Scully Resigns, Joins Alston & Bird; Smith Named Acting CMS Head

Baltimore

After three years at the helm of the Centers for Medicare and Medicaid Services, Administrator Tom Scully resigned on Dec. 15 and has joined Alston & Bird’s Washington, D. C., law practice.

U.S. Department of Health and Human Services Secretary Tommy Thompson named Dennis Smith, director of the agency’s Center for Medicaid and State Operations, as interim CMS administrator. At the same time, Thompson said Leslie Norwalk will remain in her position as deputy administrator and chief operating officer at CMS, and will continue to be the CMS lead in carrying out new Medicare reform legislation.

Scully’s resignation became effective shortly after President Bush signed The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 on Dec. 8. “Watching the President and Secretary Thompson drive the Medicare bill across the finish line in the last few weeks was a very rewarding culmination to a very exciting and fulfiling three years,” Scully said. “I’ve been working on [Medicare reform] for 15 years, and that’s one of the reasons [why] I came back into government.”

Scully said he feels he left his mark on CMS by making the agency more responsive to consumers and removing the “impenetrable bureaucracy” of years past — along with accomplishing one of his top priorities, Medicare reform.

In a press release, CMS named various highlights of Scully’s tenure, including:

• Strengthening CMS’ fiscal responsibility by closing a multi-billion dollar loophole in Medicare for hospital outlier payments, rationalizing payments for rehabilitation services and, most recently, cracking down on fraudulent billing for power wheelchairs;
• Creating quality reforms in both the home health and nursing home sectors in partnership with unions, patient advocacy groups, the AARP and providers; and
• Serving as a key member of the President’s team involved in crafting a Medicare reform framework more than a year ago.

Scully’s departure came as no surprise to many as rumors surfaced early last year that he was looking to leave for the private sector. As CMS administrator, Scully made $134,000 a year; in the late 1990s, as president of the Federation of American Hospitals, he made $675,000 a year, the New York Times reported.

Before taking the reins at CMS, Scully held senior positions at the White House Office of Management and Budget throughout the first Bush administration, then became a partner at the Washington, D.C., law firm Patton Boggs, LLP, where he focused on regulatory and legislative work in health care. He then served as president of the Federation of American Hospitals until he was sworn in as CMS administrator in May 2001. Through it all, Scully said, he remained a great advocate of Medicare reform.

His reasons for stepping down are personal, Scully said. “It was an overwhelming vote from my family not to let me stay,” he explained at a Home Health, Hospice and DME Open Door session last month. In May 2003, Scully said he told Secretary Thompson he was planning to leave, and received an ethics waiver that allowed him to begin general discussions with potential employers.

At Alston & Bird, which represents the National Association for Homecare and Hospice, Scully’s initial focus will be on health care regulatory, strategic and public policy matters, the firm said in a press release. On Dec. 11, the firm announced that Colin Roskey, who served as a top health policy adviser and counsel to the Senate Finance Committee during congressional Medicare reform negotiations, had joined its Washington office.

Shortly after Scully announced his resignation, his boss, Secretary Thompson, told the New York Times that he, too, plans to step down after the 2004 presidential election. The resignation will come before much of Medicare reform, including the prescription drug benefit, takes effect.

“I can assure you I won’t be here in January 2006,” Thompson told the newspaper. “But I will have everything set up and operating smoothly before I leave.”

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