Holding the Government Accountable

Official Gets Waiver to Oversee Obamacare Contractor

A veteran of the health insurance industry has been granted a waiver to oversee his former company while he plays a leading role in the government’s efforts to implement Obamacare.

Andrew Slavitt stepped down this year as group executive vice president of Optum, a subsidiary of a major health insurer, UnitedHealth Group. In June, he was appointed to a senior position at the Centers for Medicare and Medicaid Services (CMS), which manages HealthCare.gov and other Obamacare initiatives.

Without a waiver, Slavitt would normally have to wait a year or longer before he could participate in CMS work that affects his former employer, according to federal ethics rules and the ethics pledge signed by Obama Administration appointees. But the government has decided to waive those rules for certain matters that are now under Slavitt’s official purview.

Slavitt’s waiver highlights the revolving door between the federal government and the private sector, and underscores the government’s continued reliance on industry experts to manage the rollout of Obamacare.

The Project On Government Oversight found the waiver posted on a government ethics website last week. The waiver says he can go to work immediately on “particular matters involving specific parties” such as HealthCare.gov contracts awarded to Optum and its subsidiaries. For instance, he can “participate in meetings where personnel from [his] former employer may be present to discuss technical issues or progress on existing contracts.” He can also “weigh in on or make decisions on policy matters or technical direction that could result in the necessity of [his] former employer having to perform additional compensated work under existing contracts.”

In addition, since Slavitt has severed all financial ties to his past firm, he can work more broadly on “particular matters of general applicability, such as regulation and policy determinations, that affect the healthcare-related industries in which [his] former employer operates,” the waiver says.

Slavitt’s former employer has a major stake in the implementation of Obamacare and HealthCare.gov. Since 2012, Optum has been a part of UnitedHealth Group, a giant insurance company that is offering plans on the Obamacare exchanges. In addition, Optum owns Quality Software Services, Inc. (QSSI), which has “worked with CMS since 2006 and is one of the many contractors currently working on the online health care marketplaces,” according to the waiver.

QSSI built some key components of HealthCare.gov, according to Slavitt’s testimony last year before the House Energy and Commerce Committee. The firm also played a critical role in testing and fixing the website after its error-riddled launch. Earlier this year, Optum/QSSI received a new contract to serve as a “senior advisor” to the site. Since 2006, QSSI has been awarded nearly $500 million in contracting dollars from CMS to work on HealthCare.gov and other projects, according to federal contracting data.

The waiver was signed by an ethics official from the Department of Health and Human Services who determined that Slavitt is uniquely qualified for his post.

“[Y]ou bring an exceptional blend of managerial experience, health care industry acumen, and hands-on experience from working for the systems integrator for healthcare.gov,” the ethics official wrote. “CMS attributes to you and your organization the marked improvement in coordination among the contractors working to repair the site in the midst of a challenging period.” The official concluded that Slavitt is the “most qualified Administration official to assist with health care reform efforts at CMS,” efforts that “go directly to the health and well-being of the American people and present the types of exigent circumstances that the waiver provision was designed to permit.” The official said he “consulted with the Office of the Counsel to the President concerning this waiver.”

Although the waiver allows Slavitt to interact with his former employer on certain issues, it says he must remain on the sidelines when other issues arise. As is often the case when the government hires industry professionals through the revolving door, Slavitt’s appointment poses a thorny problem. If he’s allowed to work too closely with the same firm that used to cut his paycheck, there are potential conflicts of interest. But if he has to recuse himself from too many agency decisions, it could limit his effectiveness as a public servant.

Slavitt’s waiver says he will be restricted from overseeing performance bonus or award fee decisions, payment disputes, and litigation related to his former employer’s HealthCare.gov contracts. In addition, he must wait at least two years before he can award a sole source contract to his former employer or evaluate its bids for new work under the existing contracts. (Just last week, CMS issued a solicitation for additional IT work on the Federally Facilitated Marketplace, which will operate in states that have opted not to build their own marketplace.) Those restrictions are put in place to “ensure the integrity of the procurement process and to avoid any appearance of special access or advantage for your former employer,” the waiver says.

Furthermore, while Slavitt can interact with his former employer on HealthCare.gov business, other matters are off-limits. “For example,” the waiver says, “you are precluded from…participating in a meeting with [UnitedHealth Group] staff regarding the administration of the Medicare Part D program in regard to prescription drug plans offered by a UHG subcomponent.”

Aaron Albright, a CMS spokesperson, said the agency has struck the right balance in managing Slavitt’s potential conflicts of interest.

“Andy Slavitt has taken all appropriate steps, such as severing financial ties with his former employer, which allow him to execute his duties as Principal Deputy and participate in broad policy matters, including those affecting the health care industry,” Albright said in a statement to POGO. “He will be recused, as appropriate, from participation in specific party matters, such as contracts or claims, involving his former employer. However, the terms of the limited waiver ensure that Andy will be able to continue to interact with all of the contractors as needed so the Marketplaces will be ready to enroll millions more Americans into quality, affordable coverage.”

But one Member of Congress questioned how the terms of the waiver will be enforced.

“The waiver still leaves a significant amount of responsibility with the employee regarding his former employer,” Senator Charles Grassley (R-IA), Ranking Member of the Senate Judiciary Committee, said in a statement to POGO. “It requires recusals in some areas but it’s unclear how the recusals will be enforced. Will the employee police himself, and if so, how are the recusals meaningful?”

“CMS needs to be forthcoming about how the recusals in this waiver will be enforced and whether it’s taking any other steps to prevent problems from conflicts of interests between the companies and CMS,” Grassley said.

Senator Grassley has also called on CMS to explain how it will mitigate potential conflicts of interest within UnitedHealth Group.

In a letter sent last month to CMS and UnitedHealth Group, Senator Grassley and Senator Orrin Hatch (R-UT), Ranking Member of the Senate Finance Committee, raised concerns about the news that Optum/QSSI had been named a senior advisor to HealthCare.gov. “Optum/QSSI will have access to a significant amount of data regarding highly sensitive aspects of [Federally Facilitated Exchanges] operations,” they wrote, noting that the firm has also obtained contracts to provide similar services to three state marketplaces (Maryland, Massachusetts, and Minnesota). Meanwhile, UnitedHealth Group, “one of the nation’s largest providers of health plans, is participating as an insurer in ten state exchanges...and may expand into the FFE Marketplace in 2015.” The Senators said they had “serious questions about any conflicts of interest that may exist” between UnitedHealth Group and its subsidiary.

Optum and QSSI did not respond to POGO’s request for comment. A spokesperson from UnitedHealth Group declined to comment.