Medicare Rx Overseer Will Be CMS Deputy Norwalk; Smith Is Acting CMS Head

The first stages of the implementation of the Medicare prescription drug benefit will be overseen by Centers for Medicare & Medicaid Services acting Deputy Director Leslie Norwalk.

HHS named Center for Medicaid & State Operations Director Dennis Smith to serve as acting administrator of CMS, effective Dec. 16.

However, HHS said, "Norwalk will continue to be the CMS lead in carrying out the Medicare legislation signed into law by the President last week."

"We will rely on her leadership to direct the very complex and demanding task of implementing the hundreds of changes to be made under the Medicare improvement act," HHS said.

The first phase of the Medicare Rx program has begun, with CMS soliciting applications to sponsor a Medicare endorsed discount card.

The top CMS position is vacant following the resignation of Tom Scully. The head of the Medicare program, Tom Grissom, is also leaving the agency (¹ (Also see "Medicare Rx Benefit Will Be Implemented By New CMS Team; Scully Resigns" - Pink Sheet, 8 Dec, 2003.), p. 16).

Scully had stayed with CMS to help shepherd the Medicare legislation through Congress. The bill was signed into law by President Bush Dec. 8 (² (Also see "Medicare Rx Law Signed; Six-Month Quiet Period Before First Phase Begins" - Pink Sheet, 15 Dec, 2003.), p. 3).

By moving Smith into the acting director role rather than elevating Norwalk, HHS is ensuring that there will be some continuity in the Medicare implementation process.

However, Norwalk herself is a relatively new face at the agency, having joined at the beginning of the year (³ 'The Pink Sheet' April 14, 2003, In Brief).

Norwalk, an attorney, served in the first Bush Administration in the Office of Presidential Personnel. She joined CMS from the D.C. law office of Epstein, Becker & Green.

Smith's tenure as acting administrator is not expected to be long. HHS had several months notice of Scully's impending departure, and the Administration appears to be focusing on internal candidates who would face a less arduous confirmation process.

The leading candidate for the full time appointment appears to be Department of Defense Health Secretary William Winkenwerder.

Winkenwerder has both an MD and an MBA and spent 13 years as a managed care executive before joining the Pentagon. His most recent position was vice chairman of Blue Cross/Blue Shield of Massachusetts.

Winkenwerder was confirmed by the Senate for his current post in 2001 and so would presumably face a relatively straightforward confirmation process for the CMS post.

Smith will continue to run the Medicaid & State Operations functions of the agency.

Although the Medicare Rx program represents the most significant federal legislation for the drug industry since the 1962 efficacy amendments, the Medicaid & State Operations side of CMS may actually be more significant to the industry over the next two years.

States continue to experiment with preferred drug lists and other programs that require approval by CMS (⁴ (Also see "Texas Medicaid Preferred Drug List Takes Shape; Penn. Expands PACE" - Pink Sheet, 8 Dec, 2003.), p. 22).

Once the new Medicare prescription drug benefit begins in 2006, the interaction with the Medicaid program and with state drug assistance plans will be an early and important test (see ⁵ (Also see "Medicaid Shift To Medicare Means Fewer Script Limits For Dual Eligibles" - Pink Sheet, 22 Dec, 2003.)).

Smith has run the CMS Medicaid program since July 2001. He joined the agency from the Virginia Department of Medical Assistance Services.

He previously served on the Republican staff of the Senate Finance Committee, and first gained Capitol Hill experience under former Rep. Tom Bliley (R-Va.). Smith was a member of the Bush-Cheney transition team as a liaison to HHS.

Scully will be joining the Washington, D.C. health policy shop Alston & Bird and serve as an advisor to the private New York equity firm Welsh, Carson, Anderson & Stowe.