November 13, 2019

Former Trump officials were paid hundreds of thousands under CMS contract

Daily Briefing

    At least eight people who previously served on President Trump's campaign, presidential transition team, or in the White House received as much as hundreds of thousands of dollars under a one-year CMS communications contract that is under federal investigation, Politico reports.

    Your cheat sheets for understanding health care's legal landscape

    Background: HHS' OIG is investigating Verma's use of external GOP consultants

    A Politico investigation published earlier this year revealed CMS spent millions of dollars on communications contracts with outside consultants, many of whom are Republicans. Experts told Politico the contracts are not considered illegal, but they raise ethical questions and concerns about transparency. Politico also spoke with three individuals who had direct knowledge of the contracts, and they said CMS Administrator Seema Verma approved the communications subcontracts, over some objections from CMS staffers, through a $2.25 million federal contract with the international public relations firm Porter Novelli, which has long held various federal contracts.

    According to Politico, many of the consultants worked on the contract via subcontracts made with Nahigian Strategies, which is a communications firm that has hired various officials from the Republican Party and campaigns. Ken Nahigian, who led Trump's transition team in early 2017, and Keith Nahigian, who has worked for several Republican presidential campaigns, run Nahigian Strategies, Politico reports.

    In March, four top Democrats requested that HHS' Office of Inspector General (OIG) officially review CMS' contracts to determine whether the agreements followed federal regulations and ethics requirements. The Democrats also sent a separate letter to Verma requesting information on the agency's contract practices and communication with consultants.

    In April, four sources with knowledge of the contracts said CMS was suspending a number of the contracts it had made with Republican communications consultants. Separately, two sources who were familiar with the contracts said one of the consultants immediately broke ties with the agency after Politico published its investigation.

    HHS' OIG in April announced that it is investigating the contracts and looking to determine whether they complied with federal regulations and ethics requirements.

    Politico unveils new details of the contracts

    Politico on Tuesday reported that it had received new documents showing at least eight former officials who served on Trump's campaign, presidential transition team, or in the White House had received as much as hundreds of thousands of dollars under the contract. According to Politico, the former officials were among at least 40 consultants who worked on the contract and were hired to bolster Verma's personal brand and provide CMS with "strategic communications" support—work that traditionally has been done by civil servants in CMS' communications department.

    The contractors charged up to $380 per hour for their work, Politico reports. According to Politico, the contractors billed CMS for at least $744,000 from September 2018 to January 2019.

    For example, Nahigian Strategies billed CMS a total of $275,565 over those four months, with Ken Nahigian and Keith Nahigian charging CMS about $56,970 for their personal services during that time. In addition, Politico reports that:

    • Brad Rateike, who was an adviser on Trump's 2016 presidential campaign and a former White House communications official, billed CMS $1,150 for three-and-a-half hours of work as an outside consultant under Nahigian Strategies' subcontract;
    • Republican fundraiser Maggie Mulvaney, who is now working on Trump's re-election campaign, billed CMS more than $2,500 for working as a consultant under the contract in October 2018;
    • Zachary Lamb, who worked on the advance team for Trump's 2016 presidential campaign, charged CMS $7,388.52 under the contract in October 2018; and
    • Taylor Mason, a Nahigian Strategies employee who worked as a regional press secretary for Trump's inaugural committee, billed CMS at least $54,900 under the contract for four months of work in 2018.

    Politico reports that the new documents show CMS had agreed to allow at least four of the contractors to bill CMS for as much as $204,000 over the course of the contract's terms. In addition, the contract would have allowed Marcus Barlow—who served as Verma's spokesperson while she consulted on Indiana's Medicaid program under Vice President Pence, who was Indiana's governor at the time—to bill CMS up to $425,000 for roughly one year's work.

    According to Politico, the amounts included in the contract permitted consultants to bill CMS at amounts much higher than CMS' communications staff—as well as HHS' top political appointees—are paid. For comparison, an HHS spokesperson told Politico that HHS Secretary Alex Azar's annual salary is $203,500.

    Comments

    Many of the consultants included in the contract did not respond to requests for comment, declined to comment, or referred questions regarding the contract to CMS, Politico reports.

    Keith Nahigian, Nahigian Strategies' president, in a statement said, "Our decades-long experience working as a GSA-qualified subcontractor to more than a dozen federal agencies, including HHS and CMS, is nonpartisan and spans Republican and Democratic administrations, and those familiar with our work know the exceptional quality and expertise of our team and the skills of our partners."

    CMS said its use of contractors was appropriate and in line with long-standing practices, Politico reports. The agency added that it did not have the in-house staff necessary to execute CMS' ambitious messaging campaign to promote Verma's priorities. A spokesperson told Politico, "When the administrator started in 2017, she wanted to ensure that the agency was communicating with the American people about CMS programs and not just relying on inside-the-beltway health press. At that point, CMS did not have the specialized expertise or bandwidth needed to execute on a strategic communications plan for the agency's work in ensuring all Americans have access to affordable, high quality health care."

    Further, a CMS spokesperson noted that the agency "was not involved in [the consultants'] employment, which was a business decision of the subcontractor."

    Verma also defended the contract last month during a congressional hearing. "All the contracts we have at CMS are based on promoting the work of CMS," she said, adding, "Those contracts that we have in place are consistent with how the agency has used resources in the past."

    But some experts have raised concerns about the contracts, Politico reports.

    Scott Amey, who directs investigations into government contracts for the Project on Government Oversight, said, "If there's pressure from the top of the agency to hire these people, you worry about whether this is payoff for old friends."

    In addition, Amey said, "There are real questions about the need for these services and are these services duplicative of what [public relations] people inside the agency are already doing." He added, "There are quite a few red flags that go up here, in terms of the services that are being outsourced, the rates that are being paid and the connections of the people being hired that are worth an HHS [OIG] investigation" (Diamond/Cancryn, Politico, 11/12).

    Have a Question?

    x

    Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.

    X
    Cookies help us improve your website experience. By using our website, you agree to our use of cookies.