of the Senate Finance Committee. Grassley called McClellan a skilled administrator who had to “juggle the agency’s competing interests of offering the highest possible level of service to beneficiaries while keeping down costs to preserve the programs for future beneficiaries.”

Reflecting on his time at CMS, McClellan told his staff, “We’ve found and fixed startup problems. We are delivering coverage at a cost at least 25% less than had been expected, and we are seeing beneficiary satisfaction rates of over 80%. For 2007, the benefit costs are going down further, and many drug plans will have lower premiums and options for enhanced coverage as well.”

Although McClellan had his critics, particularly those who thought the Medicare prescription drug benefit favored big pharmaceutical firms over program beneficiaries, his leadership of CMS was generally lauded. Even The New York Times, which is not known to speak favorably of Bush administration officials on its editorial page, said, “ He will be missed. As a pragmatic expert embedded in a fiercely ideological administration, he brought uncommon intelligence, good humor, and dispassionate judgment to politically charged issues.”

Ubl: A lasting impact.

Stephen J. Ubl, president and CEO of industry association AdvaMed (Washington, DC), said, “Mark’s leadership at the White House, FDA, and CMS on the most pressing healthcare issues facing patients will leave a lasting impact. His role in the early stages of the critical path initiative at FDA and the development and implementation of a new and improved Medicare program with greater emphasis on prevention and quality of care are important legacies that he leaves behind. We will miss working with Mark, but we look forward to his continued leadership on healthcare issues.”

Although no successor for McClellan has been named, it is widely anticipated that CMS deputy commissioner Leslie V. Norwalk will step in as acting head of the agency. She is also rumored to be a candidate for the top spot, but there are reportedly other names under consideration as well. The Senate Finance Committee will have the responsibility for picking McClellan’s successor, an action that is not expected until the new Congress convenes—possibly with new political leadership—in January 2007.

© 2006 Canon Communications LLC

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