Key DHHS Medicaid policy developer headed to would-be contractor

Posted August 27, 2014

N.C. Department of Health and Human Services

— A senior state policy official who helped develop Gov. Pat McCrory's Medicaid reform plan is going to work for WellCare, a company that has an interest in how the state rewrites its health insurance system for the poor and disabled. 

Margaret "Mardy" Peal will leave her post at the Department of Health and Human Services to join the HMO as director of businesses development, according to a DHHS spokesman and company officials. 

Medicaid is one of the most costly programs administered by the state, and changes in the program are always politically fraught. That has been all the more so this year as the governor, House and Senate developed different Medicaid reform measures, with support and pressure brought to bear from different sectors of the health care community, including WellCare.

That discussion is poised to continue in 2015 after legislators were unable to come to an agreement on a Medicaid reform bill, despite naming it as a top priority for their summer session. The political waters on the topic are so roiled that lawmakers passed up a potential November special session to try to reach agreement on a plan, despite including plans for a special session in their budget proposal.  

Amid this charged situation, in which the health care for thousands of vulnerable citizens and billions of dollars in government funding is at stake, more than one North Carolina health care advocate likened Peal's departure to a key sports franchise player leaving an "taking the administration's playbook" over to an opposing team. 

"I wouldn't say there are any particular concerns," said DHHS spokesman Aaron Mullins.

After helping to develop the governor's plan, which emphasizes the development of local doctor networks to care for Medicaid patients, Peal is going to work for a company whose lobbyists have worked on behalf of a competing measure put forward by state Senate leaders. That Senate plan would have relied more heavily on companies such as WellCare to manage the state's Medicaid population.

Mullins said the administration would continue to push for a Medicaid reform model that relies on local providers and emphasized Peal was part of a group that had developed the accountable care organization model put forward by McCrory. Mullins said Wednesday that Peal did not want to comment for this story. 

High-profile departures have raised prior concerns

WellCare acknowledged Peal's hiring on Wednesday. 

"We are pleased to have extended an offer to Mardy Peal – pending background check and physical – to join WellCare as director, business development," company spokesman Crystal Walker said in an email. "Mardy’s knowledge and experience working with Medicaid reform and health care providers will make her an asset in our mission to deliver quality, cost-effective health care solutions to our members and government customers in all of the states in which we operate. Mardy will report to Troy Hildreth, vice president, business development."

The company has two registered lobbyists in the state who, according to filings with the Secretary of State's Office, have been active on health and health insurance issues and at least one of who has frequently been in the room during debates over Medicaid reform at the General Assembly.

Asked whether WellCare thought there could be a potential conflict, Walker said, "We do not. We believe Mardy’s experience and expertise will help us to better serve our government customers across the United States." 

This is not the first time a high ranking DHHS official left the department for a private-sector job related to his or her government duties or the first time that WellCare has been involved. 

Carol Steckel, who was hired in 2013 as the state's Medicaid director and for a time led the state's Medicaid reform efforts, went to work for Florida-based WellCare last September. In November, Paul Guthery, an IT supervisor in DHHS, left to work for a computer vendor for the state's Medicaid system that he had helped oversee as a government employee. 

Spending more time with family

The high-profile departures in 2013 so worried lawmakers that members of the state House began developing legislation to prevent government administrators from going to work at companies they might have overseen. Although that bill cleared a key House committee, it never made it to a floor vote. A companion bill was introduced in the state Senate but was never heard in committee.  

It's unclear whether Peal's move would have fallen under those proposed prohibitions as they were drafted, but lawmakers say it should.

"It's a perfect example of what we're trying to make sure we don't see happen," said Rep. Julia Howard, R-Davie.  

Howard called such moves from state government into the private sector "an unfair trade practice" and vowed to bring back the revolving-door legislation next session.

"You're going to continue to see this happen until this legislation passes," Howard said. 

Good government activists agree.

"It raises issues about people providing a corporation with an advantage in the process and perhaps disadvantaging the people of North Carolina," said Jane Pinsky, director of the N.C. Coalition for Lobbying and Government Report. "We need to stop a revolving door in North Carolina that goes business to government, government to business. It so undermines people's confidence in state government."

Peal garnered attention when she was first hired to a $95,000-per-year policy position due to her campaign donations to McCrory, ties to conservative causes, including anti-abortion groups, and what some believed to be a resume light on health policy. 

In a news release that was issued Tuesday, DHHS leaders announced Peal's departure and praised her work.

"Working with doctors, hospitals and other health care providers and stakeholders across the state, DHHS will continue to pursue our Medicaid Reform plan. Our plan is based on an ACO model that is right for North Carolina, puts patients first and ensures a more predictable Medicaid budget," Medicaid director Dr. Robin Cummings said in the release.

That statement did not name Peal's new employer, saying only that she wanted to "pursue an opportunity in the private sector that will allow her to spend more time with her family."

Julia Adams, a lobbyist for the Arc of North Carolina, which advocates on behalf those with developmental disabilities, said her group has pushed for the plan put forward by McCrory and largely reflected in a measure passed by the state House. 

"We have real concerns over managed care being the only option," Adams said.

Although she has been working for the governor's position, Peal now brings a great deal of inside knowledge about how those plans were developed, their potential weaknesses and best arguments for and against with her to the private sector. 

"We are concerned that she took the playbook with her," Adams said.


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  • Tyler Mattox Aug 28, 2014
    user avatar

    The State of NC needs an INDEPENDENT Inspector General program to handle such matters of conflicts of interest and integrity violations. The corruption of NC politics is rediculous. Unfortunately, even an IG has to report to someone, and if that someone is the political friend of the abuser/subject, then the investigation will just be washed away or the IG would be replaced.

    Apparently morals, ethics, and integrity have been lost within politics. But then again, when have there every been any within politics?

  • 50s Child Aug 28, 2014

    I've said it before: DHHS and DMA (Medicaid) in particular is nothing but a revolving door. People use it as a stepping stone to bigger and better positions, or they hunker down for 25 years and refuse to share their knowledge because they know darn well they'd never be hired anywhere else if they were replaced, and become the definition of "gubmint employee". Some even "retire" and then come back as "consultants", again because they never let anyone know how things work. Middle management is too weak to insist on "teamwork" from those types, but uses that word to punish others who don't fit in with the rest of the slackers.

  • Ron Kemp Aug 28, 2014
    user avatar

    The state already has a six-month cooling off required for those who leave and wish to do contract or temp work for their old unit, apply the same rules to those wanting to work for contractors they formerly did business with. Simple.

  • Paul Maxwell Aug 28, 2014
    user avatar

    This one defies comment. How much longer are we going to put up with this farce of a state government? (Hint--November)

  • John McCray Aug 28, 2014
    user avatar

    What tears me up is that this woman has four years experience, three of which were as a lecturer at a University for what was probably a lower level set of courses, and she gets hired as a Director of Business Development? Heck, I've worked with both DENR and DOT and I know people with Master's Degrees and much more relative experience and work in policy developing positions that will never sniff $95K as a salary. Ridiculous!

  • Anita Woody Aug 28, 2014

    You got to love it. A woman without policy experience gets a near 6 figure salary because she supported the campaign to create medicaid policy is leaving to be the director at the medicaid company that contracts with NC. McCronyism at it's best!

  • Jackson Smith Aug 28, 2014
    user avatar

    She sees that McCrory will not be elected again and wants to get out while she can still sell the position she was in to Wellcare.

  • James Daniels Aug 28, 2014
    user avatar

    The state ethics laws are vague and full of loopholes now. The period before a person who leaves government to work for an entity with interests in legislation/contracts that would benefit from the employees government experience ought to be 3 years. That would end the problem. The conflict of interest sections of state ethics laws needs some serious enforcement reform and language that would force state office holders to recuse themselves more often. If the current laws were enforced, Jim Womack could not serve on the commission writing laws on fracking. He works for a mining interest company that will directly benefit from the legislation he helped write.

  • Eq Videri Aug 27, 2014
    user avatar

    Wow. I don't blame Ms. Peal. I blame the system. This should not be allowed by anyone.

    Suppose she had been a pro-choice liberal Dem who had worked for Bev Perdue's administration, and then left and went immediately to work for a prospective state vendor. Might Republicans object???

  • Gork Aug 27, 2014

    Fine, the state just shouldn't do business with "WellCare" - running business development, you have to be kidding, that's "in your face" on top of the basic impropriety...