The Independent View: HHS IG Finds Medicare Chief Broke Rules on Her Publicity Contracts

The Department of Health and Human Services (HHS) Inspector General (IG) finds Medicaid Services Chief, Seema Verma, Mishandled Millions of Dollars in Federal Contracts that ultimately Benefited Friends, Former Trump Officials.

The IG opened the Probe in April 2019, days after POLITICO Reported about Verma’s extensive use of Branding and Communications Consultants. Verma Violated Federal Contracting Rules by Steering Millions of Taxpayer Dollars in Contracts that ultimately Benefited GOP-aligned Communications Consultants. The Contracts were Halted after the POLITICO Investigation raised Questions about the Legality of Payments of more than $5 Million to the Contractors.

Verma’s Contracts became a Vehicle to Compensate Multiple Republican Communications Operatives. At least Eight Former White House, Presidential Transition and Campaign Officials for President Trump were ultimately Hired as Outside Contractors to the Federal Health Departments.

The 70-page HHS IG Report, the result of a 15-month Audit, calls on HHS and The Centers for Medicare & Medicaid Services (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 IG 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 IG 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 IG 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.

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 IG.

In One Case, the IG 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 IG, 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.

CMS paid those Contractors at Rates far Exceeding those of Senior Government Employees to Perform Duties that the IG 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 IG.

In a Letter signed by Deputy Secretary Eric Hargan, HHS Agreed with the IG’s Recommendations and Committed to an Evaluation of its Contracts. But Verma disputed the Findings in an Extensive Response to the IG 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 IG 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.

A half-dozen House Democrats 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 HHS 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.