In and Out in 2 Years: Why Can't States Keep Medicaid Directors?

Nearly two dozen directors of states' largest program have resigned in the last year.
by | March 2, 2015

At least 23 Medicaid directors have left their posts since last January, according to the National Association of Medicaid Directors (NAMD). That's a spike in turnover, for sure, but the low-income health care program is already known for having more frequent departures than other top jobs in state government. So what fuels turnover among Medicaid directors, and what can be done about it?

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The implications of frequent turnover are especially fraught given the sheer size of Medicaid programs and the increasing demands placed on them to control costs while improving quality of care. With a median budget of $6.1 billion in 2014, according to NAMD, Medicaid programs are routinely the second largest item in state budgets after K-12 education but the largest when including federal funding.

NAMD has tracked how long Medicaid directors stay in their jobs over the past three years -- most recently placing median tenure at two years and three months, but a number of directors have resigned since the survey was taken in the summer. That number, though, is down from the median three-year tenure in 2013 but slightly up from two years in 2012.

“This is certainly a noticeable increase in turnover from the previous year or two, but I can’t say that it’s off the charts,” said Kathleen Nolan, director of state policy and programs at NAMD.  “It’s an uptick.” 

Nolan said she’s not sure why most Medicaid directors don't stick around long. But Darin Gordon, an ex-NAMD president who leads Tennessee’s program, said the recent string of departures is largely the result of exhaustion after several years of major changes. Even states that didn't expand Medicaid took on technological upgrades to meet new eligibility rules -- often overhauling decades-old systems -- and transformed old payment structures and ways of delivering care.

Three of the nine states that got new governors in November also hired a new Medicaid director in the last six months. But Gordon, along with other current and former directors, says the demands of the past few years are likely a bigger driving factor than November’s elections because the job isn’t tied to individual governors in the same way as cabinet secretaries and other top-level positions.

Colorado is among the states that have pushed hard on reform -- updating their technology, integrating Medicaid enrollment with a new state-based health exchange, expanding Medicaid and transitioning enrollees to coordinated medical partnerships known as Accountable Care Organizations. Suzanne Brennan, who stepped down from the state's Medicaid director job in December after three and a half years, cited the demand of enacting “unprecedented change” as a reason for leaving, but she also pointed to more systemic issues.

As the program grew more complex from an administrative standpoint, her payroll remained small -- about 1.7 percent of expenditures, which she said is lower than other departments. She had two people managing a $500 million behavioral health budget as the state transitioned to a more coordinated approach, and people were falling through the cracks between an emergency-room visit and follow-up mental health treatments.

“I heard a lot of stories about ER discharges not getting connected to the behavioral health services they needed,” she said.

The federal government covers half of administrative costs but often has a significantly higher matching rate for medical services, and administration is often the first budget item cut during challenging financial times, according to the Kaiser Family Foundation. That lack of administrative support combined with a treacherous political situation routinely come up as top factors in short tenures among Medicaid directors.

“I was on the front page of the [Atlanta Journal Constitution], top fold, getting a whooping from the state Senate for a full eight hours,” said Mark Trail, a former Georgia director who retired after 32 years in government in 2008. "If you can’t take that, you do ask yourself, ‘Why am I doing this?’”

Directors are placed between angry lawmakers, nervous governors, skeptical health-care providers, impatient advocates and a host of other constituencies.

“My savings are someone else’s revenue deprivation,” as Gordon puts it. The choices are hard and often politically unpopular, which “tends to wear on you,” he said.

Directors say all of that can make the private sector tempting, and they’re often in high demand because of their experience running what is usually the largest single payer of health care in a state. But while 44 percent of the directors who left between 2012 and 2014 went to the private sector, according to NAMD, it doesn’t appear many are taking jobs with state contractors or managed-care plans that do business directly with their former Medicaid agency.

Directors often compare their tenures and salaries to those of corporate leaders because of the sheer size of their operation. By that count, 73 percent of directors earn below the median salary for a CEO in their state, according to NAMD. Average CEO pay in May 2012 was about $177,000, while the average Medicaid director pay range was $100,000 to $150,000.

Comparing Medicaid directors' tenures to those of other top-level appointed state officials is difficult because few professional organizations track it. For those that do track it, state school superintendents have an average tenure of about 3.2 years, and state technology chiefs have a median tenure of just over two years, according to the most recently available data.

Andy Allison, who led Arkansas’ Medicaid program for about four years and Kansas’ for about six years, is studying the issue for an upcoming Milbank Memorial Fund report. For comparison, he’s using Fortune 500 CEOs who have an average tenure of about a decade, and university presidents who Allison said stick around about 50 percent longer on average than Medicaid directors.

Aside from NAMD, he’ll be one of the first to thoroughly study the issue, which he thinks suffers from a lack of academic literature. Even long-time directors, for instance, can’t yet offer much in terms of solutions. Some, like Trail of Georgia, said the tone in legislatures and the wider political world needs to become more civil. Brennan of Colorado cites the need for greater administrative support. Allison said he also sees the need to “revisit” administrative capacity state-by-state, but the goal of his upcoming report is to at least get the ball rolling.

“The first question is to ask the question and develop some sort of approach,” he said. “I’m not aware of studies, certainly no literature, on the subject of how to attract and retain leadership on this program. And if nothing else, I think the findings of this report might suggest that’s a worthwhile endeavor.”