Clare Fauke

FOR IMMEDIATE RELEASE: May 18, 2022

Media Contact: Clare Fauke, Physicians for a National Health Program, clare@pnhp.org

WHAT: “Turning up the Heat on Medicare Direct Contracting and REACH” event

WHEN: Monday, May, 23 at 1:00 p.m. EDT (45 minutes)

WHO: Speakers include:

• U.S. Rep. Katie Porter
• U.S. Rep. Pramila Jayapal
• Drs. Ed Weisbart and Ana Malinow, Physicians for a National Health Program
• Rick Timmins, Puget Sound Advocates for Retirement Action
• Dee Dorsey and Bill Bianchi, Jane Addams Senior Caucus
• Kathryn Donahue, RN, California Alliance for Retired Americans
• Dr. Laurel Mark, co-chair of Physicians for a National Health Program Wisconsin Chapter

HOW TO WATCH: The event will be broadcast live on ActTV. Watch live at ProtectMedicare.net/WatchNow

On Monday, May 23 at 1:00 p.m. ET, thousands of seniors, doctors, nurses, and community leaders will gather to learn about Medicare Direct Contracting and REACH, and how they can fight back against Medicare profiteering. 

“Turning up the Heat on Medicare Direct Contracting and REACH” will include a presentation on the nuts-and-bolts of Direct Contacting (to be renamed “REACH” in 2023), testimonials from Medicare beneficiaries, and a call to action from Congresswomen Katie Porter and Pramila Jayapal. 

U.S. Rep. Jayapal, who is the chair of the Congressional Progressive Caucus, encouraged seniors and health care advocates to join the event. “The Direct Contracting and REACH program is Medicare privatization hidden in layers of bureaucracy,” she said. “It allows a profit seeking third-party like a health insurer or private-equity backed firm to get paid by Medicare to manage seniors’ care, taking for themselves as profit whatever they don’t want to spend on the patient. That’s why the Congressional Progressive Caucus is calling on the Biden Administration to fully end this program.”

Retired veterinarian Rick Timmins, an active member of the Puget Sound Advocates for Retirement Action (PSARA), will share his story about a life-threatening delay in care caused by insurance middlemen in Medicare Advantage. “I learned the hard way that if Wall Street firms are allowed to make decisions about your health care, their profits will always come first,” said Timmins. “When I heard that Medicare was expanding the role of profit-seeking middlemen through Direct Contracting and REACH, I knew I had to speak up.” 

Timmins noted that PSARA recently helped pass a Seattle City Council resolution calling for an end to Direct Contracting and REACH and all Medicare profiteering, and encouraged other local groups to take action. 

What is Direct Contracting and REACH?

Direct Contracting (which will be renamed “REACH” in 2023) changes the way that Traditional Medicare pays for care. Instead of paying doctors directly, Medicare pays a third-party middleman a monthly fee to “manage” seniors’ care, allowing the middleman to keep what they don’t spend on health services (up to 40%) as overhead and profit. Virtually any type of company can be a Direct Contracting middleman, including Medicare Advantage insurance companies, private equity investors, and other Wall Street profiteers. Seniors who chose Traditional Medicare are being automatically enrolled into Direct Contracting without their knowledge or consent. Today, 99 Direct Contracting Entities have enrolled 1.8 million beneficiaries in nearly every state.

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The event is co-sponsored by Physicians for a National Health Program, Social Security Works, Public Citizen, Indivisible, People’s Action, California Alliance for Retired Americans, Puget Sound Advocates for Retirement Action, and Jane Addams Senior Caucus.

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Physicians for a National Health Program (pnhp.org) is a nonprofit research and education organization whose more than 25,000 members support single-payer Medicare for All reform.

For Immediate Release: May 12, 2022
Contact: Clare Fauke, PNHP communications specialist, clare@pnhp.org

Physicians for a National Health Program (PNHP), a 25,000-member nonprofit research and education organization, today called on Congressional leaders to pass a single-payer national health system before the next public health emergency. 

“At the moment that Americans most needed stable health coverage for their families and stable funding for their community hospitals, our health system failed them miserably,” said Dr. Susan Rogers, an internal medicine physician and president of PNHP. “Medicare for All would guarantee seamless coverage for everybody in the nation, and fund our hospitals based on community health needs, not profits.” 

Dr. Adam Gaffney, PNHP’s immediate past president who is also a critical care physician and instructor at Harvard Medical School, testified at today’s U.S. Senate Budget Committee hearing on Medicare for All.  “As we mourn the loss of one million Americans from Covid-19, commercial health insurers are celebrating record profits,” said Dr. Gaffney. “In the first two years of the pandemic, UnitedHealth Group made $46 billion. Every dollar that goes into the pockets of commercial insurers is a dollar not spent on patient care.”

Dr. Gaffney noted that when the Covid-19 public health emergency expires, as many as 16 million Americans will suddenly lose health coverage, most of them in low- and middle-income families. “Without stable, high-quality coverage, a single injury or illness could bankrupt a family,” explained Dr. Gaffney. “The need to fundamentally reform how we finance health care has never been more urgent.” 

Dr. Rogers added that Medicare for All would replace today’s wasteful per-patient billing by funding hospitals with annual global operating budgets, similar to how we fund essential public services like fire departments. “Hospital global budgets would promote health equity by paying only for patient care, not shareholder dividends or slick ad campaigns, and would fund capital projects based on community health needs instead of profits,” said Dr. Rogers. 

PNHP estimates that by eliminating the bureaucracy needed for billing and payment collection, global budgets would save the U.S. $220 billion per year, representing nearly half of the expected $450 billion in annual savings — about $2,400 per person — under Medicare for All. Global budgets would also prevent hospital closures by providing facilities in rural and other underserved communities with predictable and stable funding, as well as emergency funding in times of crisis, like a pandemic or natural disaster.

“Health care profiteers are costing us lives and money,” concluded Dr. Rogers. “We can’t wait for another public health disaster to change the way we fund health care. The clock is ticking.”

Physicians for a National Health Program (pnhp.org) is a nonprofit research and education organization whose more than 25,000 members support single-payer Medicare for All reform.

Dr. Adam Gaffney’s written testimony can be found HERE. 

Media contacts:
Clare Fauke, communications specialist at Physicians for a National Health Program, clare@pnhp.org
Mike Andrew, Executive Director at Puget Sound Advocates for Retirement Action (PSARA), organizer@psara.org
Seattle Councilmember Teresa Mosqueda, Teresa.Mosqueda@seattle.gov

May 5, 2022: Opposition to the privatization of Medicare through the controversial Direct Contracting program (recently renamed “ACO REACH”) is growing across the nation, as evidenced by two recent resolutions passed by the Arizona Medical Association and the Seattle City Council. Both resolutions call on the U.S. Department of Health and Human Services (HHS) and President Biden to immediately end Direct Contracting and “REACH,” and protect Medicare from profiteering. 

Arizona Medical Association 

The 4,000-member Arizona Medical Association (ArMA) passed the anti-privatization resolution at its annual meeting on April 23. Among concerns cited by the resolution is that “Direct Contracting Entities (DCEs) are allowed to keep as profit and overhead what they don’t pay for in health services, therefore giving them a dangerous financial incentive to restrict seniors’ care.” According to HHS, there are 25 DCEs currently operating in Arizona. 

The resolution was introduced by Dr. Michael Hamant and Dr. Eve Shapiro. Dr. Shapiro, a Tuscon-based pediatrician and board member of Physicians for a National Health Program, noted that since most physicians are now employed by large groups or health systems, they may find themselves practicing in DCEs without their knowledge or consent. “Medicare is a lifeline for seniors and those with disabilities, not a cash cow for Wall Street,” said Dr. Shapiro. “Physicians must take a stand against profiteering in Medicare.”

Seattle City Council 

In Seattle, the city council unanimously passed a similar anti-DC/REACH resolution on April 26, led by Councilmember Teresa Mosqueda. According to the resolution, “The Trump administration opened the door to the complete privatization of Medicare through a Direct Contracting pilot program allowing private equity firms, insurance companies, and corporate health businesses to directly contract to provide Medicare services.” The resolution then calls for the termination of Direct Contracting and REACH, and “favors closing the door on third party entities in the Medicare system.” There are 12 DCEs currently operating in the state of Washington. 

The effort to pass a Seattle resolution was led by the Puget Sound Advocates for Retirement Action (PSARA). “The DC/ACO REACH pilot programs provide Wall Street firms and large insurers the opportunity to profit off of the health care needs of seniors and the disabled in Traditional Medicare,” said PSARA co-presidents Jeff Johnson and Karen Richter. “Skimming profits from Traditional Medicare will result in a diminution of the quality and quantity of services, an extreme draw down in the Medicare Trust Fund, and further cuts in Medicare benefits or increases in Medicare taxes, premiums, and costs for workers and seniors.”

Campaign against Direct Contracting and REACH

Direct Contracting is a pilot program launched during the Trump Administration to change the way that Traditional (fee-for-service) Medicare pays for care. Instead of paying providers directly, DC pays profit-seeking middlemen called Direct Contracting Entities (DCEs) a monthly fee to “coordinate” seniors’ care, allowing the DCEs to keep up to 40% of their Medicare payments as profit and overhead. Seniors are enrolled into DCEs without their understanding or consent, and must change primary care physicians in order to opt out. Today, 99 DCEs have enrolled approximately 1.8 million Medicare beneficiaries. 

After more than 250 organizations and Congressional leaders called on HHS to end the Direct Contracting program, HHS announced that in 2023 it would replace DC with “ACO REACH.” The rebranded program would be nearly identical to DC, and allow all of the 99 DCEs — many owned by commercial insurers and private-equity firms — to participate. 

In response, a coalition of seniors, community groups and physicians plan to expand the campaign against DC/REACH over the summer. The campaign will hold a national launch event on Monday, May 23. The event is free and open to the public; registration is HERE. 

FOR IMMEDIATE RELEASE: March 8, 2022

Media Contact: Clare Fauke, PNHP communications specialist, clare@pnhp.org

Today, more than 250 organizations representing seniors, people with disabilities, consumers, and health professionals sent a letter to Health and Human Services (HHS) Sec. Xavier Becerra and Centers for Medicare and Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure, shunning the agencies’ rebranding of the controversial Medicare Direct Contracting program into “ACO REACH,” and calling for an end to all Medicare privatization experiments. 

The signers range from major national groups like Public Citizen, Social Security Works, and The National Retiree Legislative Network, to local and regional organizations like the Consumers Council of Missouri and the California Alliance for Retired Americans.

“Hundreds of community leaders joined forces to say: You can’t fool us, we know Medicare privatization when we see it,” said Dr. Susan Rogers, president of Physicians for a National Health Program (PNHP), an organization of 25,000 doctors that support Medicare for All and oppose Medicare privatization. “HHS gave Direct Contracting a fresh coat of paint, but we can see right through it.”

Today’s letter calls on Sec. Becerra to immediately end Medicare REACH, reject the privatization of Traditional Medicare, and focus the agency’s resources on strengthening Medicare for generations to come. “If allowed to continue,” the letter states, “REACH would completely transform Traditional Medicare by allowing third-party middlemen to manage seniors’ care, without seniors’ full understanding or consent.”  

“REACH is just privatization by another name and represents a fundamental threat to traditional Medicare and seniors’ access to care,” said Lisa Gilbert, Executive Vice President of Public Citizen. “This program would mean more profit for health care companies at the expense of seniors that choose Traditional Medicare and there is no reason for it to continue. We should be working to rein in profit in health care, not expand it.”

“REACH is simply a new name for the same backdoor scheme to privatize Medicare,” added Alex Lawson, Executive Director of Social Security Works. “Unless the Biden Administration pulls the plug now, this program will put for-profit insurers and Wall Street between seniors and their doctors. This letter shows how broad-based the opposition to REACH is. Tweaks aren’t good enough — Pres. Biden and Sec. Becerra must end this dangerous experiment immediately.”

“As one of California’s foremost Senior grassroots advocacy organizations representing over 1 million members, we are deeply concerned to learn of the intentions from CMS to ‘redesign,’ and not abolish, Direct Contracting in Medicare,” said Pauline Brooks, President of the California Alliance for Retired Americans (CARA). “The Direct Contracting model introduced by the former Administration severely undercuts consumer choice —  once a core tenement of Traditional Medicare —  and expands privatization, and dilutes patient care. CMS’ attempt to advance ‘health equity’ by forcing Traditional Medicare beneficiaries to enroll into REACH is entirely contradictory and a continuation of the disastrous privatization efforts instituted from its predecessor.”

“It is disappointing to see the Biden Administration following in the footsteps of Trump by allowing the Direct Contracting privatization scheme to stand by simply giving it another name,” said Julia Santos, Senior Healthcare Policy Manager for Indivisible. “The REACH program would allow middlemen to fill their pockets at the expense of Traditional Medicare beneficiaries. The Biden Administration can change course right now by directing Sec. Becerra to end REACH and protect Medicare from privatization.”

Dr. Rogers was especially critical of REACH’s superficial nod to equity, adding that, “REACH’s equity incentives are no-strings-attached financial giveaways to middlemen, and could encourage profiteering in underserved communities.” She noted that REACH’s required “equity plan” is a simple fill-in-the blank workbook on the CMS website. 

For example, Dr. Rogers explained that under the new “Health Equity Benchmark Adjustment,” HHS will give REACH middlemen an additional $360 per year for each underserved beneficiary, regardless of how much care that beneficiary receives. REACH will also allow middlemen to inflate beneficiaries’ risk scores based on demographic factors, another opportunity to bolster revenues without increasing care, since like Direct Contracting, REACH allows middlemen to pocket up to 40% of Medicare payments as profit and overhead, incentivizing them to restrict the care of vulnerable seniors. 

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Physicians for a National Health Program (pnhp.org) is a nonprofit research and education organization whose more than 25,000 members support single-payer Medicare for All reform.

FOR IMMEDIATE RELEASE: Nov. 30, 2021

Recording of today’s event:

Contact: Clare Fauke, Physicians for a National Health Program communications specialist: clare@pnhp.org

Today a group of physicians from across the U.S. gathered outside the headquarters of the Dept. of Health and Human Services (HHS) to deliver a petition demanding an immediate end to Medicare Direct Contracting (DC), a program launched in the final months of the Trump administration that could fully privatize Traditional fee-for-service Medicare in the next few years, without a vote by Congress. 

DC is a pilot program that aims to enroll every Traditional Medicare beneficiary into a third-party “Direct Contracting Entity” (DCE), often without seniors’ knowledge or consent. Instead of paying doctors and hospitals directly for care, Medicare gives DCEs a monthly capitation payment to cover a defined portion of each seniors’ medical expenses, allowing DCEs to keep as profit and overhead (up to 40% of revenues) what they don’t pay for in medical services — establishing a dangerous incentive for DCEs to restrict seniors’ care.

Virtually any type of company can apply to be a DCE, including commercial insurers, venture capital investors, and for-profit dialysis chains. Applicants are approved by CMS without oversight from Congress. The DC “pilot phase” includes 53 DCEs in 38 states, potentially covering 30 million Traditional Medicare beneficiaries. 

“Medicare Advantage — the first wave of Medicare privatization — showed us that inserting a profit-seeking middleman into public coverage does not save money for taxpayers, but rather costs more money while also taking away care choices from seniors,” said Dr. Ana Malinow, a physician from San Francisco who traveled to Washington to deliver the petition. “If left unchecked, the Direct Contracting program will hand Traditional Medicare off to Wall Street investors, without input from seniors, doctors, or even members of Congress. Health and Human Services Sec. Xavier Becerra has the power to stop this Trump-era program in its tracks, and must do so now.”

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More information on Medicare Direct Contracting:

• Direct Contracting one-page fact sheet
• Direct Contracting policy primer (4 pages)
• Form sent to seniors in Indiana University Hospital System requesting voluntary alignment to a DCE
• Article about Direct Contracting in Health Affairs journal by former CMS Administrator Dr. Don Berwick and former CMS Innovation Center director Dr. Rick Gilfillan: PART ONE and PART TWO
• List of current DCEs 
• CONTRACT between CMS and Direct Contracting Entities 
• Direct Contracting Entities’ Financial Operating GUIDE from CMS

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Physicians for a National Health Program (pnhp.org) is a nonprofit research and education organization whose more than 24,000 members support single-payer Medicare for All reform.