Administrator of the Centers for Medicare and Medicaid Services Seema Verma speaks at the White House on June 15.

Administrator of the Centers for Medicare and Medicaid Services Seema Verma speaks at the White House on June 15. Evan Vucci/AP

Medicare Agency’s Contracting Violations Show Need for Pandemic Oversight

Experts say HHS inspector general’s findings should serve as a warning about potential waste, fraud and abuse.

An inspector general’s report earlier this week that found the Centers for Medicare and Medicaid Services violated federal contracting rules between 2017 and 2019 to award lucrative contracts to politically-connected PR firms reinforces the need for strong oversight of pandemic-related spending, independent watchdog groups said. 

On Thursday, following a 15-month audit of three contracts for “strategic communication services,” the Health and Human Services Department IG released a report detailing how CMS administrator Seema Verma  steered contracts valued at $6.4 million to consultants with whom she had prior relationships. “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,” Politico reported

CMS, a division of the Health and Human Services Department, is the fourth largest government contract spender and is the top spender on coronavirus-related contracts. As of Friday, the federal government as a whole has committed to 8,698 contracts, valued at more than $18 billion, according to ProPublica’s live tracker. 

Donald Sherman, deputy director of the watchdog group Citizens for Responsibility and Ethics in Washington, said, “This report reinforces the need for Acting IG [Christi] Grimm's experienced independent oversight at HHS, especially as the president's appointees try to exploit the coronavirus pandemic for their own purposes."

Watchdog Accountable.US president Kyle Herrig said the report “confirms what we already suspected.” He called on Congress to take up more oversight of CMS and HHS to make sure that “public health, not personal gain” is guiding the government’s decision-making process during the ongoing pandemic. 

Top Democratic House and Senate members said on Thursday they soon would be releasing the results of their own investigation into CMS spending on communications consultants that will build on the IG’s report. 

Scott Amey, general counsel for the watchdog group Project on Government Oversight, said the IG report raises legal and ethical concerns. Standards from the Federal Acquisition Regulation should be applied in a “normal year” in which the government spends over $500 billion and, even more so, with the additional approximate $3 trillion in pandemic spending now, he told Government Executive. In a recent report, Bloomberg Government predicted that contract spending could top $600 billion in fiscal 2020 based on allocated appropriations. That calculation didn’t include what is likely to be significant additional spending under the $2.2 trillion CARES Act. 

“There’s a lot of money that’s being spent and there’s a lot of money being spent quickly and that can be a recipe for waste, fraud and abuse,” Amey said. The Pandemic Response Accountability Committee, one of the oversight bodies established by the CARES Act, is focused on just that. Last month, it launched an online tool to track federal contract spending related to the pandemic. 

“Just because you’re a senior-level agency official and you may have friends that can provide goods and services to the federal government, that does not excuse the fact that there are established contracting rules on the book that safeguard taxpayers,” said Amey. “Those rules need to be followed.”