Officials undermine

Clashes among top HHS officials undermine Trump agenda

Alex Azar and Seema Verma spar over Obamacare replacement plan, staffing and who gets credit for major initiatives.

By RACHANA PRADHAN, ADAM CANCRYN and DAN DIAMOND

President Donald Trump’s health secretary, Alex Azar, and his Medicare chief, Seema Verma, are increasingly at odds, and their feuding has delayed the president’s long-promised replacement proposal for Obamacare and disrupted other health care initiatives central to Trump's reelection campaign, according to administration officials.

Verma spent about six months developing a Trump administration alternative to the Affordable Care Act, only to have Azar nix the proposal before it could be presented to Trump this summer, sending the administration back to the drawing board, senior officials told POLITICO. Azar believed Verma’s plan would actually strengthen Obamacare, not kill it.

Behind the policy differences over Obamacare, drug pricing and other initiatives, however, is a personal rivalry that has become increasingly bitter. This fall, Azar blocked Verma from traveling with Trump on Air Force One from Washington to Florida in early October for the unveiling of a high-profile Medicare executive order — an initiative largely drawn up by Verma's agency — said six officials with knowledge of the episode, which played out over days. Only after Verma complained to White House staff was she allowed on Trump’s plane, according to seven people familiar with the situation. HHS disputed the account, saying that the White House had identified space limitations on the plane.

Azar is a Cabinet secretary who oversees the 80,000-person Health and Human Services department, while Verma runs the Centers for Medicare and Medicaid Services, which administers Medicare, Medicaid and Obamacare and accounts for the lion's share of the overall HHS budget. That often affords the CMS administrator outsize autonomy and public visibility.

Before joining the administration, Azar and Verma were both based in Indianapolis, where the state's political and policy circle is so tight-knit that their children even attended the same school. While Vice President Mike Pence was governor of Indiana, Azar was a senior executive at the drug company Eli Lilly and developed ties with Pence. Verma was Pence's health care consultant, drafting his conservative overhaul of Medicaid. But despite their overlapping connections, the two are not personally close, officials said.

The rift that has emerged between Azar and Verma over the last several months is deep, according to interviews with more than a dozen current and former officials at HHS, CMS and the White House, who requested anonymity to describe sensitive inner workings of the administration. Privately, Azar's and Verma's camps are pointing the finger at one another. Disclosures about Verma’s extensive use of highly paid outside consultants to raise her personal profile have exacerbated the tensions.

Time that could and should be spent on policy issues and advancing Trump's health agenda is instead being consumed by disputes, officials said.

"The amount of time spent dealing with things like this, and having to have these fights and have these issues, are time that could've been spent thinking of better drug pricing proposals or other ways to advance parts of the agenda,” said one health care official close to the situation.

An Azar spokesperson said any suggestion about tensions between him and Verma was "absurd."

"As the head of the Department, which includes CMS as an agency, Secretary Azar is working positively and productively with all operating and staff divisions to advance the President’s agenda and deliver real results for the American people," said HHS spokesperson Caitlin Oakley.

A spokesperson for CMS did not directly respond to questions about the pair's working relationship.

“Under the president’s bold leadership to put patients first, CMS has a record number of initiatives aimed at transforming the health care system to deliver access to low cost, high quality care and improved health outcomes for all Americans," the CMS spokesperson said. "Advancing the president’s health care agenda is the Administrator’s number one priority and focus.”

An HHS spokesperson denied that the secretary tried to block Verma from joining Trump's flight last month. The spokesperson said Azar's chief of staff had in fact approved Verma to go on Air Force One for Trump's Medicare announcement, but the White House said there was no longer room for her because Trump would be taking a smaller plane to Florida than planned.

The White House declined to comment.

Given the organizational relationship between HHS and CMS, some friction between the two offices isn’t unusual. However, officials familiar with the workings of previous administrations described an atmosphere of discord among the top two health appointees unlike anything seen in recent years.

Several said Azar and his top aides have worked to shut out Verma from the department's decision-making in an effort to minimize her influence. At the same time, Verma has frustrated senior HHS officials who believe she is overly concerned with building up her public profile. Those suspicions were heightened earlier this year after POLITICO first reported Verma directed a multi-million-dollar federal contract to outside communications consultants, circumventing her agency’s own extensive communication staff, in part to boost her personal brand.

Azar’s and Verma’s aides have dueled over who takes high-profile speaking engagements, how to announce agency priorities and who gets to decide personnel matters such as promotions and the hiring of top aides. In one particularly intense episode last month, the health department scrambled for days to arrange an announcement on a major rollback of regulations for health care providers after infighting over who would get the spotlight, said three people who were familiar with the planning for the event.

In the Trump administration’s early days, Verma clashed with Azar’s predecessor, Tom Price, who resigned in 2017 after a scandal over his use of private planes for official business, multiple officials recalled. A spokesperson for CMS said Verma and Price had a "fine working relationship" that helped advance Trump's agenda.

The tensions between Azar and Verma blew up this summer after Verma — in an Oval Office meeting with senior administration officials, including Azar and Trump — criticized a major drug pricing proposal Azar had been pushing for months, said three officials with knowledge.

In doing so, Verma sided with White House officials, including domestic policy chief Joe Grogan, who have challenged Azar on several major policy debates, including the administration's position on a high-profile lawsuit that could strike down the entire Affordable Care Act. The White House ultimately shelved the drug plan, aimed at lowering out-of-pocket costs for some seniors, over fears it would drive up both Medicare premiums in 2020 and government spending.

Around the same time, Verma was finalizing an Obamacare replacement proposal that would have created new subsidies for coverage options that the administration has long opposed. Azar and other senior officials worried that Verma's plan would drive people away from the cheaper but less robust health insurance options the White House had crafted over the previous two years. The proposal's $1 trillion price tag was also a nonstarter.

"That was simply not acceptable to HHS and the White House team," said one senior administration official, calling the proposal a "disastrous plan" that was killed before Trump could be formally briefed. The official also said Verma had failed to collaborate with Azar. "She was absolutely freelancing."

A White House official rejected that characterization. “The CMS administrator is following the president’s directive in full coordination with HHS and the White House and is not freelancing,” the official said. A spokesperson for CMS said that Verma "has been working closely and diligently with senior officials from the White House and [HHS] to deliver a health care plan that keeps what works and fixes what doesn’t." HHS declined to comment.

Yet multiple administration officials said the conflict between Azar and Verma had been building before then.

Verma was often mentioned as a potential successor as HHS secretary following Price's fall 2017 resignation. But Trump nominated Azar for the role that November, and he was confirmed in January 2018. Since then, the two have competed over which would get credit from Trump for advancing his health policies.

Verma has worked to put her stamp on policies seen as undermining Obamacare — a program she directly oversees — and spearheaded the Medicaid program’s first-ever work requirements, which so far have been struck down in the courts. She’s become the administration’s most visible critic of Democratic health care plans like “Medicare for All."

Before joining Eli Lilly, Azar was the top HHS lawyer and then the deputy secretary in the George W. Bush administration. He was brought into Trump's HHS because of his reputation as an able administrator who could establish order to the department after Price stepped down.

In working to maintain Trump’s favor, both Azar and Verma have faced ongoing challenges. The mercurial president is eager to tout major accomplishments on health care — and undercut a traditional political strength for Democrats — but has little patience for the glacial pace of making federal policy.

Azar has taken a hard line on some culture war issues important to Trump’s evangelical base, like the ban on federal Title X family planning dollars to abortion providers, but has largely avoided tangling with Democratic critics to the extent Verma has. He's also played a prominent role in some of the administration’s bipartisan health initiatives, such as trying to eradicate HIV transmission and overhauling care for kidney disease.

Azar has been particularly focused on forging a close relationship with Trump — privately vowing to have “no daylight” with the president. That’s even meant reversing his opposition to importing cheaper drugs from Canada, a policy priority for Trump that Republicans have traditionally viewed skeptically and Azar just last year dismissed as a “gimmick."

Verma, though nominally Azar’s deputy, has cultivated her own line to the White House and become a favorite of senior officials as a prominent woman in the administration who readily attacks Democratic health policies, aiding Trump’s efforts to cast their ideas as extreme.

Several officials say Azar and his top aides have made changes within the department meant to marginalize Verma, exercising greater control over her public appearances and staffing decisions.

Azar in recent months has required that senior CMS officials report directly to him or his aides. In some instances, Verma has been excluded from internal policy meetings her subordinates have attended, four officials said.

"A lot of this is sort of, 'Just remember, we are in charge,'" said one official. "It's not so subtly making that point over and over."

Last month, the two officials sparred over the announcement of a plan to help health care providers better coordinate patient care. When Azar heard that Verma was set to lead the announcement, he insisted on being included, said three individuals with knowledge of the discussions. The White House then pushed to be included in the rollout as well, prolonging an agency turf war by days.

Health officials eventually agreed to make the announcement in stages. Azar and Verma would brief reporters on a phone call, and Verma — accompanied by HHS Deputy Secretary Eric Hargan and Grogan — the next day would make an in-person announcement at a health industry association in Minnesota.

But that second part of the plan was scuttled after HHS aides realized the industry-hosted event could expose the health department to ethical risks. That forced a scramble to find a new location — a Mayo Clinic satellite facility — just hours ahead of the major announcement and after invitations had already gone out.

An HHS spokesperson said the secretary had been involved in the rollout from the start.

Azar aides have also intervened in CMS personnel decisions to a degree that three current administration officials described as highly unusual.

In one case that illustrates the tensions, top HHS officials over a year ago encouraged Verma to hire Paul Mango, a former Republican gubernatorial candidate in Pennsylvania, to run CMS’ daily operations as her chief of staff and principal deputy administrator. Then, in July, Azar plucked Mango from CMS and gave him a top role at HHS — without consulting Verma. She didn’t find out until Mango told her less than an hour before the move was announced publicly, two officials said.

Verma spent the following months without an official chief of staff, largely because HHS officials hadn’t signed off on giving that role to Brady Brookes, a former aide to Pence who had been Verma’s right hand for months. She was formally approved for the job last week.

CMS has encountered similar roadblocks trying to make acting Medicaid director Calder Lynch the program’s permanent leader, officials said. He enjoys wide support in the agency.

In other instances, Azar has established a direct line with Verma’s top aides to advise him on major policy efforts. Shortly after Verma hired Adam Boehler to run CMS' innovation center last year, Azar tapped him to serve simultaneously as a senior HHS adviser on value-based care.

Azar also asserted his authority over John Brooks, a senior CMS official overseeing Medicare, who simultaneously became a senior adviser to Azar on drug pricing.

In another case earlier this month, Azar’s top aides told Alec Aramanda, the top CMS liaison to Capitol Hill, that he would report directly to Azar's staff instead of Verma, although CMS has its own legislative division, three officials said.

Officials said the confusion over who reports to whom undermines the administration’s work. Without a clear chain of command, the policy making process can be easily scrambled and break down.

"It just makes it so much harder, and our jobs are hard enough already," one official said. "I don't see what the net positive outcome is."

An HHS spokesperson defended Azar, saying, "The secretary believes firmly in one goal and one team and put these reporting structures into place to better communicate and operationalize subject-matter experts to work on implementing the president's agenda at HHS."