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Health Care: The Unlobbyist’s Clinical Trial

Broad Scope of Burgeoning Industry Blurs Lines on K Street

Last July, former presidential contender and one-time Democratic National Committee Chairman Howard Dean visited the West Wing. At the time, he was a senior strategic adviser and independent consultant at the McKenna, Long & Aldridge lobbying and law firm, a position he still holds. Dean and five other people visited Nancy-Ann DeParle, then the director of the White House Office for Health Care Reform and one of the driving forces in the administration behind the health care overhaul enacted the year before. With him was a registered lobbyist from his firm along with industry executives from Colorado, New York and Massachusetts. They were there to discuss Medicaid.

The hospital executives wanted federal backing for their participation in a new demonstration project allowed under the 2010 law that would pay set fees for patient care rather than for specific medical services that patients receive — a system the executives argue would be more flexible and profitable.

The demonstration project as envisioned by the industry officials did not go forward, but each health system continued to pursue the idea individually. During the course of the next year, at least one health center represented in the meeting won hundreds of millions of dollars in funding to support its plans, according to participants and a review of federal announcements. Some are hoping for approval this month as individual demonstration projects through a new federal division created by the law known as the Center for Medicare and Medicaid Innovation.

Dean made five other trips to the White House between February 2009 and the end of last year, according to visitors’ logs made public this spring. But, despite his efforts to help clients woo the president’s top policymaking staff, he is not registered as a lobbyist. “I am not registered because I do not lobby,” Dean wrote in an email. When asked about meetings between federal officials and his clients, he said those were rare, “maybe three times in four years.”

Federal rules do not require consultants to register as lobbyists unless they spend at least 20 percent of their time working for a client in lobbying. That includes activities that contribute to lobbying, such as setting priorities among legislative issues, discussing which lobbyists to hire, working with advocacy coalitions or designing lobbying strategies. The American League of Lobbyists has recommended changes that would require registration for any outside consultant who makes one lobbying contact for a client.

Across Washington, D.C., all manner of players in the health care arena have long employed legions of consultants who say they’re not spending enough time making arguments directly to lawmakers or administration officials to meet the definition of lobbyist. Their number is expected to increase as more groups try to decipher the health care law. Regardless of how the Supreme Court rules this month on the constitutional challenge to the law, a wide array of medical providers, insurers, drug and device manufacturers, consumer groups, state officials and employers will need guidance in understanding the effect and strategizing about how to influence the next steps.

‘Swarming to the Issue’

The reasons former government officials would look to health care as a lucrative opportunity are clear. The sector is huge, with projections showing it will grow from about 18 percent of the national economy now to almost 20 percent by the end of the decade. The industry is undergoing enormous change with the implementation of the health care law, which, if upheld, will dramatically reshape the health care system in the next 18 months. But people affected by the changes also face uncertainty: The court is considering whether to strike down all or at least part of President Barack Obama’s signature legislative achievement. And even if the entire law survives those legal challenges in the coming weeks, the election of Mitt Romney as president would assure a sustained Republican drive in Congress next year to repeal the statute and start over.

Dean may not be the most widely known health care consultant who has not registered as a lobbyist, nor the most active. Others include Tom Daschle, the former Senate Majority Leader and briefly Obama’s pick to be his first Health and Human Services secretary. The South Dakota Democrat has numerous industry clients whom he advises on how to operate in Washington, but he says he does not fit the criteria that would require him to register as a lobbyist. Daschle visited the White House nine times after his nomination was withdrawn, including a meeting identified as a private lunch with Obama two weeks before the health care law was signed.

On the GOP side, former Speaker and presidential contender Newt Gingrich ran a now-defunct health care think tank while hunting for clients in the industry, including General Electric, who wanted help with issues such as new rules and funding for health information technology in Medicaid and in Medicare, the federal program for seniors and people with disabilities.

After leaving the Senate and before running for president, Rick Santorum earned millions  of dollars as a consultant representing clients, including some in the health industry. His work with hospital management firm Universal Health Services also has drawn scrutiny. During his two terms as a Pennsylvania Senator, he often pushed for more Medicare and Medicaid spending for Universal-affiliated hospitals and companies, including some in Puerto Rico, as amendments to larger bills. After he lost in 2006, Santorum joined Universal’s board, receiving almost $400,000 in compensation and stock options. He also has as much as $250,000 in Universal stock.

he health care industry ranked as the highest-spending sector in reported lobbying expenses last year, according to the Center for Responsive Politics. It is unclear how much additional money is spent to pay unregistered health care consultants for strategic advice. “Given how much of Washington’s attention health care has consumed and continues to consume, and how much money is at stake, it’s likely that, just like their registered counterparts, shadow lobbyists are swarming to the issue,” said Bill Allison, editorial director at the nonprofit Sunlight Foundation, which calls for greater government transparency.

No Enforcement Mechanism

Advisers prefer to avoid registration for a number of reasons. Near the top of the list: Registered lobbyists must file quarterly reports detailing how much their clients paid them and the topics they oversaw.

Since the Obama administration changed executive branch ethics rules in 2009, consultants have had another important motivation to dodge registration. Registered lobbyists may not serve on any of the estimated 1,000 or so advisory committees that offer guidance to federal agencies. The administration said the rule change was part of a larger effort to reduce the role of special interests in policy decisions.

The role that advisory panels play in health care is significant, affecting everything from pharmaceutical patent protection in trade treaties to recommendations about whether a specific drug or device should be approved by the Food and Drug Administration.

ecause of the new restriction, many advisory committee panelists who previously lobbied have tried to limit their advocacy efforts to less than 20 percent of their work to avoid registering.

Some say the rule on advisory panels is counterproductive to their intended purpose of reducing the role of large stakeholders and bringing more voices into debates.

That’s because large trade associations have larger staffs than small nonprofits. Bigger organizations can more easily divvy up their lobbying duties, so people who want to serve on advisory panels can reduce their involvement to just below the 20 percent threshold that would require them to register as lobbyists. But smaller nonprofits may have only a couple of federal affairs staffers and would be unable to shift some of their lobbying to other employees to avoid registration.

Practically speaking, there’s no real enforcement mechanism to ensure that professionals who do not track their hours at work actually spend less than 20 percent of their time on lobbying.

‘Awesome Consulting Opportunity’

The scope of the health care law is so vast that even industry officials need a well-connected expert guide.

Medicare and Medicaid payments play a significant role in the type of treatments and providers that are rewarded. HHS also will provide billions in grants intended to improve the care that patients receive.

One area that many industry officials are interested in is the administration’s push to change Medicare and Medicaid payments so they will be based less on volume of service and more on medical outcomes. One example is a model of care known as “accountable care organizations” — a concept that lobbyists say could stand for “awesome consulting opportunity.”

Under the ACO approach, teams of medical providers coordinate the care of patients and share payments. If patients stay healthy and don’t need expensive follow-up treatment, then providers typically would get more money than under a fee-for-service system. Federal officials have put forward several projects involving ACOs.

The group that Dean advised is interested in a variation of the ACO idea that was included in the health care law with the support of Sen. John Kerry (D-Mass.). After the meeting, several of the executives were pleased with the reception they’d received. And although Dean did not label himself a lobbyist, the participants seemed to think of him that way, praising him for his deep involvement in representing them. The blurred lines of Dean’s professional title was underscored by an offhand comment from one out-of-town industry official in the White House meeting, Denver Health Medical Plan Medical Director David Brody. “Gov. Dean,” Brody said, “was our sort of lobbyist.”