Should Insurance Companies Own Home Health Agencies?

Editorial

by Kristin Rowan | Sep 13, 2023 | Editorial, M&A, Regulatory

by Kristin Rowan, Editor

UnitedHealth Group Makes Bid to Buy Amedisys after Acquiring LHC Group

Amedisys is one of the leading providers of home health, hospice, and other healthcare at home services. It operates more than 500 locations in 37 states and the District of Columbia. After acquiring Contessa Health in 2021 for $250 million, Amedisys added hospital-at-home, SNF-at-home, and palliative care to its list of services.

Optum Outbids Option Care Health

In May of this year, Option Care Health and Amedisys issued joint statements announcing a merger of the two companies in an all stock-option bid. Option Care Health provides home and alternate site infusion services, while Amedisys provides home health, hospice, and high-acuity care. The merger was valued at $3.6 billion. It would have increased stockholder value, increased access to care across the United States, and created a network of more than 16,000 health care professionals, according to the joint statement.¹

By June 26th, Option Care Health confirmed the termination of the merger and a $106 million termination payment from Amedisys, after Amedisys accepted an all-cash bid from UnitedHealth Group.²

UnitedHealth Expanding Service Options

UnitedHealth Group acquired LHC Group earlier this year for $5.4 billion.³ That acquisition folded LHC Group into UnitedHealth Group’s Optum. The acquisition came after increased demands for home care services. UnitedHealth Group considered this a move toward value-based care. The Federal Trade Commission stalled the merger with requests for additional details in mid-2022. Despite the FTC probe and a shareholder lawsuit, the deal was ultimately approved and the LHC Group delisted its stock on February 22.⁴

New Merger Faces Federal Scrutiny

Optum and Amedysis expected concerns over anti-trust issues surrounding the merger, according to a joint statement from the two groups. The Department of Justice recently asked for more information.⁵ The request will push back the timeline for the merger. Amedisys believes there is little geographic overlap between Amedisys and LHC Group and that the scrutiny is a result of other UnitedHealth Group acquisitions.

Optum Remains Optimistic

In a press release about the merger, Optum CEO Patrick Conway, M.D. said, “Amedisys’ commitment to quality and care innovation within the home, and the patient-first culture of its people, combined with Optum’s deep value-based care expertise can drive meaningful improvement in the health outcomes and experiences of more patients at lower costs, leading to continued growth.”⁶

Even with the recent acquisitions and mergers, if this deal with Amedisys proceeds, Optum will have only a 10% market share across the U.S. For this reason, as well as the demand for home care far exceeding the supply, Optum believes this merger will be approved.

Opinion

Should a company that brokers health insurance also be allowed to be the provider of care? In this author’s experience, job-based healthcare insurance does not come with many options. There may be different levels of care to fit your budget, but the insurance company is already chosen by the employer. This means that employees and their families choose to have health insurance or not but cannot choose the insurance company.

Home Care, Hospice, Post-Acute Care, Palliative Care, and other in-home services are very personal. The company you choose and the care provider you get have to fit your needs and personality and there is a high level of trust needed to allow a stranger into your home when you are in a vulnerable state. If the insurance company is also providing the care, the option to find a care provider that suits the level of trust needed almost disappears.

Oversight

In 2021, President Joe Biden signed an executive order for more vigorous oversight of the healthcare market. Mergers and acquisitions are being scrutinized more heavily to preclude monopolies of care. The FTC and DOJ, in response to this executive order, have proposed updates to antitrust guidelines that will make healthcare mergers and acquisitions more difficult.⁷

Medicare Advantage

Medicare beneficiaries enrolled in Medicare Advantage has now reached 50%, making insurance companies more involved in senior care than ever before.⁸ Insurance companies only recently increased the percentage of revenue spent on patient care to 80%, up from as low as 50% before 2010.⁹ Given these facts, it may be worth questioning whether the insurance companies have too much control over care now, and if the acquisition of care providers by insurance providers should be eliminated completely to avoid a complete takeover of healthcare by insurance companies that already focus more on profit than people.

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Kristin Rowan has been working at Healthcare at Home: The Rowan Report since 2008. She has a master’s degree in business administration and marketing and runs Girard Marketing Group, a multi-faceted boutique marketing firm specializing in event planning, sales, and marketing strategy. She has recently taken on the role of Editor of The Rowan Report and will add her voice to current Home Care topics as well as marketing tips for home care agencies. Connect with Kristin directly kristin@girardmarketinggroup.com or www.girardmarketinggroup.com

©2024 by The Rowan Report, Peoria, AZ. All rights reserved. This article originally appeared in Healthcare at Home: The Rowan Report. One copy may be printed for personal use: further reproduction by permission only. editor@therowanreport.com

¹https://investors.optioncarehealth.com/news-releases/news-release-details/option-care-health-and-amedisys-combine-creating-leading
²https://investors.optioncarehealth.com/news-releases/news-release-details/option-care-health-confirms-termination-merger-agreement
³https://www.reuters.com/markets/deals/amedisys-agrees-unitedhealth-buyout-offer-scraps-option-care-deal-2023-06-26/
⁴https://www.fiercehealthcare.com/payers/unitedhealth-lhc-group-close-54b-merger-deal
⁵https://www.healthcaredive.com/news/unitedhealth-amedisys-second-request-doj/690612/
⁶https://www.unitedhealthgroup.com/newsroom/2023/2023-06-05-optum-offers-to-combine-with-amedisys.html
⁷https://www.medicaldevice-network.com/news/unitedhealth-acquisition-under-doj-scrutiny/?cf-view
⁸https://homecaretechreport.com/article/3549
⁹https://www.commonwealthfund.org/publications/issue-briefs/2019/jul/how-aca-medical-loss-ratio-rule-protects-consumers-insurers

EEOC Sues Licensed Home Care Agency for Discrimination

CMS

by Tim Rowan | Aug 23, 2023 | CMS, Regulatory

by Tim Rowan, Editor

Home Care Agency Removed Black and Hispanic Home Health Aides from Assignments to Accommodate Racial Preferences of Clients, Federal Agency Charges

There is a question that appears on social media chat pages with great regularity. What does a home care agency do when a client places it in a difficult legal position? The family of a Spanish-speaking grandmother asks for a Spanish-speaking caregiver. An elderly white gentleman insists on a white, English-speaking caregiver.

For agencies across the country, the only reasonable answer to this question is, “I don’t like my choices.” Those choices are to either offend, likely lose, a client, or risk violating Equal Employment Opportunity laws. It is common knowledge that home care clients have ample options should they become disillusioned with their current agency. In this situation, an agency has to choose between confronting a client’s racial bias and risk losing the client, or accommodating a client and losing a federal lawsuit. In other words, here we have the very definition of “no-win.”

With a recent action, the EEOC has put our entire industry on notice which option it expects. On July 31, the federal agency issued a public news release announcing it has filed a lawsuit against a New York agency. Four Seasons Home Care is a licensed personal care agency under a corporate umbrella with sister companies that offer Nursing and Rehabilitation, Certified Home Health, a Dialysis Center, Pharmacy, and an Adult Health Day Care Center. The company was faced with this common dilemma and made a choice of which the EEOC disapproved.

Reaction to the announcement, reprinted verbatim below, has already begun to appear on social media sites, including LinkedIn and home care groups on Facebook. One eloquent comment came from the CEO of an organization that serves an elderly client base made up of elderly people, mostly first-generation, who come from dozens of other countries and speak dozens of languages.

He pointed out that, in a diverse market like New York, it is common for patients and clients to express preference for an aide who can relate to their culture and speak their language. He even mentioned data that shows a connection between culture match and care effectiveness. The reason there has been a push to achieve diversity in the caregiving community expressly for the purpose of culture matching.

What stood out to this writer is that some of the language violates a journalistic rule, specifically the one against revealing the author’s bias within an otherwise facts-only story. In the second paragraph, the phrasing “including by removing Black and Hispanic” caregivers implies that the entire lawsuit is about disadvantaging these two groups. By looking beyond any implied meaning and parsing the language as written, one can see that removing these two specific ethnic groups is part of the accusation, but the writer offers no clue as to whether “part of” means 10 percent or 90 percent of the people discriminated against were Black and Hispanic.

Without this knowledge, one is led to assume that the entire accusation is that Four Seasons discriminated against Black and Hispanic caregivers. However, it is just as possible, based on the vague term “including,” that other ethnic groups were also victims of discrimination. It is just as possible that some Black and Hispanic caregivers were recipients of bonus work hours when assigned to clients who requested a caregiver with their cultural or language backgrounds. Sadly, the bottom line is that the language of the news release does not actually say what it appears to say. We will have to wait for the case to arrive in court to know what percentage of Four Seasons policy discriminated against minorities and what percentage help them.

Complete Announcement From EEOC

NEW YORK — ACARE HHC Inc., doing business as Four Seasons Licensed Home Health Care Agency, a Brooklyn-based company that provides its clients with home health aides, violated federal law by removing aides from their work assignments due to their race and national origin to accommodate client preferences, the U.S. Equal Employment Opportunity Commission (EEOC) charged in a lawsuit filed today.

According to the EEOC’s lawsuit, Four Seasons routinely would accede to racial preferences of patients in making home health aide assignments, including by removing Black and Hispanic home health aides based on clients’ race and national origin-based requests. Those aides would be transferred to a new assignment or, if no other assignment were available, lose their employment completely.

Such alleged conduct violates Title VII of the Civil Rights Act of 1964, which prohibits employers from discriminating against employees on the basis of race and national origin.

The EEOC filed suit, (EEOC v. ACARE HHC d/b/a Four Seasons Licensed Home Health Care, 23-cv-5760), in the U.S. District Court for Eastern District of New York, after first attempting to reach a pre-litigation settlement through the agency’s conciliation process. The EEOC seeks compensatory damages and punitive damages for the affected employees, and injunctive relief to remedy and prevent future discrimination based on employees’ race and national origin.

“Making work assignment decisions based on an employee’s race or national origin is against the law, including when these decisions are grounded in preferences of the employer’s clients,” said Jeffrey Burstein, regional attorney for the EEOC’s New York District Office.

“It is long past the day when employers comply with the discriminatory requests of its clients or customers, to the detriment of its Black and Hispanic workers,” said Timothy Riera, acting director of the New York District Office.

The EEOC’s New York District Office is responsible for processing discrimination charges, administrative enforcement, and the conduct of agency litigation in Connecticut, Maine, Massachusetts, New Hampshire, New York, northern New Jersey, Rhode Island, and Vermont.

More information about race discrimination can be found at eeoc.gov/racecolor-discrimination. More information about national origin discrimination can be found at eeoc.gov/national-origin-discrimination.

The EEOC advances opportunity in the workplace by enforcing federal laws prohibiting employment discrimination. More information is available at eeoc.gov. Stay connected with the latest EEOC news by subscribing to our email updates.

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Tim Rowan is a 30-year home care technology consultant who co-founded and served as Editor and principal writer of this publication for 25 years. He continues to occasionally contribute news and analysis articles under The Rowan Report’s new ownership. He also continues to work part-time as a Home Care recruiting and retention consultant. More information: RowanResources.com
Tim@RowanResources.com

©2024 by The Rowan Report, Peoria, AZ. All rights reserved. This article originally appeared in Healthcare at Home: The Rowan Report.homecaretechreport.com One copy may be printed for personal use: further reproduction by permission only. editor@homecaretechreport.com

Supreme Court Takes Action About Knowledge Required to Prove False Claims

CMS

by Elizabeth E. Hogue, Esq. | Jul 12, 2023 | CMS, Regulatory

by Elizabeth Hogue, Esq.

For providers to be liable under the federal False Claims Act, enforcers must prove that they knowingly submitted false claims. The U.S. Supreme Court recently issued an opinion in United States ex rel. Schutte v. SuperValu, Inc. [No. 21-1326 (U.S. June 1, 2023)], which defines what “knowingly” means. The Court decided that providers act knowingly depending on their “culpable state of mind” when they submitted alleged false claims; not what providers may have thought after submitting them. The requirement to prove knowledge, or “scienter,” said the Court, refers to providers’ knowledge and subjective beliefs; not to what objectively reasonable persons may have known or believed.

On June 30, 2023, the U.S. Supreme Court issued orders that revive two whistleblower lawsuits based on the opinion described above. Specifically citing the above decision, the Court granted whistleblower Troy Olbausen’s request to hear his case. The Court then vacated an Eleventh Circuit decision that dismissed Olhausen’s whistleblower lawsuit.

The Eleventh Circuit previously dismissed Olhausen’s suit against Arriva Medical because he could not prove that the defendants had knowledge of their submission of false claims in view of their objectively reasonable interpretation of the Medicare rules in question. The Supreme Court sent the case back to the Eleventh Circuit for further consideration based on its decision in Schuttte v. SuperValu, above [Olhausen v. Arriva Med., LLC, No. 22-374 (U.D. June 30, 2023)].

Likewise, on June 30, 2023, the Supreme Court sent a case back to the Fourth Circuit for further consideration in light of the Schutte case.

These actions make it clear that the new standard set by the Supreme Court in the Schutte case will make a difference in cases based on the federal False Claims Act. The Court said in the Schutte case:

“Both the text and the common law also point to what the defendant thought when submitting the false claim – not what the defendant may have thought after submitting it…As such, the focus is not, as respondents would have it, on post hoc interpretations that might have rendered their claims accurate. It is instead on what the defendant knew when presenting the claims…Culpability is generally measured against the knowledge of the actor at the time of the challenged conduct.”

The Court also said:

“Under the FCA, petitioners may establish scienter by showing that respondents:

actually knew that their reported prices were not their ‘usual and customary’ prices when they reported those prices;
were aware of a substantial risk that their higher, retail prices were not their ‘usual and customary’ prices and intentionally avoided learning whether their reports were accurate, or
were aware of such a substantial and unjustifiable risk but submitted the claims anyway…

If petitioners can make that showing, then it does not matter whether some other, objectively reasonable interpretation of ‘usual and customary’ would point to respondents’ higher prices. For scienter, it is enough if respondents believed that their claims were not accurate.”

Proving that providers submitted false claims just got tougher for enforcers.

See Ms. Hogue’s earlier report on this SCOTUS case in our June 7 edition: homecaretechreport.com/article/3587

©2023 by Rowan Consulting Associates, Inc., Colorado Springs, CO. All rights reserved. This article originally appeared in Home Care Technology: The Rowan Report. homecaretechreport.com One copy may be printed for personal use; further reproduction by permission only. editor@homecaretechreport.com

Crackdown is Coming: Are You Paying Overtime?

Admin

by Tim Rowan | May 17, 2023 | Admin, Regulatory

by Tim Rowan, Editor

he Department of Labor, Wage and Hour Division, has selected several southeastern states as targets for its investigation into a practice that appears to be quite common, underpaying in-home caregivers. It appears, based on early DoL reports, that some Home Care agency owners in Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina and Tennessee either do not understand the law, or simply try to get away with it.

According to a mid-February, 2023 report:

“From 2020 to 2022, Wage and Hour Division investigators identified violations in nearly 89 percent of more than 1,200 home care and nursing care investigations. These reviews led the agency to recover more than $16.2 million in back wages and liquidated damages for more than 13,000 workers.

The department produced an instructional webinar on federal wage and hour regulations for home care, residential care and nursing care industry employers, workers and other stakeholders in the Southeast. “Caring For Those Who Care: Fair Labor Standards Act Requirements in the Care Industry,” is part of the DoL’s ongoing education and enforcement initiative to improve compliance in those states.

On October 13, 2022, the DoL published a Notice of Proposed Rulemaking to revise the Department’s guidance on how to determine who is an employee or independent contractor under the Fair Labor Standards Act. The NPRM proposes to rescind the rule, Independent Contractor Status Under the Fair Labor Standards Act (2021 IC Rule), that was published in the closing days of the previous administration, January 7, 2021, and replace it with an analysis for determining employee or independent contractor status that is more consistent with the FLSA as interpreted by longstanding judicial precedent. The Department believes that its proposed rule would reduce the risk that employees are misclassified as independent contractors, while providing added certainty for businesses that engage (or wish to engage) with individuals who are in business for themselves.

A DoL publication explained this targeted effort aligns with the agency’s initiative to protect essential workers in the Southeast. See an April 28 update on progress of the proposed rule here.

Writing for a Polsinelli Law firm bulletin, home care attorney Angelo Spinola stated, along with the caveat that this is not to be construed as legal advice, “The DOL is not required to give employers prior notice of an audit. In fact, WHD investigators often initiate unannounced investigations to observe normal business operations. As such, the best way to prepare for a DOL audit is to conduct regular and periodic internal audits of employment records and policies to ensure compliance with the FLSA. Internal audits typically include a review of exempt employee classifications, independent contractor classifications, payroll and time records, and FMLA and other leave law compliance. It is advisable to work with knowledgeable employment attorneys who can counsel employers on current wage and hour laws and best practices.”

Abuse Found to be Widespread

From 2020 to 2022, Wage and Hour Division investigators identified violations in nearly 89 percent of more than 1,200 home care and nursing care investigations. These reviews led the agency to recover more than $16.2 million in back wages and liquidated damages for more than 13,000 workers. In addition, the division assessed employers a total of $156,404 in civil money penalties. The February DoL report cited two recent North Carolina cases as examples of the practices it uncovered throughout the South:

Gentle Shepherd Care – which provides home healthcare services in the Charlotte area – failed to combine hours when employees worked at more than one of its locations during the same workweek. By doing so, the employer did not pay the affected workers their additional half-time premium rate for overtime for hours over 40 in a workweek. The Fair Labor Standards Act requires all hours worked in a workweek be combined when calculating wages, regardless of where employees performed the work. Back wages and liquidated damages recovered: $193,768 for 98 workers.

A separate investigation found Greenville”s At Home Personal Care paid employees straight-time rates for all hours worked, including hours over 40 in a workweek. By doing so, the employer did not pay the additional half-time premium rate for overtime as the FLSA requires. In addition, the employer failed to pay for travel time between the clients’ homes when the employees visited multiple clients during the same day. The agency also did not keep accurate records as required. Back wages and liquidated damages recovered: $187,148 for 28 workers.

North Carolina Wage and Hour Division District Director Richard Blaylock stated, “Workers who provide home healthcare services deserve to be paid every penny of their hard-earned wages as they care for our loved ones. When employers choose to ignore the law, they deny workers the wages they earned and need to support their families. Employers must use this investigation’s outcome as a reminder to review their pay practices to ensure they comply with the law.”

Employers can contact the Wage and Hour Division at its toll-free number, 1-866-4-US-WAGE. The division also offers online resources for employers, such as a fact sheet on Fair Labor Standards Act wage laws overtime requirements. Workers who feel they may not be getting the wages they earned may contact a Wage and Hour Division representative in their state through a list and interactive online map on the agency’s website. Workers and employers alike can help ensure hours worked and pay are accurate by downloading the department’s Android Timesheet App for free. Learn more about Wage and Hour Division.

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CMS News: New Rule Cracks Down on Medicare Advantage Upcoding

CMS

by Tim Rowan | Feb 1, 2023 | CMS, Medicare Advantage, Regulatory

by Tim Rowan, Editor

CMS Rule to Protect Medicare

The U.S. Department of Health and Human Services, through the Centers for Medicare & Medicaid Services, finalized the policies for the Medicare Advantage “Risk Adjustment Data Validation” program, which is CMS’s primary audit and oversight tool of MA program payments.

Under this program, CMS identifies improper risk adjustment payments made to Medicare Advantage Organizations in instances where medical diagnoses submitted for payment were not supported in the beneficiary’s medical record. The commonsense policies finalized in the RADV final rule (CMS-4185-F) will help CMS ensure that people with Medicare are able to access the benefits and services they need, including in Medicare Advantage, while responsibly protecting the fiscal sustainability of Medicare and aligning CMS’s oversight of both Traditional Medicare and MA programs.

In Other Words, Fraud

As required by law, CMS’s payments to MAOs are adjusted based on the health status of enrollees, as determined through medical diagnoses reported by MAOs. Studies and audits done separately by CMS and the HHS Office of Inspector General have shown that Medicare Advantage enrollees’ medical records do not always support the diagnoses reported by MAOs, which leads to billions of dollars in overpayments to plans and increased costs to the Medicare program as well as taxpayers.

No Overpayments Collected Since 2007

“Protecting Medicare is one of my highest responsibilities as Secretary, and this commonsense rule is a critical accountability measure that strengthens the Medicare Advantage program. CMS has a responsibility to recover overpayments across all of its programs, and improper payments made to Medicare Advantage plans are no exception. For years, federal watchdogs and outside experts have identified the Medicare Advantage program as one of the top management and performance challenges facing HHS, and today we are taking long overdue steps to conduct audits and recoup funds. These steps will make Medicare and the Medicare Advantage program stronger.”

Xavier Becerra

Secretary, Department of Health and Human Services

“CMS is committed to protecting people with Medicare and being a responsible steward of taxpayer dollars,” said CMS Administrator Chiquita Brooks-LaSure. “By establishing our approach to RADV audits through this regulation, we are protecting access to Medicare both now and for future generations. We have considered significant stakeholder feedback and developed a balanced approach to ensure appropriate oversight of the Medicare Advantage program that aligns with our oversight of Traditional Medicare.”

The RADV final rule reflects CMS’s consideration of extensive public comments and robust stakeholder engagement after the release of the 2018 Notice of Proposed Rulemaking. The finalized policies will also allow CMS to continue to focus its audits on those MAOs identified as being at the highest risk for improper payments. The RADV final rule can be accessed at the Federal Register.

Pre-Implementation Performance Report

The January 2023 Pre-Implementation Performance Report is now available to download from the Internet Quality Improvement Evaluation System (iQIES).

Instructions on how to access the PIPR are available below and on the Expanded HHVBP Model webpage under “Model Reports.”

Background

To support home health agencies during this first performance year, CMS issued PIPRs in November 2022 and January 2023 to all active HHAs. The PIPR provides HHAs with data on their quality measure performance used in the expanded HHVBP Model, in comparison to HHAs nationally within peer cohorts, in advance of the first Interim Performance Reports (IPRs) in July 2023. The PIPRs do not contain calendar year (CY) 2023 data. The January 2023 PIPR includes a new tab containing preliminary achievement thresholds and benchmarks by volume-based cohort.

Need Help Understanding Your PIPR?

To assist HHAs in understanding the purpose, content, and use of the PIPRs, the HHVBP Technical Assistance Team created an on-demand video and downloadable resource, “Introduction to the Pre-Implementation Performance Report,” available on the Expanded HHVBP Model webpage. The video is also available on the Expanded HHVBP Model YouTube channel.

Additionally, the December 2022 edition of the “Expanded HHVBP Model Frequently Asked Questions” includes questions regarding the PIPR. If you do not see an answer to your specific question, please email the HHVBP Model Help Desk at HHVBPquestions@lewin.com.

If you experience an issue with accessing resources on the Expanded HHVBP Model webpage, first try refreshing the webpage. If that does not work, please try closing and reopening the browser. If you continue to experience issues, please try clearing the cache/cookies—links to instructions are below.

Locating the PIPR in iQIES

Log into iQIES at iqies.cms.gov.
Select the My Reports option from the Reports
From the My Reports page, select the HHA Provider Preview Reports
Select the HHVBP file to view the desired report. To quickly locate the most recently published report, select the down arrow adjacent to the Created Date label at the top of the table. This will order the reports in the folder from newest to oldest.
Select the file name link and the contents of the file will display.

Help Desk Information

Should you experience difficulty locating the HHVBP file or with downloading, please contact the iQIES Help desk staff by email at iQIES@cms.hhs.gov or by phone at (800) 339-9313.

For questions about the content of the expanded HHVBP Model reports, please contact the HHVBP Help Desk staff by email at HHVBPquestions@lewin.com.

*Please include your name, agency name, and the CCN when contacting the help desks.

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©2023 by The Rowan Report, Peoria, AZ. All rights reserved. This article originally appeared in The Rowan Report. One copy may be printed for personal use: further reproduction by permission only. editor@therowanreport.com

Bi-Partisan Congressional Committees Demand CMS Administrator Repay Misspent Funds

CMS

by Tim Rowan | Sep 16, 2020 | CMS, Regulatory

Bi-Partisan Congressional Committees Demand CMS Administrator Repay Misspent Funds

his month, two House committees and two Senate committees published a report of a joint investigation into Centers for Medicare and Medicaid Services Administrator Seema Verma’s spending of taxpayer funds. The complete 56-page report is available in our “Partner News” section in the footer of our web site. For convenience, we reprint highlights from the report’s Executive Summary here.

The House Committee on Energy and Commerce, House Committee on Oversight and Reform, Senate Committee on Finance Minority, and Senate Committee on Health, Education, Labor, and Pensions Minority (the Committees) conducted a year-long investigation into Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma’s use of taxpayer funds to retain communications consultants with strong Republican political ties.

The Committees’ investigation shows that Administrator Verma and her top aides abused the federal contracting process to stock CMS with handpicked Republican consultants who billed the government hourly rates of up to $380. In less than two years, Administrator Verma’s consultants charged CMS nearly $6 million for work that included boosting her public profile and personal brand, serving as her preferred communications advisors, arranging private meetings for her with media personalities and other high-profile individuals, and routinely traveling with her to events across the country. By retaining these consultants, Administrator Verma misused funds appropriated by Congress, wasting taxpayer dollars intended to support federal health care programs.

The evidence obtained by the Committees expands on the findings of a recent audit conducted by the Department of Health and Human Services (HHS) Office of Inspector General (OIG) and demonstrates that Administrator Verma’s expenditures potentially exceeded the scope of CMS’s authority under the applicable appropriations. Congress appropriated taxpayer funds to CMS to ensure that Americans have access to and are aware of opportunities to enroll in federal health care programs, including Medicare, Medicaid, and the Affordable Care Act. Congress did not intend for Administrator Verma or other senior CMS officials to use taxpayer dollars to stockpile CMS with handpicked consultants or promote Administrator Verma’s public profile and personal brand. Given the reckless disregard she has shown for the public’s trust, Administrator Verma should reimburse the taxpayers for these inappropriate expenditures.

During the course of the investigation, the Committees obtained tens of thousands of pages of documents from HHS and private parties, conducted interviews and briefings with employees and executives from two of the consulting firms used by CMS, and collected additional information from databases, court records, and press reports, among other sources. The Committees’ investigation shows:

- Administrator Verma and her top aides misused federal contracts CMS held with consulting firms to bring handpicked Republican communications consultants into CMS operations.

- Administrator Verma and her top aides built a shadow operation that sidelined CMS’s Office of Communications in favor of the handpicked consultants.

- Consultants — particularly Pam Stevens — worked to promote Administrator Verma’s public profile and personal brand beyond her role as CMS Administrator, while also expanding the Administrator’s network.
- Administrator Verma’s consultants charged CMS nearly $6 million in less than two years.

- After CMS issued a stop-work order in April 2019, consulting firm Porter Novelli continued working for CMS under other task orders to pitch profile pieces on Administrator Verma to media outlets, including lifestyle magazines targeted in Pam Stevens’s Executive Visibility Proposal.

OIG issued an audit on July 16, 2020 (OIG Audit) containing findings consistent with the Committees’ investigation and concluding that CMS violated federal contracting requirements. The OIG Audit, which was requested by the Committees, found:
- - Administrator Verma and senior CMS officials allowed consultant Marcus Barlow to perform inherently governmental functions, such as making managerial decisions and directing CMS employees, thereby violating the Federal Acquisition Regulation (FAR).
- - CMS improperly administered certain contracts it held with consulting firms as personal services contracts. In doing so, CMS officials exerted a level of control over the consultants’ work that created an improper employer-employee relationship, exceeding what was permissible under the contracts.
- CMS did not comply with the FAR and other federal requirements in managing contract deliverables, approving the use of a subcontractor, maintaining complete working files, and paying questionable

©2020 by Rowan Consulting Associates, Inc., Colorado Springs, CO. This article originally appeared in Home Care Technology: The Rowan Report. Click here to subscribe. It may be freely reproduced provided this copyright statement remains intact. editor@homecaretechreport.com

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