Thursday, April 04, 2019

Why Did the Head of the Center for Medicare and Medicaid Services Outsource Communications Functions to Private Public Relations Firms? - Ethical and Legal Questions

There is now never a dull moment at the Center for Medicare and Medicaid Services (CMS) an agency of the US Department of Health and Human Services (DHHS).  Its current director, Seema Verma, has developed a more efficient way to combine conflicts of interest with self-interest, bad management, and possibly worse.

Outsourcing CMS Communications to Private Public Relations Firms

In summary, Politico reported

The Trump appointee who oversees Medicare, Medicaid and Obamacare [Seema Verma] quietly directed millions of taxpayer dollars in contracts to Republican communications consultants during her tenure atop the agency — including hiring one well-connected GOP media adviser to bolster her public profile.

The communications subcontracts approved by Centers for Medicare and Medicaid Services Administrator Seema Verma — routed through a larger federal contract and described to POLITICO by three individuals with firsthand knowledge of the agreements — represent a sharp break from precedent at the agency. Those deals, managed by Verma’s deputies, came in some cases over the objections of CMS staffers, who raised concerns about her push to use federal funds on GOP consultants and to amplify coverage of Verma’s own work. CMS has its own large communications shop, including about two dozen people who handle the press.

The move to give large contracts to outside public relations (PR) firms seems unprecedented and seems unnecessary.  Per CNN

whether the issue was Medicare, Medicaid or Obamacare, prior heads of the agency were often quoted, profiled and in the news, so current officials said they’re puzzled why so much work is being outsourced.

'The head of Obamacare doesn't need outside consultants to get reporters to talk to her,' said one CMS official, who asked for anonymity. 'The job pitches itself.'

Ethical and Legal Issues

In addition, outsourcing communications to private PR firms raises multiple ethical, and possibly legal questions:

'Outsourcing communications work to private contractors puts the agency's ability to protect ‘potentially market-moving’ information from premature disclosure at considerable risk,' said Andy Schneider, a Medicaid expert who worked at CMS during the Obama administration and is now a researcher at Georgetown University.


But some career CMS staff have voiced their concerns to political appointees within the agency about routing taxpayer dollars to GOP consultants and helping a federal official like Verma improve her personal brand, said two individuals aware of those conversations. Oversight groups also have raised concerns, saying the behavior, as described to them by POLITICO, would appear to cross ethical lines.

'There are a host of ethical and contractual problems with appointees steering contracts to political allies and subcontractors, and possibly a violation of the ban on personal services contracts if the work is being performed at the direction of the appointee,' Scott Amey, general counsel of the Project on Government Oversight, told POLITICO. 'Contracts are supposed to be above reproach, with complete impartiality, and without preferential treatment, and the HHS Inspector General should review this [Porter Novelli] contract and the activities under it to ensure they are proper.'

The choice of PR firms led to the concerns about steering contracts to "political allies."

The subcontracts are part of a $2.25 million contract administered by Porter Novelli, an international public relations firm that performs a wide variety of government services. CMS’ new top communications official Tom Corry confirmed the arrangement. Two other individuals said CMS also spent at least $1 million on earlier contracts with GOP communications consultants.

One subcontract is with Pam Stevens, a longtime GOP media adviser who specializes in setting up profiles of Republican women. A second subcontract is with Marcus Barlow, whom Verma worked with in Indiana and considered hiring as a top communications official in 2017 before he was blocked by the White House.


A third contract is with Nahigian Strategies, a firm run by a high-profile pair of brothers. Keith Nahigian consulted with several GOP presidential campaigns; Ken Nahigian briefly led President Donald Trump’s presidential transition team in 2017.

In other words, hiring contractors because of their political affiliations for the purposes of burnishing the image of particular government bureaucrats appears to be an abuse of power.

Also, Porter Novelli subcontracted with one Brett O'Donnell, who was involved in the following controversial episode which could be interpreted as a threat to the free press, which is protected by the Bill of Rights:

In a February 2018 incident, contractor Brett O'Donnell barred a Modern Healthcare reporter from a media call for refusing to alter a story that had rankled Verma. CMS officials walked back that threat within days and said a week later that Porter Novelli’s subcontract with O’Donnell, a longtime GOP consultant, would not be renewed. But CMS never provided any explanation of O’Donnell’s role or responsibilities. O’Donnell declined to comment for this article.

We wrote about his incident here

Given that federal officials like Verma swear

I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same;

for Ms Verma to have enabled the hiring of a contractor who tried to suppress press freedom could certainly be interpreted as mission-hostile management, or worse. 

Questions About Conflicts of Interest

Although not mentioned in the Politico article, the choice of Porter Novelli as the main contractor may raise concerns about conflicts of interest, it seems to me.

Porter Novelli is a huge public relations firm.  It has substantial business with the government.  However, it is also known for its "health and wellness" practice, per its profile in EverythingPRAccording to SourceWatch, its clients have included multinational pharmaceutical companies: Pfizer, Wyeth, and GlaxoSmithKline.  One of the practice's leaders once was Peter Pitts, who frequently spun stories to advance pharma interests, and who founded the Center for Medicine in the Public Interest (CMPI), which received considerable money from pharma and has often seemed to be an advocate for the industry.  Some examples of Pitts' work were discussed here, and his apologia for opioid manufacturers here.


Perhaps there is more to come on this story.  Today, Politico reported that after the publicity of Ms Verma's contract with Porter Novelli et al, those contracts have been suspended. 

 Previously, US News & World Report noted that

House Energy and Commerce Chairman Frank Pallone on Friday called on an inspector general to investigate a report that a top health official appointed by President Donald Trump spent millions of taxpayer dollars on GOP communications consultants.


Pallone called the contracts a 'highly questionable use of taxpayer dollars' and wants investigators to determine how the contracts got approval and if there was any breach of regulations and ethical guidelines.'

'Given that this agency should be spending tax dollars to ensure Americans can access quality health care, it is particularly egregious that it is using millions to ensure its Administrator has access to outside public relations and image building services,' Pallone said in a statement.

'I intend to ask the HHS OIG [the U.S. Department of Health and Human Services Office of Inspector General] to immediately begin an investigation into how these contracts were approved, whether all regulations and ethical guidelines were followed, and why taxpayers are stuck paying for these unnecessary services. This is not the way to drain the swamp.'

In any case, the Trump administration continues to come up with new and innovative conflicts of interest affecting health care policy and regulation.  We have discussed the rotational velocity of the revolving door that has supplied health care industry stalwarts to become government health care policy-makers and regulators (most recent example is here, and most recent example involving CMS is here).   Now a top DHHS official has decided to commission and big PR firm well known for its pharmaceutical industry clients to promote her attempts to bolster "her tenure running Medicare and Medicaid ... marked by attacks on both programs and their beneficiaries," per a commentary in the National Memo.

This is not the first time we have discussed Ms Verma's conflicts of interest.  Here we noted how she advised the Indiana, Kentucky, and at least seven other states' Medicaid programs while working for Hewlett-Packard, a contractor for those programs.  (Note that Hewlett-Packard was also a big Porter Novelli client, per SourceWatch.)  But she continues to expand her reputation for mingling government functions and commercial interests.

Ms Verma also apparently has used outsourcing to add a propaganda element to government communications (Recall that public relations was just the term Bernays picked because he thought sounded better than "propaganda.")  Furthermore, that propaganda seemed meant not to improve the health of the public, but to enhance Ms Verma's personal image. That seemed to be an abuse of power, in my humble opinion.

Moreover, there was at least one incident in which the propaganda function may have turned into a threat against press freedom (the O'Donnell incident above), and hence was certainly an example of mission-hostile management, and could easily also be viewed as an abuse of power.

We have long written about conflicts of interest, but until 2016, our cases were mostly conflicted academics, health care professionals, or leaders of private health organizations, e.g., hospitals, academic organizations, pharmaceutical companies etc.  Now the most striking cases are coming from the Trump regime.

We have long written about self-interested and mission hostile management, but again, until 2016, our cases were mostly about leaders of private health organizations.  Now the most striking cases are coming from the Trump regime.

How can be talk about true health care reform without talking about true reform of our current government?

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