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4
Achieving Cultural and
Organizational Transformation
I
n any large-scale organization, major changes in the roles, uses, and
architectural assumptions of information technology (IT) systems
and processes may be seen as disruptive, or onerous, or be poorly
appreciated—even when the drivers for change are well understood by
the organization, and even when modernizing or transforming business
and information ecosystems is done in a structured, incremental, and
iterative fashion, as this report recommends. If the need for moderniza-
tion or outright transformation is poorly understood, especially by orga -
nizational leaders as well as by the users and stakeholders who will be
most affected, even the best-intended and well-designed projects can be
unsuccessful.
Achieving the kinds of changes in CMS’s business and informa-
tion ecosystems outlined in previous chapters will require both internal
CMS organizational adaptations and a cultural adaptation embracing the
notion that CMS’s business functions are intrinsically tied to IT. Rather
than being seen simply as a support service and mechanism for imple-
menting programs, IT must be recognized as integral to CMS’s strategic
directions. In the business community, which has increasingly accepted IT
as fundamental to its mission, IT leaders play strategic roles in addition
to their traditional operational ones. CMS, too, can benefit from evolving
structurally and transforming its internal culture to effect an improved
understanding of IT’s role in and contributions to realization of CMS’s
mission and goals. Although the choice to modernize or transform a
business or information ecosystem has to be evaluated in terms of what
77
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78 STRATEGIES AND PRIORITIES FOR INFORMATION TECHNOLOGY AT CMS
type of transition is needed for that ecosystem, in the committee’s view
the culture and organization of CMS have to be transformed—not merely
modernized—in order to meet its current and future challenges.
CMS faces special challenges in this regard, given that its agenda
and priorities are often defined by external forces such as new legislation
or other congressional directives, as described in Chapters 1 and 2. But
much of how CMS does what it does is determined internally, based on
organizational structures, planning and decision-making conventions, the
availability of resources, and relationships (defined by informal culture as
well as formal reporting relationships). Considering the centrality of IT as
an element in, and enhancement to, a transformation in CMS’s organiza-
tion and culture, the committee in this chapter summarizes CMS’s cur-
rent organization and relationships and describes what an IT-enhanced
enterprise within CMS might look like, offers suggestions for aligning
overall strategic goals and resources to achieve the needed organizational
transformation, discusses the importance of leadership and innovation,
and outlines some guiding principles along with a roadmap for cultural
and organizational transformation at CMS.
In summary, the committee believes that in order to meet emerging
and future needs, CMS should undergo an organizational and cultural
transformation, actively integrating IT as a strategic partner in its business
and deepening in several areas its critical internal IT core competency.
BASIC ELEMENTS OF THE CULTURAL AND ORGANIZATIONAL
TRANSFORMATION NEEDED AT CMS
In any organizational transformation, several key elements contribute
to a successful transition: a clear and well-articulated mission; an effective
organizational structure; firm commitment on the part of leadership to
lead change; effective communication across the board; buy-in and sup-
port from key players, engaged staff, and employees; and perseverance.1
A frequently cited example of successful organizational transformation in
the federal government is the IT transformation of the Internal Revenue
Service. Achieving large-scale change in a complex government service
operation,2 that effort has been applauded for demonstrating the key
roles of leadership, vision, and cultural change. Similarly, a generation of
physicians and other health professionals has seen the transformation in
1 Mark A. Abramson and Paul R. Lawrence, 2002, Transforming Organizations: IBM
Endowment Series for Business of Government, Lanham, Md.: Rowman & Littlefield Publishers.
2 Amy C. Edmondson, Frances X. Frei, and Corey B. Hajim, 2002, “Transformation at the
IRS,” Harvard Business School Case 603-010, available at http://cb.hbsp.harvard.edu/cb/
product/603010-PDF-ENG, last accessed July 20, 2011.
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79
ACHIEVING CULTURAL AND ORGANIZATIONAL TRANSFORMATION
BOX 4.1
CMS Achievements in Information Technology
CMS has achieved several noteworthy achievements in IT. Among them are the
following:
• Consolidated and standardized Medicare fee-for-service claims processing
by eliminating numerous claims-processing systems and transitioning all Medicare
contractors to three standard claims-processing systems;
• Consolidated 22 independent data centers housing the processing of fee-for-
service claims into two CMS-controlled enterprise data centers;
• Implemented the Medicare Part D Prescription Drug Program, a more than
$300 million effort over 2 years;
• Implemented the Healthcare Integrated General Ledger Accounting System,
providing a single integrated general ledger accounting system for all financial trans-
actions and modernizing Medicare accounting;
• Implemented the CMS Integrated Data Repository—a warehouse envisioned
to eventually contain all CMS program data—and business intelligence tools, en-
abling delivery of the CMS Dashboard (a tool to make CMS data more accessible
and transparent) in just over 6 weeks;
• Implemented the Health Insurance Portability and Accountability Act-com-
pliant eligibility transaction system, which processes and responds to more than 300
million eligibility requests annually;
• Implemented the CMS Virtual Call Center strategy in support of users of the
toll-free number 1-800-Medicare; and
• Developed and implemented numerous “compare” tools for the Medicare
websites.
the Department of Veterans Affairs’ clinical services at all its hospitals and
clinics as a result of the federal program’s effective design, development,
and deployment of its transformational electronic health record system
known as VISTA.3 The past 10 years have also seen a number of important
CMS achievements in the IT arena, several of which are listed in Box 4.1.
As in other federal agencies, the context within which cultural (atti -
tudes, experiences, beliefs, and values of an organization4) and organi-
zational (structures and processes) transformation will occur at CMS is
complex. The agency will have to address the core components of busi-
ness transformation—people (including external stakeholders and Con -
3 U.S. Department of Veterans Affairs, “Veterans Health Information Systems and Technol-
ogy Architecture (VISTA),” website, available at http://www.va.gov/vista_monograph/,
last accessed July 20, 2011.
4 E.H. Schein, 2005, Organizational Culture and Leadership, 3rd Ed., Jossey-Bass.
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80 STRATEGIES AND PRIORITIES FOR INFORMATION TECHNOLOGY AT CMS
gress), processes (including those that involve a complex array of external
contractors at state and regional levels), and technology—all while under
intense public scrutiny, and coping with federal funding idiosyncrasies
and frequent transitions in leadership.
In the committee’s view, five related cultural and organizational tran-
sitions at CMS would have positive repercussions for nearly all of CMS’s
activities, given the centrality of data, IT, information, and information
management to the agency’s mission:
• A cultural shift from viewing IT as simply an operational necessity
to embracing IT as a critical strategic element;
• A cultural shift away from viewing IT leadership as overseeing a
support group, complementing but not an integral part of the leadership
mainstream, and toward viewing IT leadership as playing a key role in
planning, designing solutions, and advising CMS business leaders regard-
ing suitable approaches to their own responsibilities;
• An organizational shift from a mission centered on transaction
processing to a mission centered on data, information, and information
management;
• An organizational shift from a focus on paying claims to a focus on
driving a combination of payment with improvements in quality, safety,
and equity of health care and outcomes for individuals and populations;
and
• An organizational shift from relying on heroics from IT staff to
securing a sustained investment in and commitment to infrastructure,
resources, and staff.
These transitions must occur in the context of shifts in the CMS cus-
tomer base, with a Patient Protection and Affordable Care Act (PPACA)-
mandated emphasis on clinical care quality, equity, and safety as well as
the promotion of health and increased efficiencies and cost savings. The
demand for CMS-managed data to support research and other external
analytic efforts continues to grow and may change in both character and
volume as CMS is perceived as providing information that is more clini-
cal in nature. Furthermore, the creation of accountable care organizations,
the development of episode-of-care and bundled payment mechanisms,
the relationship with the Office of the National Coordinator for Health IT
concerning meaningful use of health IT, and growing interactions with
other federal IT organizations (in HHS and beyond) highlight the growing
need for cultural transformation within CMS.
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81
ACHIEVING CULTURAL AND ORGANIZATIONAL TRANSFORMATION
CURRENT CMS ORGANIZATION AND RELATIONSHIPS
TO INFORMATION TECHNOLOGY FUNCTIONS
One of the largest agencies within the Department of Health and
Human Services, CMS has more than 4,000 federal employees and
approximately 80,000 external contractors organized into 6 major cen-
ters, 18 operating offices and consortia, and 10 regional offices across the
country (Box 4.2).
The most recent enterprise-wide organizational restructuring of the
agency occurred in 2001, when the agency changed its name from the
Health Care Financing Administration to the current Centers for Medi-
care and Medicaid Services and reorganized into three centers reflecting
the agency’s major lines of business: Medicare Management, Beneficiary
Choices, and Medicaid and State Operations.5 In 2003, the most signifi-
cant legislative change to Medicare (the Medicare Modernization Act, or
MMA)6 was signed into law, adding a new outpatient prescription drug
benefit and making many other important changes to the program. Figure
4.1 shows the CMS organizational chart at the time of this writing, includ-
ing the three additional centers introduced since 2001.
Information Services and Information Technology in CMS
Although CMS has experienced significant organizational change
over the years, information services and information technology have not
been fully consolidated into an enterprise-wide operation. The lead office
for IT is the Office of Information Services (OIS), headed by a director
who also serves as the agency’s chief information officer. The OIS is orga -
nized into several units, including enterprise data, business applications
management, information services design and development, an enter-
prise data center, an enterprise architecture and strategy group, consumer
information and insurance systems, and resource and acquisition man -
agement. The Office of the Chief Information Security Officer is also part
of the Office of Information Services. OIS’s main responsibility is to serve
as the focal point for planning, organizing, and coordinating all aspects
of the agency-wide information resource management program and to
ensure the effective management of the agency’s IT, including information
systems and resources. The office also serves as the lead for developing,
maintaining, and enforcing the agency’s information architecture, poli -
cies, standards, and practices in all areas of IT (Box 4.3). Nevertheless, the
5 CMS Press Office, 2001, “The New Centers for Medicare & Medicaid Services (CMS),”
press release, June 14, available at http://archive.hhs.gov/news/press/2001pres/20010614a.
html, last accessed July 20, 2011.
6 The Medicare Prescription Drug and Modernization Act of 2003 (P.L. 108-173).
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82 STRATEGIES AND PRIORITIES FOR INFORMATION TECHNOLOGY AT CMS
BOX 4.2
CMS Regions, Centers, and Offices
Regions
• Region I—Boston (Connecticut, Massachusetts, Maine, New Hampshire,
Rhode Island, Vermont)
• Region II—New York City (New Jersey, New York, U.S. Virgin Islands,
Puerto Rico)
• Region III—Philadelphia (Delaware, Maryland, Pennsylvania, Virginia, West
Virginia, District of Columbia)
• Region IV—Atlanta (Alabama, Florida, Georgia, Kentucky, Mississippi,
North Carolina, South Carolina, Tennessee)
• Region V—Chicago (Illinois, Indiana, Michigan, Minnesota, Ohio,
Wisconsin)
• Region VI—Dallas (Arkansas, Louisiana, New Mexico, Oklahoma, Texas)
• Region VII—Kansas City (Iowa, Kansas, Missouri, Nebraska)
• Region VIII—Denver (Colorado, Montana, North Dakota, South Dakota,
Utah, Wyoming)
• Region IX—San Francisco (Arizona, California, Hawaii, Nevada, U.S.
Territories)
• Region X—Seattle (Alaska, Idaho, Oregon, Washington)
Centers
• Center for Medicare
• Center for Medicaid, CHIP and Survey & Certification
• Center for Strategic Planning
committee’s impression is that there is still significant fragmentation of
resources (human, technical, financial), and cross-program coordination
and collaboration are less than ideal.
Apart from OIS, IT resources and systems can be found across almost
all other offices and centers throughout CMS. Although the operations
and indeed the missions, goals, and responsibilities of all the agency’s
units (whether centers, offices, or consortia) are heavily dependent on IT
services and resources, there are in most cases opportunities to integrate
these key IT components more fully into each unit’s operational leader-
ship and policy directions. Opportunities also exist to increase OIS’s over-
sight and coordination of the IT resources distributed across the agency
in order to use them more effectively and at lower cost, for example, by
reducing redundancy.
Some offices and centers within the agency play a more significant
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ACHIEVING CULTURAL AND ORGANIZATIONAL TRANSFORMATION
• Center for Program Integrity
• Center for Medicare and Medicaid Innovation
• Center for Consumer Information and Insurance Oversight
Offices
• Operations (Chief Operating Officer)
—Office of Acquisition and Grant Management
—Office of e-Health Standards and Services
—Office of Information Services
—Offices of Financial Management
—Office of Operations Management
—Consortium for Medicaid and Children’s Health
—Consortium for Financial Management and Fee for Service Operations
—Consortium for Medicare Health Plan Operations
—Consortium for Quality Improvement and Survey and Certification
Operations
• Office of the Actuary
• Office of Strategic Operations and Regulatory Affairs
• Office of Clinical Standards and Quality (CMS Chief Medical Officer)
• Office of Legislation
• Office of Communications
• Office of Public Engagement
• Office of Equal Opportunity and Civil Rights
• Office of Federal Coordinated Health Care
NOTE: Information from the CMS website, available at http://www.cms.gov/home/aboutcms.asp.
role than others in shaping and defining the direction of IT at CMS. In
addition to the Center for Medicare and the Center for Medicaid, CHIP
and Survey & Certification, other centers and offices with a significant
role in IT include:7
• Center for Strategic Planning, which provides senior leadership
across the organization for strategic planning and the development of
CMS strategic goals, using metrics to facilitate plans for IT integration
of data resources. The center is also responsible for providing leadership
in the development of performance dashboards and databases for key
agency initiatives; maintaining and ensuring the quality of data resources
7 CMS, 2011, “Overview: CMS Leadership,” website, available at http://www.cms.gov/
CMSLeadership/Downloads/CMS_Organizational_Chart.pdf, last accessed August 1, 2011.
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OFFICE OF EQUAL
84
OPPORTUNITY AND CIVIL
OFFICE OF THE ACTUARY
RIGHTS
Rick Foster, Chief Actuary
Arlene E. Austin, Director
Anita Pinder, Dep. Dir.
Donald M.Berwick, M.D.
MEDICARE ADMINISTRATOR
OMBUDSMAN GROUP
OFFICE OF STRATEGIC
Marilyn Tavenner
OPERATIONS AND
PRINCIPAL DEPUTY ADMINISTRATOR
REGULATORY AFFAIRS
AND CHIEF OPERATING OFFICER
Jacquelyn White, Director
Olen Clybourn, Dep. Dir.
Caya B. Lewis
OFFICE OF PUBLIC CHIEF OF STAFF
ENGAGEMENT
Teresa Niño, Director Michelle Snyder
Charlotte Newman , Dep. Dir. DEPUTY CHIEF OPERATING OFFICER
Vish Sankaran
SENIOR ADVISOR OFFICE OF CLINICAL
STANDARDS AND QUALITY
TRIBAL AFFAIRS Joseph McCannon Patrick Conway, M.D., Director
GROUP SENIOR ADVISOR & CMS Chief Medical Officer
Wesley Perich, Dep. Dir.*
Vacant, Dep. Chief Medical
OFFICE OF COMMUNICATIONS
Officer
Julie Bataille, Director
Vacant, Dep. Dir.
Mary Wallace, Dep. Dir.
OPERATIONS
Michelle Snyder
Deputy Chief Operating Officer
OFFICE OF LEGISLATION
Amy Hall, Director OAGM—Daniel Kane, Director
Jennifer Boulanger, Dep. Dir.
OESS—Robert Tagalicod, Director
OFM--Deborah Taylor, Director & Chief Financial Officer
FEDERAL COORDINATED OIS--Tony Trenkle, Director & CMS Chief Information Officer
HEALTH CARE OFFICE
Broadside
Figure 4-1
OOM—James Weber, Director
Melanie Bella, Director
Cheryl Powell, Deputy Director
CFMFFSO--Nanette Foster Reilly, Consortium Administrator
CMCHO--Jackie Garner, Consortium Administrator
CMHPO--James T. Kerr, Consortium Administrator
OFFICE OF MINORITY HEALTH
Renard Murray, Director* CQISCO—James Randolph Farris, M.D., Consortium Admin.
Vacant, Deputy Director
PMAS—Sandy Kraft, Director
CENTER FOR MEDICARE AND
CENTER FOR MEDICARE CENTER FOR MEDICAID CENTER FOR STRATEGIC CENTER FOR PROGRAM CENTER FOR CONSUMER
MEDICAID INNOVATION
AND CHIP SERVICES PLANNING INTEGRITY INFORMATION AND
Jonathan Blum INSURANCE OVERSIGHT
Richard Gilfillan, M.D.
Deputy Administrator and Director Cindy Mann Anthony Rodgers
Director*
Deputy Administrator and Director Deputy Administrator and Director Peter Budetti Steve Larsen
Liz Richter Deputy Administrator and Director Deputy Administrator and Director
Nancy Oconnor
Deputy Center Director Julie Boughn Anthony Rodgers
Deputy Director*
Deputy Center Director Deputy Director * Mary Agnes Laureno Timothy Hill
Tim Love Deputy Center Director Deputy Center & Policy Director
Peter Lee
Deputy Center Director Penny Thompson Thomas Reilly
Deputy Director
Deputy Center Director Deputy Director* Ted Doolittle
Deputy Policy Director
FIGURE 4.1 Centers for Medicare and Medicaid Services organizational chart. *, Acting. For more information regarding CMS’s
organizational structure, see the CMS organizational chart, “Department of Health and Human Services: Centers for Medicare
and Medicaid Services,” last updated October 1, 2011, available at http://www.cms.gov/CMSLeadership/Downloads/CMS_
Organizational_Chart.pdf, last accessed November 5, 2011.
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ACHIEVING CULTURAL AND ORGANIZATIONAL TRANSFORMATION
BOX 4.3
Functional Responsibilities of the CMS
Office of Information Services
CMS’s Office of Information Services has the following functional responsibilities:
• Serves as the focal point for the responsibilities of the agency’s chief infor-
mation officer in planning, organizing, and coordinating the activities required to
maintain the agency-wide Information Resources Management program.
• Ensures the effective management of the agency’s information technology and
its information systems and resources (for example, implementation and administra-
tion of the process of managing change).
• Provides workstation, server, and local area network support for CMS-wide
activities. Works with customer components to develop requirements, needs, and
cost-benefit analysis in support of the local area network infrastructure, including
hardware, software, and office automation services.
• Serves as the lead for developing and enforcing the agency’s information
architecture, policies, standards, and practices in all areas of information technology.
• Develops and maintains enterprise-wide central databases, statistical files,
and general access paths, ensuring the quality of information maintained in these
data sources.
• Directs Medicare claims payment systems activities, including common work-
ing file operation, as well as systems conversion activities.
• Develops application development platform standards and policies for use by
internal CMS staff and contractor agents in such areas as applications development
and the use of infrastructure resources.
• Manages and directs the operation of CMS hardware infrastructure, includ-
ing the agency’s data center, data communications networks, enterprise infrastruc-
ture, voice/data switch, audio conferencing, and other data centers supporting CMS
programs.
• Leads the coordination, development, implementation, and maintenance of
health care information standards in the health care industry.
• Provides Medicare and Medicaid information to the public, within the param-
eters imposed by the Privacy Act.
• Performs information collection analyses as necessary to satisfy the require-
ments of the Paperwork Reduction Act.
• Directs CMS’s application development platform systems security program
with respect to data, hardware, and software.
• Directs and advises the administrator, senior staff, and components on the
requirements, policies, and administration of the Privacy Act.
SOURCE: CMS, 2011, “CMS Leadership, Office of Information Services,” website, available at
http://www.cms.gov/CMSLeadership/16_Office_OIS.asp, last accessed August 1, 2011.
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86 STRATEGIES AND PRIORITIES FOR INFORMATION TECHNOLOGY AT CMS
needed for testing and evaluating demonstrations and innovations; devel-
oping enterprise business plans and process requirements for CMS post-
PPACA responsibilities; operationalizing files for Medicare, Medicaid,
and CHIP administrative data for use in research; and conducting and
managing the Research Data Assistance Center, Research Data Distribu-
tion Center, and Chronic Condition Warehouse activities.
• Center for Medicare and Medicaid Innovation, which is respon-
sible for identifying and developing new models for payment approaches,
clinical care, integrated care, and community health, and for disseminat-
ing information about these new models. This center is discussed in more
detail below.
• Center for Program Integrity, which serves as CMS’s focal point for
all national and state-wide Medicare and Medicaid programs and CHIP
integrity fraud and abuse issues.
• Office of e-Health Standards and Services, which, in addition to
having primary responsibility for developing regulations and guidance
materials related to the administrative simplification provisions of the
Health Insurance Portability and Accountability Act (HIPPA; P.L. 104-
191) is also responsible for developing and coordinating implementation
of a comprehensive e-health strategy for CMS, and for coordinating and
supporting internal and external technical activities related to e-health
services. This office also ensures that individual initiatives tie to overall
CMS and federal e-health goals and strategies, promoting and leverag -
ing innovative component initiatives, and facilitating cross-component
awareness of various e-health projects.
• Office of Clinical Standards and Quality, which serves as the focal
point for all quality, clinical, and medical science issues and policies for
CMS. It also provides leadership and coordination for the development
and implementation of a cohesive, agency-wide approach to measuring
and promoting quality and leads the agency’s priority-setting process for
clinical quality improvement.
• Office of Legislation, which provides leadership and executive
direction within CMS for legislative planning to address the organiza -
tion’s agenda, and also tracks, evaluates, and develops provisions of
annual legislative proposals for Medicare, Medicaid, the Clinical Labora -
tory Improvement Act (P.L. 90-174), HIPPA, and related statutes affecting
health care financing, quality, and access. It does so in concert with other
CMS components, the Department of Health and Human Services, and
the Office of Management and Budget, advancing the legislative policy
process through analysis, review, and development of health care initia-
tives and issues.
• Office of Federal Coordinated Health Care, which is responsible for
managing the implementation and operation of the office as mandated in
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ACHIEVING CULTURAL AND ORGANIZATIONAL TRANSFORMATION
section 2602 of the Patient Protection and Affordable Care Act,8 to ensure
more effective integration of benefits under Medicare and Medicaid for
individuals eligible for both programs and to improve coordination
between the federal government and the states in the delivery of benefits
for such individuals. This office is also responsible for facilitating the
testing of various delivery system, payment, service, and/or technology
models to improve coordination of care, control costs, and improve the
experience of beneficiaries eligible for both Medicare and Medicaid, and
for performing policy and program analysis of federal and state statutes,
policies, rules, and regulations affecting the dual-eligible population.
CMS IT Internal and External Bodies and Oversight Review Groups
As part of the agency’s IT operations CMS uses several internal and
external bodies and oversight review groups, including the following: 9
• CIO’s Technical Advisory Board (CTAB), comprising technical rep-
resentatives from the CMS business components who collectively serve as
a communication and vetting body for CMS target architecture products
and standards, responsible for reviewing technical impact analyses per-
formed by OIS regarding requests to add, change, or delete a product or
standard in the Technical Reference Architecture (TRA). The CTAB weighs
the overall technical impact of the request against the CMS business
need(s) and makes related recommendations to the CIO. The CTAB also
recommends to the CIO any changes that are deemed necessary to evolve
CMS’s enterprise architecture in response to business needs, technology
innovations, or industry trends.
• The Information Technology Investment Review Board (ITIRB)
provides business-driven leadership to CMS’s IT operations and develop-
ment to ensure that CMS’s IT resources are efficiently deployed to meet
short-, medium-, and long-term business demand. The board deliberates
and provides recommendations to the Office of the Administrator regard-
ing expenditure of appropriated IT capital investment funds.
• Executive steering committees (ESCs) serve as management
authorities, providing senior management leadership for the successful
and timely completion of IT projects to meet business needs. Each ESC
provides management oversight and guidance to project owners/man -
agers and project officers and makes final decisions on the priority, risk,
8 ThePatient Protection and Affordable Care Act of 2010 (P.L. 111-148).
9 CMS, 2011, “Oversight and Review Groups,” document, available at http://www.cms.
gov/SystemLifecycleFramework/Downloads/OversightReviewGroups.pdf, last accessed
August 1, 2011.
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96 STRATEGIES AND PRIORITIES FOR INFORMATION TECHNOLOGY AT CMS
fusely broad demands or expectations, the inclusion of some elements of
the suggestions offered here may be important to specify early on, before
the Innovation Center’s culture, personnel, and budget are focused solely
on innovative payment models.
STRATEGY, GUIDING PRINCIPLES, AND ROADMAP
FOR CULTURAL AND ORGANIZATIONAL
TRANSFORMATION AT CMS
CMS is in the information business; its changing roles and mission
make this ever more true. The successful transformation of CMS toward
an IT-enhanced enterprise requires that the CMS leadership manage the
following organizational and cultural elements in such a way that they
are aligned and carefully optimized to work together. Comparatively
frequent changes in leadership make it difficult to build and execute a
strategic IT plan. This is particularly challenging when there is no strong
backbone of enterprise strategic planning that tightly integrates IT stra -
tegic planning with business needs. For IT to be deployed strategically,
particularly given the frequent changes at the top level, CMS business-
led IT governance is needed whereby the OIS guides the agenda but the
CMS business leaders are also responsible for the actions and outcomes.
Ensuring that CMS business leaders are directly involved in sorting out
IT priorities for CMS contributes to their understanding of what business
and IT alignment means to them as well as the consequences of action or
inaction and funding constraints.
• Active engagement of leadership. CMS IT transformation is not solely
a technical issue but is also a critical business issue and thus must be
owned by CMS top management. Emphasized above in this chapter are
the roles of CMS leadership in the modernization and transformation of
CMS business and information ecosystems.
• Business-driven IT governance. IT governance should include not
only the current focus of technical review but also IT investment priori-
tization and funding and should aim to take advantage of the benefits
of shared services and enterprise architecture. Business-driven IT gover-
nance for CMS is discussed in more detail below.
• Strategic technology plan. CMS’s organization and culture must be
aligned to support the execution and evolution of the strategic technology
plan in an incremental manner as recommended in Chapters 2 and 3.
• Skill sets. Some of the in-house skill sets that need to be strength-
ened or newly acquired for the successful modernization and transforma -
tion are discussed below.
• Management of change. The meta-methodology described in
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97
ACHIEVING CULTURAL AND ORGANIZATIONAL TRANSFORMATION
Chapter 3 implies changes not only in the way CMS manages IT but also
in the way CMS interacts with its stakeholders. Suggestions for effective
management of change are discussed below.
Information Technology Governance
Given the strategic and operational importance of IT modernization
and CMS transformation, the highest levels of the organization must be
involved in the governance of the transition, actively guiding and man -
aging it using a meta-methodology as described in Chapter 3. Gover-
nance refers to the principles, processes, and organization that direct and
manage IT resources.21 At its core, governance involves determining the
distribution of the responsibility for making decisions, the scope of the
decisions that can be made by different organizational functions, and the
processes to be used for making decisions. Internal and external stake-
holders should be engaged in defining governance structures.
CMS can strengthen its IT governance efforts by addressing (and
regularly reconsidering) the following general IT-governance related
questions:22
• Who sets priorities for IT and how are those priorities set?
• Who is responsible for implementing information systems plans, and
what principles will guide the implementation process?
• What organizational structures are needed to support the linkage
between IT and the rest of the organization? [In particular, how is man-
agement authority assigned regarding data, projects, budgets, strategies,
and so on?]
• How are IT responsibilities distributed between IT and the rest of the
organization and between central and “local” IT groups?
• How is the IT budget developed?
• What principles will govern [data, applications, and core technologies]?
High-level governance should ensure that the efforts toward business
and information ecosystems modernization and transformation achieve
CMS’s goals. In addition governance should provide direction with
respect to major changes to core processes, resolve policy issues raised by
the implementation, address problems encountered during the transition,
and approve, if necessary, the commitment of additional resources. IT
governance must be developed to oversee the full set of CMS IT strategies,
policies, and operations. The governing body that serves this function
21 Erica Drazen and D. Staisor, 1995, “Information Support in an Integrated Care Delivery
System,” Healthcare Information and Management Systems Society Proceedings 2:191-199.
22 John P. Glaser, 2002, The Strategic Application of Information Technology in Health Care Or -
ganizations, 2nd Ed., San Francisco, Calif.: Jossey-Bass.
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98 STRATEGIES AND PRIORITIES FOR INFORMATION TECHNOLOGY AT CMS
should be led by senior business leadership at the agency, and members
of the body should be drawn from the senior leadership team. 23
CMS currently has several IT governance bodies such as the Executive
Steering Committee, Information Technology Investment Review Board,
and Configuration Control Board. These bodies are important. However,
they focus largely on technical, tactical, and operational issues. Because
modernization and transformation efforts are critically important to the
agency, IT governance bodies should be structured so that senior leader-
ship, including the CMS administrator, are well aware of the needs and
efforts underway, are willing and able to integrate the planning into their
business thinking, and are well-informed so as to take advantages of the
opportunities that such planning provides.24
In addition, subordinate governance bodies (reporting to the overall
governance body) should be established to strategically direct and man -
age critical components of the IT strategy. On the basis of the discussion
in Chapters 2 and 3 and related recommendations, component-specific
bodies should be established for the following:
• Shared services,
• An enterprise architecture framework, and
• A health information model.
Shared service governance determines which services should be
shared among whom to achieve which benefits, defines the services,
and ensures that services evolve appropriately. Enterprise architecture
and health information model governance defines the architecture and
model, monitors conformance, and evolves the architecture and model
as appropriate. The enterprise architecture governance defines the enter-
prise architecture framework, including all relevant standards, monitors
conformance to standards, and evolves the framework.
Each of these component bodies will need means and authority
(including budgets, authority in personnel actions, and exercise of man-
agement decision-making authority) to enforce governance decisions.
Effective IT governance requires a tight linkage with the overall orga -
nizational strategy. The agency’s Center for Strategic Planning and its
Office of Research Development and Information will play important
roles. The implementation of a major IT application invariably occurs as
23 PeterWeill and Jeanne W. Ross, 2004, IT Governance, Harvard Business School Press,
available at http://hbswk.hbs.edu/archive/4241.html.
24 For more on characteristics and behaviors of senior leaders who are actively engaged and
successful in the strategic use of IT, see M. Earl and D. Freeney, 2000, “How to Be a CEO for
the Information Age,” MIT Sloan Management Review 41(2):11-23.
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ACHIEVING CULTURAL AND ORGANIZATIONAL TRANSFORMATION
a component of a larger process in the management of change. Hence IT
governance is inextricably linked to the strategies and operations of the
organization, and governance should be responsible for making such IT-
centric decisions as the following:25
• How do we link our IT strategy to our overall strategy?
• How much should we spend on IT?
• Which business processes should receive our IT dollars?
• Which IT capabilities need to be organization-wide?
• How good do our IT services really need to be?
• What security and privacy risks will we accept?
• Who do we hold accountable for the success of an IT project?
The specific relationships between IT and the business side have to be
worked out through this governance process. In general, CMS’s business
side would lead process transformation and establish what it needs from
IT (including service-level agreements), and indeed this is what the pro-
cess outlined in Chapter 3 affords. From time to time IT might be asked
to lead a specific initiative within the overall agenda for transformation.
A key component of establishing governance is determining which indi -
viduals and functions will make which decisions and the mechanics of
the governance process. The governance function for each of these efforts
could be structured as a CMS IT governance committee or could become
a responsibility of an existing CMS senior leadership forum. Regardless,
given the importance of the transformation, the CMS business leadership
should be an integral part of the IT governance function.
Organizations cannot accomplish the large-scale modernization or
transformation of core business and information ecosystems without
the effective utilization of outside expertise. This expertise takes several
forms:
• Expertise in the management of change that can assist the organi-
zation in preparing its members for changes in roles, processes, working
relationships, and goals;
• Process redesign experience that can help the organization think
through how to design its new processes and how to determine what data
it needs;
• Project management experience with projects of comparable, scope,
size, and complexity;
25 Jeanne W. Ross and Peter Weill, 2002, “Six IT Decisions Your IT People Shouldn’t Make,”
Harvard Business Review 80(11):84-91.
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100 STRATEGIES AND PRIORITIES FOR INFORMATION TECHNOLOGY AT CMS
• Technical assistance to enable the organization’s information tech-
nology staff to master the new technology being introduced; and
• Staff augmentation management to provide the person-power nec-
essary to do a sizeable portion of the work that accompanies the imple -
mentation of a large system; existing organizational staff rarely have large
amounts of “free time” to devote to such an initiative.
In particular, CMS would benefit from the counsel of leaders from
organizations in the public and private sectors that have effected sig-
nificant IT-enabled organizational transformations. CMS will encoun-
ter issues and challenges for which the advice of others would be very
important. An advisory panel of these leaders or similar entity should be
developed and structured so that they can develop a deep understanding
of CMS and its challenges as well as its broader stakeholder communities.
Building in the ability to foster informed and frank exchanges of ideas
should be emphasized.
CMS should not underestimate the difficulty of the transformation
and the value of learning from the experiences of others.
Critical Skill Sets
The implementation of the recommendations stemming from the dis-
cussion in Chapters 2 and 3 will require introducing new skills into CMS
and strengthening existing skills. In addition to reflecting the importance
of informatics skills and the value of the CMS Innovation Center, the IT
organization should be augmented and changed in some key areas.
CMS’s existing IT staff are talented and skilled, and they have dem -
onstrated an impressive ability to implement complex systems under sig -
nificant time pressures. Moreover they continue to manage well a massive
IT operation. To enable an effective response to the near and intermediate
demands of payment reform and other responsibilities placed on CMS,
these competencies must be strengthened. Central to the CMS agenda
is the application of IT and data to help improve the delivery of care.
Enhancing staff expertise in data management practices and the applica -
tion of those practices to health care, as well as in health services research
and the performance of that research in an electronic health record envi-
ronment, will be important.
Recognizing the critical role played by having a well-conceived, well-
executed, and well-supported global information ecosystem and design
is a critical competency of CMS. The roles of the technology strategy
function and chief information officer should be strengthened, and they
should be responsible for guiding and managing the enterprise techni -
cal architecture and contributing to the strategic and tactical decisions
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ACHIEVING CULTURAL AND ORGANIZATIONAL TRANSFORMATION
basic to the approach outlined in Chapter 3, including shared services
and process and information model strategies and plans. These efforts
should be aligned with the agency’s strategic planning office as part of
the strengthened interactions between business and operation needs and
IT. Architectural, engineering, project management, security, and support
staff will all have critical roles to play.
Information technology continues to undergo extraordinary innova -
tion. This innovation occurs not only in the technology but also in the uses
of the technologies and surrounding business models that enable rapid
technology adoption. CMS would benefit from having a stronger technol-
ogy scanning and surveillance function to regularly assess the potential
applicability of new information technologies to CMS requirements.
In the committee’s view CMS IT currently excels at managing its
huge portfolio of subcontracts, which provide the bulk of CMS’s IT ser-
vices. The recruitment, retention, and training of IT professionals within
CMS must reflect not only technical skill requirements but also organiza-
tional, management, and planning capabilities. In addition to its internal
staff, CMS has a large contracting contingent that performs the bulk of
the day-to-day work in systems development, operations, maintenance,
claims processing, and so on. Of course the cultural shifts the committee
is urging here will have to occur in the contracting community as well.
Appropriate leadership and strategic guidance from within the agency are
critical to ensuring that the needed cultural changes propagate through
CMS’s contractor community as well.
The ability to manage subcontractors is critical, but so is the ability to
manage and respond to internal CMS organizational and cultural issues.
Although soliciting and receiving advice from contractors about technol -
ogy can be useful, the ultimate decisions about which technologies should
be explored, evaluated, and deployed must reside with CMS and should
be based on the judgments of people whose principal obligations are to
CMS and the success of its missions and who can draw on deep insights
and expertise in IT. Key decisions need to be made by the agency itself.
Contractors may have their own institutional agendas, which may or
may not always align with CMS’s agenda, or they may simply have an
understandably narrower view than in-house staff. In order for CMS to
make decisions that are as sound as possible, the decisions must be rooted
in a strong grasp of CMS issues and considerations, and also in a strong
grasp of technology.
A number of positive factors should be preserved during the trans-
formation. IT personnel’s current commitment to the CMS mission and
the welfare of the public is notable. In the committee’s view, the group
has a commitment to getting the job done, having succeeded on a number
of difficult projects like Medicare Part D. The group has shown unusual
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102 STRATEGIES AND PRIORITIES FOR INFORMATION TECHNOLOGY AT CMS
resourcefulness and inventiveness in executing such projects, overcoming
the challenges of outdated software and enormous complexity and largely
recognizing the need for positive organizational and cultural changes
such as those outlined in this report.
IT skills and knowledge will also be needed by non-technical man -
agers in an IT-enhanced enterprise. IT is at the heart of virtually every
CMS business interaction, process, and decision. Managers can thus no
longer afford the luxury of relinquishing participation in IT decisions.
CMS managers must become knowledgeable participants in IT decisions,
understanding the interdependency between its business strategy, orga -
nizational strategy, and IT strategy. In addition, managers have to under-
stand the basics of how IT is managed in CMS, in particular, enterprise
architecture, IT governance, IT funding and value management, and the
moral and ethical implications of using information and information
systems.
Management of Change
Effective management of change requires attention not only to the
formal design of the organization (business processes, roles, and incen -
tives) but also to the political (power bases) and cultural (shared val-
ues and beliefs and traditions) aspects of the organization. These three
areas—formal design, political considerations, and culture—need to
change in concert for significant organizational change to be effective.
Organizational change need not be precipitated by the implementation
of an information ecosystem, but invariably new information ecosystems
are required to enable the change.26
Managing significant change has several necessary aspects: 27
• Leadership. Change must be led. Leadership, often in the form of a
group of leaders, will be necessary to:
—Define the nature of the change;
—Communicate the rationale for and approach to the change;
—Identify, procure, and deploy necessary resources;
—Resolve issues and alter direction as needed;
—Monitor the progress of the change initiative; and
—Lead by example.
Given the magnitude of the changes proposed for CMS, the process
26 S.L. Woerner and J.W. Ross, 2007, “Tackling the Organizational Change Issues in IT
Projects,” research briefing, Volume VII, Number 3D, Center for Information Systems
Research, Massachusetts Institute of Technology, December.
27 Peter G.W. Keen, 1997, The Process Edge, Boston: Harvard University Press.
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of change should be led by senior business leadership at the agency, and
all members of the CMS leadership and management structure should be
engaged as leaders of change.
• Language and vision. The staff who are experiencing a change must
understand the nature of the change. They must know what the world
will look like (to the degree that this is clear) when the change has been
completed, how their roles and work life will be different, and why making
this change is important. A failure to communicate the importance of a
chosen vision elevates the risk that staff will resist the change needed to
realize that vision and through subtle and not-so-subtle means cause the
change to grind to a halt, or worse, negatively affect current operations.
For example, CMS can establish a vision of being at the forefront of the
country’s efforts to transform health care delivery.
• Connection and trust. Achieving connection means that leadership
takes every opportunity to present the guiding vision throughout the
organization. Leaders may use department head meetings, all-staff
meetings, one-on-one conversations in the hallway, internal publications,
and e-mail to communicate and to keep communicating the vision. These
communications need to invite feedback, criticism, and challenges. The
members of the organization need to trust the integrity, intelligence,
compassion, and skill of the leadership. Trust is earned or lost by
everything that leaders do or do not do. The members must also trust that
leaders have thoughtfully come to the conclusion that a difficult change
has excellent reasons behind it and represents the best option for the
organization. An organization’s members are willing to rise to a challenge,
often to heroic levels, if they trust their leadership. Trust requires that
leaders act in the best interests of the staff and the organization and that
leaders listen and respond to the organization’s concerns.
• Motivating factors. An organization’s members must be motivated
to support significant change. At times, excitement about the vision will
be a sufficient incentive. Alternatively, fear of what will happen if the
organization fails to move toward the vision may serve as an incentive.
Although important, neither fear nor enthusiasm is necessarily sufficient.
If an organization’s members will lose their jobs or have their roles
changed significantly, education that prepares them for new roles and or
new jobs must be offered.
• Planning, implementing, and iterating. Change should be planned.
Plans describe the tasks and task sequences necessary to effect a change.
Tasks, which can range from redesigning forms to managing the staged
implementation of information ecosystems to retraining staff, must be
allotted resources, and staff accountable for the performance of the tasks
must be designated. Because few organizational changes of any magnitude
are fully understood beforehand, problems will be encountered during
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104 STRATEGIES AND PRIORITIES FOR INFORMATION TECHNOLOGY AT CMS
implementation in addition to the problems that occur, for example,
when task timetables slip and task sequences are interrupted or tasks
themselves disrupted. Iteration and adjustment will be necessary as an
organization handles problems and learns about glitches in new processes
and workflows.
These basic steps in managing large-scale change will require the
focused attention of the CMS leadership and the involvement of all CMS
staff and its contractors.
Factors That Contribute to Successful Organizational Transformations
Transformation of the role and contribution of IT at CMS requires that
the leadership skillfully manage the necessary changes in processes, cul -
ture, and technology. In addition to this overall effort CMS should estab -
lish management practices that will enable it to more effectively guide the
changes and manage the new organization throughout its transformation.
Moving an organization from the systems that currently support core
operations to a new system is a difficult, expensive, and risky undertak -
ing. The organization must make this transition in a way that does not
jeopardize its ability to function from day to day.
Several factors come into play and are discussed below along with spe-
cific management practices that contribute to successful transformations.
Leadership Conviction and Sustained Commitment
The leadership of the organization must be convinced that a transi -
tion is necessary. This conviction can result from the creation of a new
strategy that clearly highlights the need for new organizational activi -
ties, processes, and data needs—needs that can be addressed only by an
extensive replacement or modernization of an information ecosystem.
Such a conviction can also result from a fear by leadership that the cur-
rent systems will be unable to support the future demands made of the
organization, raising the specter that the organization will be unable to
fulfill its mission because of its information systems’ inability to keep up.
Conviction on the part of leaders is necessary because these transi-
tions invariably take years to accomplish, involve a significant invest -
ment, subject the organization to extensive change, and place the orga -
nization at risk that the transition will not go well. These transitions
inevitably involve some disruption to the organization and the transition
will encounter problems, some of them serious problems, several times
during the transition; leadership conviction will be needed to ensure that
the organization stays the course during rough periods. Frequent leader-
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ACHIEVING CULTURAL AND ORGANIZATIONAL TRANSFORMATION
ship changes over the course of a transformation, such as those experi -
enced by CMS, are an impediment to success.
Resources Sufficient for the Task
The transition of major application systems and infrastructure has
costs that include the new system infrastructure, external implementa -
tion assistance, and the time and management attention of organization
members who have been assigned the tasks of guiding and designing
the new system. The investment will be non-trivial. But if some of the
funds are obtained by taxing current initiatives, demand for new funds
may be modest. In addition, in CMS’s case, the committee’s suggested
incremental approach means that the funds would not all be required
up front. Experience and the literature show that the initial estimates of
resources needed are almost always low because organizations usually
fail to accurately estimate the magnitude of the necessary resources and
do not anticipate the problems that will be encountered.
Even if internal taxes on programmatic initiatives can be used to help
fund larger transition efforts, resources for the transition should be man-
aged separately from routine operating and capital budgets lest line man -
agers be faced with the temptation to borrow funds from the transition
effort to address shortfalls in operations budgets. Funding for any piece of
these efforts should cover not only the initial capital and operating costs
of the implementation but also ongoing operations and maintenance of
the new IT applications and infrastructure. Too often in the past the allot-
ted funding has failed to take into account the life-cycle costs of a system
once implementation has been completed. Successful transitions can lead
to reduced expenses in ongoing operations, but such expenses still need
to be accounted for.
Obtaining and protecting resources in an ongoing manner for transi-
tion as the incremental work is done is challenging for any large organiza-
tion, but particularly so for a government agency. If the commitment of
resources is anemic, too myopic, unnecessarily stove-piped, or unpredict-
able, the transformation will not succeed.
Management of Risk
Large-scale transitions are fraught with risk. Invariably, mistakes will
be made in the design of new processes. The information systems may
not scale or may demonstrate unexpected instability. Project budget and
time estimates may be grossly understated. Changes in the organization’s
external environment may challenge the value or importance of some of
the changes particular to a transition.
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106 STRATEGIES AND PRIORITIES FOR INFORMATION TECHNOLOGY AT CMS
An analysis of the risks associated with an initiative should be con -
ducted and frequently updated. Such an analysis would identify the more
significant risks, develop plans to mitigate risk should it occur, and devise
means to track whether a risk is materializing.
