Fischmann, Elizabeth (HHS/OGC)
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Fischmann, Elizabeth (HHS/OGC)
Tuesday, March 14, 2017 1:18 PM
Verma, Seema (CMS/OA); Brookes, Brady (CMS/OA)
Benson, Paul-Jon (HHS/OGC)
authorization for conference call

Under 5 C.F.R. 2635.502, Ms. Verma is subject to recusal requirements for specific party matters in which the states of
Arkansas, Indiana, Iowa, Kentucky, Ohio, South Carolina, or Virginia are parties or represent parties. In light of the
factors provided at 5 C.F.R. 2635.502(d), I am authorizing her participation as CMS Administrator in the conference call
and meetings with state governors occurring today, Tuesday, March 14, 2017. The nature of the conference call and the
factors,. considered together, would not lead a reasonable person.to question Ms. Verma's impartiality-in.this matter.
Elizabeth J. Fischmann

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THE SECRETARY OF HEALTH AND HUMAN SERVICES
WASHINGTON, O.C. 20201

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TO:

Seema Verma, Administrator, Centers for Medicare & Medicaid Services

FROM:

Thomas E. Price, M.D., Secretary, Department of Health & Human Services

SUBJECT:

Limited Authorization to Participate in Matters Involving Former State
Government Clients

The purpose of this memorandum is to authorize you, pursuant to 5 C.F.R. § 2635.502(d), to
participate in specific-party matters where the States of Arkansas, Indiana, Iowa, Kentucky,
Ohio, South Carolina, or Virginia is a party, or represents a party, to a matter. These state
governments were previously your clients through your consultancy, SVC Inc. After weighing
the factors articulated in section 502(d), and consulting with the Designated Agency Ethics
Official for the Department, I have determined that the governmental interest in your
participation in these specific party matters outweighs any countervailing appearance concerns
and authorize your participation in these particular matters as described in more detail, and
subject to the limitations, below.
AUTHORIZATION LIMITATIONS
You remain subject to the application of the prior employer and prior client recusal requirements
of 5 C.F.R. § 2635.502 with respect to matters involving prior employers or clients other than the
States of Arkansas, Indiana, Iowa, Kentucky, Ohio, South Carolina, or Virginia; thus, you would
still have a recusal requirement from matters involving SVC Inc. and any other clients for whom
you provided services. 1 Regarding Indiana, Kentucky and Iowa, you indicated that you worked
personally and substantially on the Medicaid Section 111 S(a) Waivers for newly eligible adults
in Indiana and Kentucky as well as the managed care waiver for Iowa. Given your involvement
with these specific party matters, you raised concerns that a reasonable person might question
your impartiality on these sensitive matters. Under these circumstances, I have determined that
this authorization does not apply to any specific party matters related to the Indiana, Iowa, and
Kentucky waivers on which you personally worked. Additionally, this limited authorization
does not affect your ongoing recusal obligation arising from your spouse's financial interests,
including his financial interest in the Indiana Health Group. Finally, this limited authorization
does not affect your obligation otherwise to comply with all other provisions of the Standards of
Conduct for Employees of the Executive Branch and the HHS Supplemental Ethics Regulations.
1

Please note that the Ethics Pledge (Executive Order 13770) separately requires recusal from specific party matters
involving a fonner employer or fonner clients to whom you provided services in the two years prior to your
appointment. This recusal obligation extends for two years from the dale of your appointment However, state and
local governments, as former employers or clients, are excluded from the restrictions of the Ethics Pledge under Sec.
2(j) and controlling Office of Government Ethics guidance (00-09-011).

 Page 2 - Seema Verma

BACKGROUND
On March 13, 2017, you were confirmed as the Administrator for the Centers for Medicare and
Medicaid Services (CMS) within the Department of Health and Human Services (HHS). CMS
oversees the federal government's Medicare and Medicaid programs, which provide healthcare
to almost one in every three Americans. Medicare provides health insurance to more than 55.5
million elderly and disabled Americans. Medicaid, a joint federal-state program, provides health
coverage for some 69 million low-income persons, including 24 million children, and nursing
home coverage for low-income elderly. CMS also oversees the State Children's Health
Insurance Program (CHIP) that covers more than 8.4 million children.
As Administrator, you are responsible for directing the implementation of the Administration's
policies for health care reform at CMS, including health care financing programs and health care
policies more generally. Your duties include establishing overall program goals and objectives
and developing policies and standards to accomplish these goals. You are responsible for the
development and implementation of health quality and safety standards, including evaluation of
their impact on utilization, quality, and cost of health care services. You manage the
development of methods, systems, procedures and specifications for Medicare claims processing
and improvement to program management. Finally, you have overall responsibility for the
developm~nt, coordination, evaluation, review and promulgation of CMS policy related to
eligibility, coverage of benefits, and reimbursement under the jurisdiction of CMS.
During the one year period immediately preceding your appointment, you provided consulting
services to the States of Arkansas, Jndiana, Iowa, Kentucky, Ohio, South Carolina, and Virginia
through SVC Inc. concerning these states' Medicaid programs and health care policies. You
provided support on Medicaid reform programs including waivers and coverage expansion under
the AffordabJe Care Act (ACA). More specifically, you were the architect of the Health Indiana
Plan (HIP) and HIP 2.0, a consumer directed Medicaid program. You aided Indiana in
impJementing legis]ation, developing the federal waiver, and supporting federal negotiations in
implementation of this plan.
While the majority of your work as CMS Administrator is at a policy-setting level, you may
become involved in particular matters involving specific parties, including your former state
clients. To effectively carry out your function as CMS Administrator, you will necessarily work
with states, other HHS and federal agencies, and non-governmental organizations and industry
stakeholders in administering CMS programs. These contacts may occur as a larger meeting that
may not be considered a particular matter involving specific parties, or as one-on-one or small
group meetings or conversations that would be a party matter. It is also possible that you may be
asked to participate in the approval of state Medicaid waivers or other particular matters
involving one of your former clients that would affect only that particular client, as opposed to a
policy that would affect all of the 50 states.

 Page 3 - Seema Venna
ANALYSIS OF FACTORS UNDER THE ETHICS STANDARDS
Under the Standards of Ethical Conduct for Employees of the Executive Branch, a federal
employee may not participate in a particular matter involving specific parties if one of the parties
is, or is represented by, an entity with which the employee has a .. covered relationship" and
where the circumstances would cause a reasonable person to question the employee's
impartiality in the matter. "Covered relationships" include persons or entities for which the
employee has within the last year served as an employee or consultant. See 5 C.F.R.
§ 2635.502(b)(l)(iv}. This requirement of disqualification only applies to "particular matters
involving specific parties" and not to "particular matters of general applicability" or broad policy
matters. It applies, for example, to litigation, grant awards, contracts and other matters involving
a specific request, detennination or ruling, but not to legislation or regulations that might affect
an entity as part of a group. When an employee's participation in a particular matter involving
specific parties gives rise to a concern about the employee's impartiality in the matter, the
employee may be authorized to participate in the matter if the federal government's interest in
the employee's participation outweighs the concern of a potential appearance of a lack of
integrity in the agency's program and operations. See 5 C.F.R. § 2635.502(d).
You served as a consultant for the States of Arkansas, Indiana, Iowa, Kentucky, Ohio, South
Carolina, and Virginia within the last year. As such, you have a covered relationship with these
states. Furthermore, because you recently provided services to these scates (including states'
departments, agencies and/or instrumentalities) on issues that overlap with your current position,
a reasonable person could question your impartiality in matters involving these states.
Therefore, you are disqualified- for one year from your last date of service to a state - from
participating in any particular matter in which that state is a party, unless I first authorize your
participation after determining - in light of all the circumstances - that the interest of the
government in your participation outweighs the concern that a reasonable person may question
the integrity of the programs and operations of the HHS.
The ethics regulations provide that I may consider the following factors in determining whether
to authorize your participation:

Nature of tl1e relationship. You provided consulting services for the stales listed above on those
states' Medicaid programs, Medicaid waivers, and public health policy initiatives. These state
clients accounted for seven of your approximately 14 clients. Moreover, since you had multiple
similarly situated state clients, it seems less likely that you would favor any particular one over
another. You are no longer consulting or in any other way continuing a relationship with those
state clients and have, in fact, severed your relationship with your prior consulting firm,
removing even an attenuated relationship to those clients. Likewise, you have no personal
financial ties to these states.
Effect of the matter on the finances of the States. As CMS Administrator, you are likely to
participate in matters that are of significance to the states' financial interests. As stated above,
you have broad responsibilities regarding the policies and operations of CMS, some of which are
sure to affect budgets and resource allocation of all states. While the Administrator's duties
primarily focus on policy matters, it is possible that you will be asked to participate personally

 Page 4 - Seema Verma
and substantially in specific party matters that affect the financial interests of states for whom
you had previously consulted. For instance, you may be asked to offer advice or direction in the
review of a state's application for a Medicaid waiver, which would directly affect that state's
budget, resource allocation and whether it receives federal Medicaid funds. Inasmuch as your
participation in a specific party matter is an application of or is concerned with departmental or
Administration policy, it would be unlikely that such application of policy would favorably
advantage any particular state and would rather be presumed to have equal application to all
similarly situated states. Furthermore, the financial effect of any specific party matters involving
states in which you are likely to participate is not particularly significant relative to the financial
effect of your policy work, which would have an equal effect across all states.

Nature and importance ofyour role. You are the Administrator for CMS, a presidentiallyappointed Senate-confirmed (PAS) position, one of only 19 at HHS and the only PAS for CMS.
As stated above, one of your primary responsibilities wi11 be overseeing the implementation of
the Administration's policies for healthcare reform and its health care policies more generally.
As the top political appointee at CMS, it is imperative that you be able to effectively work with
representatives from rill 50 states during implementation of the expected health care reforms and
other matters as such sweeping changes to the healthcare system will profoundly affect all
citizens of the United States.
While you will have considerable authority as the Administrator, your role will chiefly involve
setting of departmental policy, although you might be called upon to attend meetings or weigh-in
on decisions that involve one or several of your previous state clients. Nevertheless, these
decisions will be made in consultation with your staff and other stakeholders.

Sensilivily of llie maller. CMS oversees a budget of roughly $980 billion dollars, with
Medicare, Medicaid, and CHIP affecting the lives of over 100 million Americans. Furthermore,
the work of CMS affects aU Americans through its impact on the health insurance system and
understandably receives considerable attention from the public, press, and politicians. It is
bordering on a truism that the American healthcare system is full of sensitive matters. Your
involvement in specific party matters affecting the states you previously consulted may range
from the routine to the significant, but even otherwise routine matters elevated to the
Administrator's attention can, by that fact alone, be classed as sensitive.
Difficulty ofreassignilig llie maller. You have significant experience in implementing reforms
in state Medicaid policy. Your prior work has given you a broad understanding of and expertise
in state-level health policy. A central responsibiHty of the CMS Administrator is developing an
effective working relationship with all health policy stakeholders, including the state
governments, to ensure that CMS and HHS are receiving meaningful input from all 50 states and
that the citizens of each state are afforded the opportunity to address the federal government on
matters under the jurisdiction of CMS. To deny access to the CMS Administrator on such issues
would unduly disadvantage the citizens of your former state clients. Given your expertise, the
Administration's interests in having an experienced Administrator in charge of the
implementation of its policies, and to not unduly disadvantage Americans Ii ving in the states to
which you formerly provided consulting services, it is critical that you are able to effectively

 Page 5 - Seema Verma
work with representatives from all states to advance health care in the U.S. Such activity cannot
be reassigned; as such responsibilities are central to your function.

Adjustments to your duties. Because of your unique knowledge of state-level Medicaid and
health policy, as weH as the responsibilities conferred upon you as the CMS Administrator, it
would be both difficult and impractical to adjust your job duties. As stated above, you were
appointed because of your familiarity and experience in this area and to implement the
Administration's policies. Unlike the recusal you are under for particular matters that affect your
spouse's financial interests, it would be insurmountably difficult to carve-out matters that
affected more than a tenth of U.S. states. Moreover, such a recusal again would disadvantage the
citizens of your former state clients inasmuch as non-client states could both rely on and benefit
from your involvement in matters and provide input into development of CMS po1icies for their
respective citizens.
DECISION
Based upon my determination, made in accordance with 5 C.F.R. § 2635.502(d), that, in light of
all the circumstances, the interest of the government in your participation in specific party
matters involving the States of Arkansas, Indiana, Iowa, Kentucky, Ohio, South Carolina, or
Virginia as a party or party representative outweighs any concern about a potential appearance of
lack of integrity, therefore the limited authorization as described above, and subject to the
limitations above, is granted.

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cc:
OGC/Ethics Division
CMS Deputy Chief of Staff