HHS 1997: HMOs Can Inform Customers About Healthcare Legislation

By Noel Sheppard | September 24, 2009 | 17:53

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As outrage builds concerning the Department of Health and Human Services' gag order preventing private health insurance companies from communicating to their Medicare Advantage customers how pending legislation could impact them, a July 1997 letter from the Director of the HHS's Center for Health Plans and Providers claimed such an edict "would violate basic freedom of speech and other constitutional rights of the Medicare beneficiary as a citizen."

As the Media Research Center's Brent Bozell on Thursday demanded news outlets investigate this gag order or appear as if "they approve of government censorship," one can hope this July 1997 correspondence from Bruce Merlin Fried will become a pivotal piece of the puzzle.

Such seems especially important as Fried was the Chief Coordinator of the 1992 Clinton/Gore Campaign's Health Care Advisory Group, and later was a member of the President's Transition Health Policy Team.

With that as pretext, here's the money section of his July 10, 1997, letter to Wendy Krasner of the law firm McDermott, Will & Emery:

A related question could be: "Do any other requirements, for example the prohibition against distributing marketing material that is inaccurate, misleading, or that misrepresents the HMO/CMP, its marketing representatives, or HCFA, prohibit an HMO from informing its members of proposed legislation and exhorting them to express their opinions?" While it may be difficult for a reviewer to ascertain whether or not the information about legislation, for example contained in a member's newsletter issued by an HMO, is accurate and without a slant or unrevealed self-interest, we believe that prohibiting such information would violate basic freedom of speech and other constitutional rights of the Medicare beneficiary as a citizen. As long as member materials that discuss the rights and responsibilities of the member and the HMO with regard to HMO membership are not misrepresented in the context of this article, we see no reason for prohibiting the distribution of information.

For some further background on the author of this letter, here's Fried's bio at his current employer's website:

Mr. Fried has more than thirty years of experience in health care law and policy, both in the public and private sectors. He served as the Health Care Financing Administration's (HCFA, now CMS) Director of the Center for Health Plans and Providers where he was responsible for policy and operations for the Medicare program. Prior to that, Mr. Fried was Director of HCFA's Office of Managed Care where he managed the rapid growth of the Medicare managed care program.

Prior to joining the government, Mr. Fried was Vice President of Federal Affairs at FHP International Corporation, then one of the nation's largest managed care organizations.

Mr. Fried served as Chief Coordinator of the 1992 Clinton/Gore Campaign's Health Care Advisory Group. After the election, he was a member of the President's Transition Health Policy Team.

So, a former Clinton administration advisor in 1997 believed that HMO's had the right to contact their Medicare customers about pending healthcare legislation as long as the information being provided was not a misrepresentation.

According to Thursday's Wall Street Journal, the Congressional Budget Office supports the information contained in letters HHS demanded Humana stop sending to its customers:

Maybe Senate Finance Chairman Max Baucus should put a gag order on Douglas Elmendorf too. On Tuesday, the Congressional Budget Office director told Mr. Baucus's committee that its plan to cut $123 billion from Medicare Advantage—the program that gives almost one-fourth of seniors private health-insurance options—will result in lower benefits and some 2.7 million people losing this coverage.

Compounding matters further, Roll Call revealed Wednesday that the man in the middle of this growing controversy is a former aide to Baucus as well as a healthcare advisor on President Obama's transition team:

Jonathan Blum, the administration official at the center of a growing flap over alleged efforts to “muzzle” insurance companies critical of Democratic health care reform efforts, is a former senior aide to Senate Finance Chairman Max Baucus (D-Mont.) — who originally asked the Centers for Medicare and Medicaid Services to investigate the companies critical of his bill.
Blum, who worked on the Finance Committee on Medicare and Medicaid issues, was appointed by President Barack Obama as acting director of CMS’ Center for Drug and Health Plan Choices this spring. Prior to taking the directorship, he also acted as a health care policy adviser on Obama’s transition team.
Baucus had asked the CMS to investigate a mailer by insurance giant Humana to senior citizens the company insures. In the mailer, Humana warned that Democratic plans to reform health care could result in cuts to their benefits, a claim that Baucus argued was a disingenuous effort to scare seniors. At Blum’s direction, the CMS launched an investigation and sent Humana a letter warning the company to halt further mailings.

This has led the Republican leaders in the Senate to send the following letter to HHS secretary Kathleen Sebelius:

September 24, 2009

The Honorable Kathleen Sebelius
Secretary
Department of Health and Human Services
200 Independence Avenue, SW
Washington, D.C. 20201

Dear Secretary Sebelius:

America’s 11 million seniors enrolled in the Medicare Advantage program deserve to be informed of any potential actions that could be taken by the federal government that could have broad implications on the Medicare program. Medicare Advantage Plans and Prescription Drug Plans that provide services through the Medicare program have a constitutional right to provide information about these Medicare programs to their customers. Therefore, we hope you understand our grave concern with the recent Centers for Medicare and Medicaid Services directive barring all such providers from any and all communications of this kind with America’s seniors. This gag order must be immediately lifted.

As the Supreme Court has repeatedly recognized, our constitutional tradition is one of “a profound commitment to the principle that debate on public issues should be uninhibited, robust, and wide-open.” Health plans, of course, have the right to speak on matters of public concern, a fundamental principle that your department, until recently, recognized and respected. Specifically, the Department of Health and Human Services (HHS) had previously noted that there was no legal authority to justify prohibiting a health plan “from informing its members of proposed legislation and exhorting them to express their opinions” about it. In fact, HHS had previously determined that shutting down communication of this sort “would violate basic freedom of speech and other constitutional rights of the Medicare beneficiary as a citizen.”

Now, the Obama administration has reversed this longstanding HHS decision – in the midst of a critical debate about the future of health care services in our country – to shut down communication between private companies and America’s seniors on an issue that has a direct impact on their health care. Your department has done this by imposing an industry-wide gag order without apparent justification or basis in law, contradicting your past public guidance and the plain language and spirit of the First Amendment, among the most sacred tenets of our democracy.

America’s seniors and the health plans that serve them deserve to have their free speech rights respected. Their rights should not be subject to the whims of any administration, and the health plans that serve them should not be threatened with punishment if they speak out on a matter of public concern simply because the administration disagrees with their position.

Until your department rescinds its gag order and allows seniors to receive information about matters before Congress, we will not consent to time agreements on the confirmation of any nominees to your department or associated agencies.

Thank you for your consideration of this matter of such great importance to America’s seniors.

Signed,
Republican Leader Mitch McConnell
Republican Whip Jon Kyl
Republican Conference Chairman Lamar Alexander
Republican Policy Chairman John Thune
Vice Conference Chair Lisa Murkowski
NRSC Chairman John Cornyn
Ranking Member on Senate Finance Committee Charles Grassley
Ranking Member on Senate HELP Committee Mike Enzi