HEALTH CARE
Inspector general: Medicare chief broke rules on
her publicity contracts
HHS watchdog finds Seema Verma mishandled millions of
dollars in federal contracts that ultimately benefited friends, former Trump
officials.
By DAN
DIAMOND and ADAM CANCRYN
07/16/2020
12:01 AM EDT
A top Trump
administration health official violated federal contracting rules by steering
millions of taxpayer dollars in contracts that ultimately benefited GOP-aligned
communications consultants, according to an inspector general report set to be
released today.
The
contracts, which were directed by Centers for Medicare and Medicaid Services
chief Seema Verma, were only halted after a POLITICO investigation raised
questions about their legality and the agency had paid out more than $5 million
to the contractors.
The 70-page
HHS inspector general report — the result of a 15-month audit — calls on HHS
and CMS to take nine separate actions to address the "significant
deficiencies" that it identified. Those actions include conducting a
review of all the department's contracts, and making a closer examination of
whether CMS overpaid several of its contractors.
The report
paints a detailed portrait of Verma's use of federal contracts to install
allies who managed high-priority projects and exercised broad authority within
CMS, while circumventing the agency's career officials and funding projects
that ethics experts have said wasted taxpayers’ money.
“CMS
improperly administered the contracts and created improper employer-employee
relationships between CMS and the contractors,” the inspector general wrote,
detailing how Verma leaned on her hand-picked consultants rather than hundreds
of civil servants in her communications department. “CMS’s administration of
these contracts put the Government at increased risk for waste and abuse.”
For
instance, the report cites numerous examples across her first two years leading
CMS of Verma personally directing contractors to craft her speeches and
remarks, working with them to secure media appearances and even accompanying
one for a “Girl’s Night Out” networking event. While the inspector general uses
pseudonyms to describe individual contractors, POLITICO has previously
identified the individuals cited in the report.
Verma — a
close ally of Vice President Mike Pence — has emerged as a key leader of the
White House coronavirus task force, overseeing billions of dollars in emergency
payments to doctors and hospitals, rolling out new rules affecting nursing
homes and championing the use of telemedicine. She also runs the nation's
largest health care safety-net programs — Medicare and Medicaid — in addition
to overseeing Obamacare, as head of a trillion-dollar agency with sweeping
regulatory authority over the U.S. health care system.
Verma has
spent more than a year defending the contracts, testifying to Congress that
they were “consistent” with previous communications arrangements and focused on
promoting the agency, not her.
However,
the inspector general concluded that Verma and her team “did not administer and
manage the contracts in accordance with Federal requirements.” The watchdog
also faulted the health department for failing to adequately manage the
contracts, which auditors linked to potential duplicate spending and other
“questionable costs,” such as a $150,000 payout for a canceled bus tour.
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At other
times, Verma’s hand-picked contractors — including her former communications
specialist, Marcus Barlow, who had worked as a spokesperson on behalf of
Verma’s consulting firm but had been blocked from taking a job at CMS —
personally steered federal staff and policies in ways that appeared to flout
contracting rules, according to the inspector general.
In one
case, the inspector general report recounts, two senior CMS civil servants
questioned the legality of the arrangement after Barlow instructed agency staff
that he needed to be among the officials clearing tweets before they were
posted.
“I’m trying
to figure out if it is legal for a contractor to direct federal personnel,” a
top communications official wrote in August 2017 to a team member, who
responded, “I have been wondering the same thing.”
The
communications official later minimized the email to the inspector general,
telling the auditors that he’d had an “emotional reaction” and didn’t believe
the contractor was directing him.
Still, the
episode fit a pattern of Verma charging contractors with directing tasks that
ranged from the high-profile to the mundane, from writing major speeches and
organizing events to managing media requests and approving tweets.
For
example, Verma recommended that contractors hire Pam Stevens, a well-known
Washington communications expert, to help set up her media appearances,
according to the inspector general’s report. Stevens would go on to devise a
publicity plan for Verma that proposed profiles in magazines like Glamour,
invitations to prestigious events like the Kennedy Center Honors and recognition
on “Power Women” lists. CMS has downplayed the plan and said that many of
Stevens’ proposals were not pursued.
In the
process, CMS paid those contractors at rates far exceeding those of senior
government employees to perform duties that the inspector general said should
have been handled by the agency's more than 200 in-house communications
officials.
“Improper
administration and management of contracts can put the government at increased
risk for waste and abuse,” said Tesia Williams, a spokesperson for the
inspector general.
In a letter
signed by Deputy Secretary Eric Hargan, HHS agreed with the inspector general’s
recommendations and committed to an evaluation of its contracts.
But Verma
disputed the findings in an extensive response to the inspector general that
accompanied the report, calling them “disingenuous” and arguing that auditors
cherry-picked their findings.
“Making
these conclusions is only possible using an incomplete record of evidence and a
misunderstanding of federal contracting requirements,” Verma wrote. “I wholly
disagree that the management and execution of the contracts ever gave rise to
serious concerns.”
Verma also
chastised the inspector general for the timing of its report.
“CMS should
be solely focused on responding to an unprecedented global pandemic, but
instead had to spend precious time responding to the numerous
mischaracterizations and technical inaccuracies” in the report, Verma wrote.
“At the end
of the day, CMS should have been solely focused on responding to the
unprecedented coronavirus pandemic instead of focusing on alleged infractions
of a minor and technical nature that have been the subject of longstanding
debate and confusion,” HHS spokesperson Michael Caputo said in a statement.
Caputo did
not respond to questions about how the report specifically pulled federal staff
away from coronavirus-related work. The inspector general’s office maintains in
its report that much of the audit was completed before the pandemic, with all
fieldwork wrapping up in February 2020, and that CMS received "all
requested extensions," given the current outbreak.
Meanwhile,
Caputo took aim at his own department’s watchdog. “The President,
Vice-President and the Secretary have enormous confidence in Administrator
Verma and the great work she has done, and will continue to do, for the
American people,” he said. “But confidence in the Inspector General? Not so
much.”
The
inspector general opened its probe in April 2019, days after POLITICO first
reported about Verma’s extensive use of branding and communications
consultants. The health department swiftly froze the contracts, and
congressional Democrats have separately worked on an investigation into Verma’s
spending.
Verma’s
contracts also became a vehicle to compensate multiple Republican
communications operatives: At least eight former White House, presidential transition
and campaign officials for President Donald Trump were ultimately hired as
outside contractors to the federal health department at the cost of hundreds of
thousands of dollars per year.
In October
2019, Verma testified to Congress that the contracts were appropriate and
"consistent with what previous administrations have done."
"Those
contracts that we have in place are consistent with how the agency has used
resources in the past, and they're focused on promoting the work," she
told the House Energy and Commerce Committee in a fiery exchange with Rep. Joe
Kennedy, who argued that Verma had wasted taxpayer funds and should have
steered the money toward health services instead.
A
half-dozen House Democrats, including Energy and Commerce Chair Frank Pallone,
subsequently called for Verma's resignation over her stewardship of taxpayer
funds. Verma’s efforts to raise her profile also became a factor in her bitter
feud last year with Health and Human Services Secretary Alex Azar — the leader
of the health department and Verma’s nominal boss — as the two officials
clashed over influence with the White House and in the press.
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