Federal health contract funneled hundreds of thousands of dollars to Trump allies – POLITICO
At least eight former White House, presidential transition and campaign officials for President Donald Trump were hired as outside contractors to the federal health department at the cost of hundreds of thousands of dollars per year, according to documents newly obtained by POLITICO.
They were among at least 40 consultants who worked on a one-year, $2.25 million contract directed by Centers for Medicare and Medicaid Services Administrator Seema Verma. The contractors were hired to burnish Verma’s personal brand and provide “strategic communications” support. They charged up to $380 per hour for work traditionally handled by dozens of career civil servants in CMS’s communications department.
The arrangement allowed the Trump allies to cycle through the federal government’s opaque contracting system, charging hefty fees with little public oversight or accountability.
Over a four-and-a-half month stretch from September 2018 to January, the contractors collectively billed at least $744,000. The Department of Health and Human Services halted the contract in April in the face of widespread criticism after POLITICO reported on Verma’s extensive use of communications consultants.
But under the terms hammered out last year, revealed for the first time, CMS agreed to allow at least four consultants to bill up to $204,000 over the length of the contract. That included one longtime Verma ally — Marcus Barlow, her spokesperson while she was an Indiana-based consultant to then-Gov. Mike Pence — who was greenlighted to bill as much as $425,000 for about a year’s worth of work.
Those are far higher rates than for the department’s regular communications staff and even the agency’s top political appointees. Senior career officials in the CMS communications department were paid about $140,000 last year. HHS Secretary Alex Azar’s annual salary is $203,500, a spokesperson said.
POLITICO obtained roughly 200 pages of billing documents, which were prepared by HHS in response to a congressional oversight request, from a former House staffer and confirmed the authenticity of the files with multiple sources.
The GOP consultants mostly worked as subcontractors through Nahigian Strategies, a communications firm that’s hired multiple veterans of the Republican party and GOP campaigns. The firm was brought in by Trump officials under the umbrella of public relations giant Porter Novelli, which has long maintained a slew of contracts with the federal government.
Nahigian Strategies is run by brothers Ken Nahigian — who led the Trump transition team in early 2017 — and Keith Nahigian, who has worked for multiple GOP presidential campaigns. Over a four-month period reviewed by POLITICO, Nahigian Strategies collectively charged $275,565 for a range of strategic communications duties, and the brothers themselves billed roughly $56,970 for their personal services at a $379.80 hourly rate.
The contractors brought in by the Nahigians included Brad Rateike, an adviser to Trump’s 2016 campaign and former White House communications official before leaving the administration in July 2018. Six months later, Rateike billed roughly $1,150 for just three-and-a-half hours of work as an outside consultant.
Maggie Mulvaney — a Republican fundraiser — charged more than $2,500 for a stint as a contractor in October 2018. She has since joined the Trump reelection campaign. Zachary Lamb, who staffed the advance team for Trump’s 2016 run, billed $7,388.52 that same month.
And Taylor Mason, a Nahigian Strategies employee who was formerly a regional press secretary for Trump’s inaugural committee, accounted for at least $54,900 in charges for four months of work in late 2018 and early 2019.
Lynn Hatcher, a former intern for Vice President Mike Pence before joining Nahigian Strategies, and Justin Caporale, who was a top aide in the Trump White House, briefly worked on behalf of CMS after leaving the White House.
Pam Stevens, who did two short stints in the Trump administration, was brought in to CMS as an independent consultant through Porter Novelli. The firm billed CMS roughly $280 per hour for Stevens, a longtime GOP media adviser who specializes in promoting Republican women.
Rateike, Mulvaney, Lamb, Mason and Hatcher didn’t respond to requests for comment. Caporale declined a request to comment. Stevens referred all questions to CMS, as did Porter Novelli.
Nahigian Strategies president Keith Nahigian said in a statement: “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 called its use of contractors appropriate and in line with long-standing practices, contending in a statement that it did not have the in-house staff needed to carry out an ambitious messaging campaign promoting Verma’s policy priorities for the agency.
“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,” a CMS spokesperson told POLITICO. “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.”
But the agency’s heavy reliance on contractors — spanning nearly two years and drawing on multiple political operatives — alarmed current and former CMS officials and government ethics experts, who questioned the appearance and justification for outsourcing a substantial portion of the agency’s communications duties. By early 2019, CMS also had hired multiple political appointees to help manage Verma’s communications.
“It’s the classic revolving door,” said Scott Amey, who leads investigations into government contracts for the Project on Government Oversight. Amey added that the number of consultants with ties to the White House or the Trump campaign raises further concerns. “If there’s pressure from the top of the agency to hire these people, you worry about whether this is payoff for old friends.”
Verma, who herself previously worked as an independent consultant, has played a central and controversial role in crafting the Trump administration’s health agenda as its top official in charge of Medicare, Medicaid and the Affordable Care Act.
A fierce advocate for cutting waste in federal health spending, Verma has championed efforts to tie Medicaid benefits to employment, unwind parts of Obamacare and loosen insurance coverage requirements — and taken on an increasingly political role as a prominent critic of Democratic health proposals like “Medicare for All.”
That has won her praise from conservatives within the White House and GOP. But Democrats and the broader health care community have sharply criticized Verma’s policy priorities as designed to cut benefits and patient protections, and several of those policies have faced court challenges over their legality.
Nahigian Strategies became intertwined with the health department over the first two years of the administration — helping coordinate Verma’s communications strategy, write her speeches, manage her events and set up interviews, according to four people familiar with CMS’ operations and contracting details reviewed by POLITICO.
Even before the strategic communications contract took effect in September 2018, Nahigian Strategies had served as a subcontractor in earlier arrangements, according to emails and separate contracting documents obtained through Freedom of Information requests — during which it played a key role in shaping Verma’s messages and handling her interactions with the press.
Verma directed the subcontracts with Nahigian Strategies, said two people with knowledge of her strategy, in part because she wanted to assemble a team that included Barlow, whom she’d initially sought to hire as her communications director.
Barlow — who previously worked for a series of Indiana Republicans — had served as a spokesperson for Verma’s own health policy consulting firm, SVC Inc., prior to her appointment to Trump’s health department. But Barlow was blocked from following Verma into CMS after the White House found out he’d written a column in an Indianapolis newspaper calling Trump “offensive and ignorant” and vowing never to support him in the run-up to the 2016 election.
Instead, Barlow became a highly paid shadow staffer — helping write Verma’s speeches, providing strategic advice and even screening potential CMS hires, first as an employee of Nahigian Strategies and later as an independent consultant, according to his billing records and multiple people familiar with the workings of the department. Between September 2018 and January, Barlow billed CMS for more than $150,000 as an independent consultant.
Barlow referred all questions about his work for the agency to CMS.
HHS halted the contract in April after POLITICO first reported on its existence, prompting the HHS inspector general to open a review. Top Democrats on the House Energy and Commerce Committee, House Oversight Committee, Senate Finance Committee and Senate HELP Committee have since launched their own probe into CMS’ use of outside consultants.
At a congressional hearing last month, Verma defended the contract and her broader use of consultants.
“All the contracts we have at CMS are based on promoting the work of CMS,” Verma said in response to questioning from Rep. Joe Kennedy (D-Mass.). “Those contracts that we have in place are consistent with how the agency has used resources in the past.”
Previous administrations have indeed utilized contractors to aid the rollout of new laws and programs, such as the Obama administration’s public launch of the Affordable Care Act.
But health department veterans stressed that those contractors were traditionally relied on for specific initiatives, not the daily work of the agency or for so narrowly supporting a senior official. There is similarly little precedent for a top political appointee like Verma directing government funds toward consultants dedicated to boosting her public visibility — let alone so many of them.
In addition to bringing on Nahigian Strategies as a subcontractor, Porter Novelli dispatched at least 20 of its in-house public affairs, branding and social media specialists to CMS at various points over the four-and-a-half months. It also utilized several other independent consultants who specialized in communications and speechwriting.
The contractors’ deep involvement with CMS’ activities concerned the agency’s career staff, three people familiar with CMS’ inner workings said, causing some to raise objections over devoting so many taxpayer dollars to bring in outside help.
In a statement to POLITICO, CMS did not answer specific questions about the contractors’ duties and whether their work troubled any agency leaders, saying only that it followed standard government contracting procedures and that CMS routinely relies on thousands of contractors for “critical day-to-day operations.”
The majority of the consultants with ties to the Trump administration were brought in through a subcontractor, a CMS spokesperson noted, adding that “CMS was not involved in their employment, which was a business decision of the subcontractor.”
Government ethics experts said that the consultants’ work still deserved additional scrutiny.
“There are real questions about the need for these services and are these services duplicative of what PR people inside the agency are already doing,” said POGO’s Amey. “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 inspector general investigation.”
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