Acting Medicare administrator Marilyn Tavenner.

For over a year now, Marilyn Tavenner has run the federal government's largest agency: the Centers for Medicare and Medicaid Services. With a budget of nearly $1 trillion, Tavenner oversees everything from the implementation of the Affordable Care Act to programs that already administer health benefits to more than 80 million Americans.

The White House nominated Tavenner for the post in November 2011, but with the fight over the Affordable Care Act still winding its way up to the Supreme Court, she never received a confirmation hearing. She was then renominated in January, and a hearing now looks likely.

In her first interview since her renomination, Tavenner and I spoke about the work she's done over the past year, whether health care costs are actually slowing and what it means for Rick Scott to sign onto the Medicaid expansion. A transcript of our conversation follows, lightly edited for length and clarity.

Sarah Kliff: I wanted to start by learning a bit more about the time you've spent at CMS so far. What has the transition from deputy administrator to acting administrator been like? What's changed about your role, and what strikes you as the biggest things you've worked on?

Marilyn Tavenner: When I first came here, it was two or three weeks before the Affordable Care Act passed. Actually, it was early February, and people here were wondering, "Is this going to make it?" So it's been an amazing three years.

Probably because of of the fact I came before Don [Berwick, who preceded Tavenner as acting administrator], the number two role and acting administrator has been a back and forth for the three years. It hasn't been a tremendous transition to running the agency.

I would say it's been a great agency to work with. We've done a lot of good work, and part of that is around the Affordable Care Act. A huge piece is around the day-to-day strategy, and planning strategy, for the agency. About half the time is management, since it is a large agency, and half the time is implementation of the Affordable Care Act and other laws.

SK: When you think back on the time you've spent at CMS so far, are there any projects that you're most proud of, or ones that have been the most challenging?

MT: The work I've done around health IT has been very rewarding, and while this was not part of the Affordable Care Act, over the last few years we've passed the hump on IT adoption by hospitals, so we're seeing much higher numbers and much more sophisticated use of technology. We're seeing doctors come on board. We still have pockets we're working on, but that's very rewarding.

Our work around data sharing has been huge, so we've spent a lot of time being more transparent and sharing data with the public. Certainly the Affordable Care Act work has been exciting, all the work in CCIIO which has been a brand new role for CMS.

It's been fun talking about increasing insurance to young adults under 26, building the exchanges, talking about the Medicaid expansion. Florida was obviously very exciting to us yesterday. [On Wednesday, Florida Gov. Rick Scott, a longtime opponent of the ACA,  endorsed the act's Medicaid expansion program for his state.]

The work in the innovation center, which is focused on slowing the rate of growth, is also exciting to us. Over the last three years you've started to see lower per capita cost, so that part has been rewarding.

SK: On that last point, I wanted to get your opinion on whether you think the cost slowdown we're seeing right now is permanent or temporary? 

MT: Particularly in the first year or two, there was a big concern about is this recession-oriented. Now we've ended three years, we're entering a fourth year, and we're still seeing the trend continue.

Certainly the recession had an early impact. We're seeing the economy recover some now, so that's less an issue. And some of the changes we're doing, whether payment reduction or delivery system reform, I think we're seeing all of those coming together in a way that's making a permanent difference.

SK: Do you expect it to continue going forward?

MT: Yes. That doesn't mean we don't need to stay focused and keep working on it, but yes.

SK: On health IT, one big gripe I hear from doctors, I imagine you hear it, is that the systems can't talk to each other. I was curious how big an obstacle that is and what is being done to address that?

MT: Some progress has been made but not enough. It depends on where you are. If you're inside a system, as a physician practicing, I think it's much easier. I think if you're in small practice, they don't feel like they have the ability to move records back and forth. I think you'll see that as a focus of the agency in 2013. That is a fair concern and one we want to work on.

SK: I wanted to ask you about the Medicare Advantage rates that came out on Friday. Health plans weren't exactly thrilled, is one way to describe it. A lot argue this is going to put them out of business. Could you talk about how CMS comes to that decision and what it means for MA?

MT: What we have said to folks, and we obviously talk to the CEOs of health plans and with Karen Ignagni [director of America's Health Insurance Plans] is, first of all, it's proposed rules. You can give us feedback about where you think the adjustments were not what you wanted.

Second, part of this is formula-driven, and it goes back to the slowdown in costs. Part of it we can be open, part of it we'll have to look at the formula for what the true costs have been.

I guess two points I'd make now: Part of it is a direct effect of the slowdown in spending, and part of it is open to comment and feedback and for us to take a look at it.

SK: Would you expect changes to it?

MT: I really can't comment on that, I will just tell you that whenever we put out proposed rules, we get the comments back, we tend to make changes in all rules between proposed and final.

SK: Under the Affordable Care Act there are going to be some big cuts that these plans will see. Do you see them still growing, or shrinking?

MT: We've seen so far tremendous growth in the plans. We've seen more generous benefits overtime and seen the premiums go down. So far, we've seen they're doing very well.

SK: This is all before the Affordable Care Act cuts though, which start in 2014.

MT: I think that if you look, there's still a pretty significant differential between fee-for-service and MA. I think obviously the plans don't want to see any decreases, but we think we are moderating those over time and working with the plans. We see the MA market as staying strong.

SK: Obviously, the next 10 months are going to be huge for your agency. What do you see happening with the effort to let people know about the new programs that are going to roll out? I know there's some research that shows the vast majority of those eligible have no idea its coming.

MT: We've done a lot of research in this area. We do have a lot of education to do, and that is part of our strategy for the remainder of 2013 into 2014. Our focus this year is going to be on outreach and education. To me it's a timing issue. We spend the first six months of the year preparing materials, working with providers and working with advocacy groups.

It's really in the summer and the fall that we start to touch beneficiaries, and there's two reasons for that. Our research has shown if you go too early, you don't have anything to offer, and people lose interest. Second, there will be a lot of detailed hand-holding for folks who may have not had insurance. It will be intense, but the timing is important.

SK: I know HHS really encouraged all the states to set up their own exchanges, and now you have 26 states that decided not to. Was that a surprise?

MT: We've always had the ability to do both. Obviously, we want states to do it as much as they will, but we are prepared to run the federal exchange. We already have relationships inside those states. We're probably neutral; we think over time more folks will move into the partnership or state-based model.

SK: How do you feel the Medicaid expansion is going?

MT: Obviously, we would love for all governors to expand Medicaid, and so far we've been very pleased with the states that have. We try to work with states both in the governor's office and also with their Medicaid offices, bureau of insurance and even with their advocates and providers. We try to be that supportive but neutral party that provides data, whatever they need to make the decision. We're obviously pleased when they do. We were delighted with [Gov. Rick Scott's decision in] Florida yesterday.

SK: Was that a surprise?

MT: You hear a lot of things over the last few weeks, that he was softening his position and moving in that direction. I can't say it was a surprise. We were delighted, but we had seen some of the articles and heard from advocates that they were making a difference.

SK: One thing Gov. Scott talked about is using this as a moment to move waivers through HHS. Is that something you're hearing from governors, as they're weighing the Medicaid expansion, about what flexibilities they can gain through a waiver?

MT: Yes. What we try to do is work with governors and governors' offices...their questions are more about cost-sharing, their ability to have cost-sharing or their ability to put this more in what looks like a private insurance model.

I think they've listened to that. For many of them, they have waivers in process or want to look at waivers in that area. So we are trying to be flexible and work as quickly as possible on waivers. Obviously, there's beneficiary protections, there's quality standards we have to keep in place. We weigh those, but the waivers in Florida had been in process for some time.

SK: The last thing I wanted to ask you about was your Senate confirmation. It looks like Senate Finance wants to give you a hearing.

MT: I don't want to get ahead of things. Since the Senate is in recess, we start meeting with members next week. I wouldn't want to get ahead of that. I'm obviously encouraged by what's happened thus far and looking forward to working with the Senate.