SCHIP Bill Could Be Chief Performance Officer?s First Efficiency Test

President Elect Barack Obama’s appointment of Nancy Killefer to be his administration’s chief performance officer likely has a few industries on guard for the impact her new government role will mean for their business.

Killefer, a senior executive at the consulting firm McKinsey & Company, is charged with eliminating dubious government programs, leaving numerous industries whose business models rely on the entitlement programs vulnerable to her red pen. Some health policy experts say health care industry programs connected to Medicaid and Medicare spending could be Killefer’s first real test after Obama’s economic recovery package.    

This week Congress is set to take up a bill to extend the State Children’s Health Insurance Program (SCHIP).  A bill that would have expanded the program — HR 3963 — was passed by the House and Senate, but vetoed by President George W. Bush.  Dennis Smith, a senior fellow of health policy for the Heritage Foundation, told insideARM that the bill included several earmarks for some health care providers and insurers based on geography.  Smith said if the new administration is serious about making the government more efficient and cutting funds to special interest groups it can start by making sure Sections 614, 615, 617 and 618 are removed from any new legislation.

“That’s special interest intervening in the reimbursement system,” Smith said.  “If the administration is serious, this is where it should start.”

The new administration will be in for a fight in that is the route it takes. Hospitals say they can barely survive now on what the federal programs reimburse to care for the nation’s poor and elderly.  Last week the American Hospital Association began an official marketing campaign to help sway lawmakers to increase the federal government’s match to state Medicaid programs, as well as extend or create new programs to assist hospitals and the uninsured, ("AHA Ad Urges Congress to Help Hospitals, Uninsured in Economic Recovery Plan,” Jan. 9).

Fitch Ratings Director Lauren Coste said Democrats on Capitol Hill are pretty amiable to funding programs to help children and the poor. She said she expects federal lawmakers will extend the SCHIP program and increase the Federal Medial Assistance Percentage (FMAP) to states. However, SCHIP may not be extended as long as originally planned because the program’s costs have risen and the amount it gets from tobacco taxes will decline.

Other AHA requests, however, may not get more debate, given the recession and problems with the current health care system.

“We have this health care sector that is growing so much faster than everything else. At some point something has to give,” said Coste, who rates for-profit health care facilities. “It’s going to happen, just who knows when.”