Limited Waiver of Executive Order 13989 for Daniel Tsai

Memorandum for Daniel Tsai

From: /s/ Randall J. Hall, Designated Agency Ethics Officer, Department of Health and Human Services

Subject: Limited Waiver of Executive Order 13989 for Daniel Tsai

Date: November 3, 2022

Pursuant to Section 3 of Executive Order 13989 “Ethics Commitments by Executive Branch Personnel” (Executive Order), I hereby grant a limited waiver of the requirements in Paragraph 2 of Section 1 of the Executive Order for Daniel Tsai with respect to the National Association of Medicaid Directors (NAMD) 2022 Fall Conference.  Following consultation with the Counsel to the President, it has been determined that Mr. Tsai’s participation in NAMD’s 2022 Fall Conference in his official capacity as the Director of the Center for Medicaid and CHIP Services (CMCS) and Deputy Administrator of the Centers for Medicare and Medicaid Services (CMS) at the Department of Health and Human Services (HHS) is in the public interest and, therefore, warrants a waiver.

Background

Section 1 of the Executive Order contains a pledge that requires all covered political appointees to abide by certain commitments (Ethics Pledge).  Paragraph 2 of the Ethics Pledge provides that a covered appointee may not participate in any official matter involving specific parties that is directly and substantially related to an appointee’s former employer, for two years from the date of appointment.  Section 2(k) of the Executive Order defines “former employer” as “any person for whom the appointee has within the 2 years prior to the date of his or her appointment served as an employee, officer, director, trustee, or general partner,” excluding certain government entities and international organizations.  Additionally, a person for whom the employee has served as a board member is also considered a former employer.  Section 2(m) of the Executive Order defines “directly and substantially related” to an appointee’s former employer as matters in which the appointee’s former employer “is a party or represents a party.”  The purpose of Paragraph 2 of the Ethics Pledge is to address concerns that a former employer may have, or appear to have, privileged access to a covered appointee.

Section 3(a) of the Executive Order provides that the Director of the Office of Management and Budget, in consultation with the Counsel to the President, may grant a waiver of the restrictions in the Ethics Pledge to a political appointee if it is in the public interest to do so or if the literal application of a restriction is inconsistent with the purposes of the restriction.  The authority to grant a waiver to the Ethics Pledge has been delegated to Designated Agency Ethics Officials.  Memorandum from Rob Fairweather, Acting Director, Office of Management and Budget, Executive Office of the President (February 16, 2021).  See also Office of Government Ethics, LA-21-04, Waiver Authority and Making Waivers Public under Section 3 of Executive Order 13989, “Ethics Commitments by Executive Branch Personnel” (Feb. 18, 2021).

As CMCS Director, Mr. Tsai leads 700 employees responsible for federal oversight of Medicaid, the Children’s Health Insurance Program (CHIP), and the Basic Health Program, which together provide health coverage to 90 million individuals with annual outlays of over $630 billion.  At CMCS, Mr. Tsai directed the design and publishing of an Eligibility and Enrollment NPRM and the roll out of several “hot topic” guidance documents concerning, among other topics, the Early and Periodic Screening, Diagnostic, and Treatment benefit, Behavioral Health, and School-Based Health Services.  He also approved major new 1115 demonstration policies in California, Massachusetts, and Oregon, while maintaining a high level of performance on CMCS’s core operations in the face of an unprecedented volume of state submissions.

Prior to becoming CMCS Director on July 6, 2021, Mr. Tsai was Assistant Secretary for MassHealth and Massachusetts state Medicaid Director.  Mr. Tsai helped lead Massachusetts Medicaid through its most significant restructuring since the 1990s through its landmark 2016 Medicaid 1115 waiver.  Under these reforms, MassHealth implemented one of the most at-scale shifts to value-based care in the nation.  Through the 1115 waiver, MassHealth also launched a unique program committing significant investments for nutritional and housing supports to address the social determinants of health for high cost, at-risk individuals.  In addition, during his tenure, the agency made critical investments in strengthening community health centers, behavioral health, and home and community-based services.

During Mr. Tsai’s tenure with MassHealth, he was elected by the East regional Medicaid directors to serve as one of the two East representatives on the board of NAMD.  His term began in April 2017 and continued until his resignation from his position as MassHealth’s Medicaid Director on June 29, 2021.  NAMD is a 501(c)(3) bipartisan, nonprofit, professional organization that represents each of the 50 states, District of Columbia, and U.S. territories that have Medicaid programs.  The NAMD board of directors is comprised of 12 members: a president, vice president, immediate past president, two representatives from each of four regions in the United States and one representative from the U.S. Territories.  The officers are elected by a national vote of the membership, comprised solely of state Medicaid directors, and the regional representatives are elected by the state members of the appropriate region.  Employment as a state Medicaid director is a prerequisite for NAMD board membership.  At no time was Mr. Tsai paid by NAMD for his service as a board member, nor did he ever participate directly in any financial matters relating to the organization.

Analysis

Due to Mr. Tsai’s service on the board of NAMD, Ethics Pledge Paragraph 2 prevents him from delivering remarks on Agency and Administration accomplishments and priorities at the NAMD 2022 Annual Conference unless he receives a waiver.  Guidance by the Office of Government Ethics on Paragraph 2 confirms that, while Paragraph 2 does not generally prohibit official speeches hosted by former employers, the Pledge restriction applies where the former employer charges a registration fee, as NAMD does here.  See Office of Government Ethics,DO-09-020, Ethics Pledge Issues: Speeches and Pledge Paragraph 2; Intergovernmental Personnel Act Detailees (May 26, 2009).

It is in the public interest to grant Mr. Tsai a limited waiver of the requirements of Section 1, Paragraph 2 of E.O. 13989 to enable him to participate in his official capacity in NAMD’s 2022 Fall Conference.  In making this assessment, I have considered the factors set forth in Section 3 of the Executive Order, which include (i) the government’s need for the individual’s services, including the existence of special circumstances related to national security, the economy, public health, or the environment; (ii) the uniqueness of the individual’s qualifications to meet the government’s needs; (iii) the scope and nature of the individual’s prior lobbying activities, including whether such activities were de minimis or rendered on behalf of a nonprofit organization; and (iv) the extent to which the purposes of the restriction may be satisfied through other limitations on the individual’s services.

Government Need

The NAMD Annual Conference is the yearly gathering for the state Medicaid leadership and staff, with whom the Agency collaborates to administer, monitor, and regulate the Medicaid and CHIP programs overseen by CMCS.  The Fall Conference is also attended by Medicaid health care providers and Medicaid managed care health plans, whom CMCS also oversees and contracts with.  The conference is the once-a-year opportunity for federal and state Medicaid and CHIP administrators and partners to meet and collaborate.  As the appointed CMCS Director, Mr. Tsai is uniquely positioned to speak knowledgeably on behalf of the Administration and the Agency.

Historically, the CMCS Director delivers a talk at the Fall Conference to outline the state of the Administration and Medicaid and CHIP programs, share how CMCS is working with states and territories, and present on what to expect from upcoming Administration priorities.  It is the one opportunity each year for CMCS to speak directly to all state Medicaid leadership gathered in a single forum.  There is no other comparable gathering that CMS or any other entity hosts that brings together all states and territories who run the Medicaid program, in addition to vendors (e.g., health plans) and providers that administer and participate in the Medicaid and CHIP programs.

The government interest in providing information to and maintaining established relationships with public and private sector stakeholders is served by providing an official with the authority to speak on behalf of the Administration and the knowledge and experience to speak to the details of the federal Medicaid and CHIP programs.  It would not be in the public interest to deprive states, territories, Medicaid providers, and other Medicaid stakeholders of the opportunity to hear from and interact with Mr. Tsai at this important national conference, which is for the benefit of state Medicaid programs.

Unique Qualifications

As the politically appointed Director of CMCS, Mr. Tsai is authorized to speak on behalf of the Administration and CMCS to highlight the Administration’s priorities and how CMCS plans to advance those priorities in the coming year.  While career officials are a knowledgeable resource, it is not appropriate for them to speak on behalf of the Administration about its goals and priorities.  Similarly, other appointed officials among CMS leadership do not possess the past state Medicaid experience and detailed knowledge of and experience with current Medicaid processes, priorities, and policies that Mr. Tsai possesses.  Since neither senior career nor other senior CMS appointees possess the combination of authority, experience, and knowledge to provide the kind of information that historically has been communicated to attendees at this annual conference, there is no one else that can adequately replace Mr. Tsai at the Fall Conference.

Prior Lobbying

Mr. Tsai was not a lobbyist for NAMD, and NAMD is not a federally registered lobbying organization.

Other Limitations

This waiver is limited to Mr. Tsai’s official participation in NAMD’s 2022 Fall Conference and does not otherwise affect his former employer recusal obligation under the Ethics Pledge.

In addition, the literal application of the restriction is inconsistent with the purposes of the restriction.  Mr. Tsai’s participation in the Fall Conference will not meaningfully change the access that NAMD has to CMCS because CMCS already is a key stakeholder in the work of NAMD and would work closely with the organization regardless of Mr. Tsai’s past service.  Moreover, Mr. Tsai’s presentation of information at the Fall Conference will not serve to draw attendees to the conference because Mr. Tsai is only one among many speakers who will be participating in the multi-day conference and the conference is the sole opportunity for state Medicaid leadership to gather in a single forum.

Conclusion

For the reasons stated above, I have determined that it is in the public interest to grant a waiver of Paragraph 2 of the Ethics Pledge to Mr. Tsai, so he may speak and otherwise participate in an official capacity at the NAMD 2022 Fall Conference.  This waiver is limited.  It does not apply to any entity covered by Paragraph 2 of the Ethics Pledge other than NAMD, nor does it apply to any engagement with NAMD other than the 2022 Fall Conference.  It also does not remove Mr. Tsai’s obligation to follow any other provision of the Ethics Pledge or any other ethics law, rule, or regulation.¹

CC:      Stuart Delery, Counsel to the President, Office of the White House Counsel

Footnotes

¹ It is important to note that Mr. Tsai does not have any financial interests, imputed or otherwise, in NAMD.  Therefore, Mr. Tsai does not require a waiver of the criminal conflict of interest law at 18 U.S.C. § 208.  In addition, Mr. Tsai’s recusal obligation under 5 C.F.R. § 2635.502 with respect to his former employment at NAMD, for which Mr. Tsai previously received an Authorization, ended on June 29, 2022.