By Helaine Olen
Washington Post, December 13, 2021

Donald Trump claimed to be a staunch supporter of Medicare. Yet he repeatedly attempted to slash the program’s budget while promoting an increased role in Medicare for insurers and other private businesses. But President Biden isn’t turning out to be the champion of Medicare activists had hoped.

Elder Law Answers, December 10, 2021

The Biden administration is moving forward with a Trump-era pilot program that would hand over the care of millions of Medicare beneficiaries to private, mostly for-profit, groups.

Health care advocates warn that that the little-known plan will limit patients’ choice of providers and effectively privatize Medicare for beneficiaries who specifically chose traditional, public Medicare because they wanted to be able to select their own doctors. The program was created without congressional oversight and can expand without Congress’s approval.

“It could potentially complete the privatization of our public precious good called Medicare,” says Ed Weisbart, MD, who chairs the Missouri chapter of Physicians for a National Health Program (PNHP). “It violates the spirit of a public health program, which Medicare is, by driving larger corporate profits as a priority over improving our health, which Medicare is remarkably successful at.”

Already, some 42 percent of Medicare beneficiaries are in private Medicare Advantage plans, to which the federal government gives a fixed monthly fee for each Medicare beneficiary under the plan’s care. The less money the plans spend on patient care, the more money they and their investors make.

The new pilot program, called Direct Contracting, would extend key aspects of this model to other Medicare beneficiaries in 38 states, Washington, D.C., and Puerto Rico, potentially covering 30 million of the 36 million beneficiaries in traditional Medicare.  Fifty-three Direct Contracting Entities (DCEs), most of which are investor-owned with ties to Medicare Advantage commercial insurers, have already signed contracts to be fiscal intermediaries between patients and their providers.

Beneficiaries Automatically Enrolled

Under the program, these DCEs will form their own networks of providers, which beneficiaries will be strongly encouraged, although not required, to use.  Traditional Medicare beneficiaries will be enrolled in these networks, often without their knowledge or consent.  The DCEs will be paid a set amount per patient, called a capitation payment, which will vary depending on a patient’s “risk score.”  If the patient care costs less than the per-patient amount, the DCE keeps some or all of the difference.  If it costs more, the DCE loses money.

Beneficiaries will not be able to opt out of being “aligned” with a DCE.  Medicare will assist the DCEs by searching the claims history of beneficiaries – again without patients’ knowledge or consent — to see if they have visited a participating DCE provider with which they could be aligned.

All this will likely be confusing for Medicare beneficiaries, many of whom will have three different entities processing their claims: the DCE, Medicare, and the beneficiary’s Medicare supplemental insurance (Medigap) plan.

“Rather than allowing patients to go to providers directly under traditional Medicare, DCEs invite insurers and investors to step in and interfere with the care that Americans get,” said Rep. Katie Porter (D-CA) at a recent PHNP webinar on Direct Contracting. The DCEs, Porter charged, will “drive up costs for patients in order to maximize profits . . . Wall Street wins, patients and taxpayers lose.”

Lowering Costs Is the Stated Aim . . .

The idea behind the pilot is that these care networks will lower costs and spur innovation by managing care.  The model, according to the federal Centers for Medicare and Medicaid Services (CMS), “is expected to increase beneficiaries’ access to innovative, affordable care while maintaining all original Medicare benefits.”

Not all medical providers oppose Direct Contracting, particularly those already affiliated with provider groups.

“Models of care that are focused on systems of reimbursement such as capitation and holding physicians accountable for cost, coordination, and quality are integral to moving away from the fee-for-service model and toward more transformative models of care that reward value,” said Don Crane, president and CEO, of America’s Physician Groups said in December 2020.

. . . But Financial Incentives Worry Critics

Critics of the program have raised a number of concerns.  They note that many beneficiaries will be unaware that they can opt out of a DCE’s provider network, and say that DCEs will seek to contain costs by discouraging or denying needed care. (It is unclear how CMS will monitor beneficiaries’ access to care.)

Advocates also note that, as with Medicare Advantage, DCEs will have a strong financial incentive to “upcode” patients – that is, to tell the government that patients in their care are sicker than they really are so the DCE can receive a higher reimbursement.  Finally, critics are convinced that DCEs affiliated with Medicare Advantage plans will use the opportunity to steer beneficiaries away from traditional Medicare and into these highly lucrative plans.

No one knows whether the DCEs will actually be profitable, but Wall Street is betting that they will be.

“Wall Street considers Direct Contracting Entities to be eight times more valuable per patient than Medicare Advantage firms,” wrote Chris Tomlinson, a business columnist for the Houston Chronicle.

Even if DCEs don’t make money initially, patient advocates say that many investors are betting on selling the DCE for a profit down the road, a favored model of private equity investment.  “The real strategy is to make rapid growth and then leave and go on to the next investment,” said PNHP’s Weisbart.

Two nationally known physicians who once led CMS are warning against the pilot program. Writing in the blog of the journal Health Affairs, Dr. Donald M. Berwick, a former CMS Administrator, and Dr. Richard Gilfillan, a former director of CMS’s Center for Medicare and Medicaid Innovation, call Direct Contracting a new addition to the “Medicare Money Machine” and characterize its name as “Orwellian.”  “‘Indirect Contracting’ would have been a far more accurate name,” they write, “since the cornerstone of the program was CMS’s opening the door to non-provider-controlled [DCEs] to become the fiscal intermediaries between patients and providers.”

Blanket Authority to Experiment

Experimental health delivery models like Direct Contracting were made possible by the Affordable Care Act.  The landmark 2008 law established the Center for Medicare and Medicaid Innovation and gave it almost blanket authority to test ways to improve health care quality and reduce costs without congressional approval or oversight.  The Trump administration seized on this authority to craft the Direct Contracting model.

Its most extreme version is called Geographic Direct Contracting, which would auto-assign every traditional Medicare beneficiary living in a number of large geographic regions into a Medicare Advantage-like “Geo DCE” without the right to opt out. Advocates persuaded the Biden administration to pause this program in March, although it is still “under review” and could resurface.

But the Biden administration has continued the rollout of a less extreme version, the Global and Professional Direct Contracting (GPDC), which CMS calls a “voluntary risk-sharing payment model.”

Rep. Porter is among lawmakers who are calling on the administration to immediately freeze this version as well, contending that while it is intended to make Medicare more efficient, it actually will do the opposite, noting that between 2008 and 2020 the federal government has overpaid Medicare Advantage plans — which were designed to contain costs in similar ways – by $143 billion.

In late November a group of physicians from around the nation traveled to Washington, D.C., to educate lawmakers about the Direct Contracting threat, call for a congressional hearing and present U.S. Department of Health and Human Services (HHS) Secretary Xavier Becerra a petition signed by more than 13,000 people, including 1,500 physicians.  The petition warns that moving the DCE program forward threatens “the future of Medicare as we know it.”

“[Direct Contracting] is very complex and it is extremely hard to explain,” said PNHP board member Dr. Judy Albert at the HHS press event.  “There has been very little coverage in the mainstream media, allowing the program to fly under the radar. . . . Together, we will continue to raise the alarm until we stop this threat to Medicare.”

https://www.elderlawanswers.com…

By Rep. Pramila Jayapal (D-Wash.) and Susan Rogers, M.D.
The Hill, December 9, 2021

Every year on July 30, advocates across the nation bake cakes and hold rallies to celebrate the anniversary of Medicare, the popular federal program established in 1965 to provide health care to seniors and Americans living with disabilities. The festivities are for good reason: Seniors love Medicare. It is simple, efficient, and empowers them to manage their own health.

But starting this year, millions of seniors are quietly being enrolled into a program run by third-party middlemen called Medicare Direct Contracting (DC). This is occurring without their full knowledge or consent. If left unchecked, the DC program could radically transform Medicare within a few years, without input from seniors or even a vote by Congress.

Developed late in the Trump administration, the Medicare DC program allows commercial insurers and other for-profit companies to “manage” care for seniors enrolled in Traditional (fee-for-service) Medicare. Instead of paying doctors and hospitals directly for seniors’ care, Medicare gives these middlemen (called Direct Contracting Entities, or DCEs) a monthly payment to cover a defined portion of each seniors’ medical expenses. DCEs are then allowed to keep what they don’t pay for in health services, a dangerous financial incentive to restrict and ration seniors’ care.

A majority of seniors choose Traditional Medicare over Medicare Advantage, the version of Medicare run by commercial insurers, because they value having free choice of providers and the power to manage their own care. But under the Medicare Direct Contracting program, older Americans who actively chose the popular Traditional Medicare program are automatically enrolled into a Direct Contracting Entity without their full knowledge or consent.

Seniors in Traditional Medicare may be “auto-aligned” to a DCE if any primary care physician they’ve visited in the past two years is affiliated with that DCE. That means Medicare automatically searches two years of seniors’ claims history without their full consent to find any visits with a participating DCE provider as the basis for enrollment. It’s no wonder that the current DC pilot phase includes potentially 30 million Traditional Medicare beneficiaries enrolled in 53 DCEs across 38 states.

It gets worse. Who are we trusting to “manage” our seniors’ care? Virtually any type of company can apply to be a DCE, including commercial insurers, venture capital investors, and even dialysis centers. In fact, applicants are approved without oversight from Congress. Unlike other care management models, there isn’t even a requirement that DCEs be majority owned by health care providers. This opens the door to ownership by for-profit entities with no health care expertise at all.

Wall Street investors are already tripping over themselves to get into the DC program. This should be a huge red flag for taxpayers and anyone concerned about funding Medicare for future generations. While Traditional Medicare spends an impressive 98 percent of its budget on patient care, Direct Contracting Entities only spends 60 percent of our tax dollars on patient care — keeping up to 40% of revenues for their own profit and overhead. We can’t think of any other industry with numbers like these, let alone one entrusted to care for the health of our nation’s seniors.

If you’ve never heard of Direct Contracting, you’re not alone. The DC program was created by the Center for Medicare and Medicaid Services’ “Innovation Center”, which was established to pilot health payment models without congressional authorization. The Innovation Center can approve and sign contracts with Direct Contracting Entities. They can even scale up the program to cover all of Medicare, without so much as a vote or hearing in Congress.

That’s why doctors from across the nation are gathering at the Department of Health and Human Services (HHS) this week to ring the alarm bells about Direct Contracting. They’re calling on HHS Secretary Xavier Becerra to end the DC program immediately. They’re also urging members of Congress to demand a hearing on this attempt to sell our beloved Medicare to Wall Street investors.

Since Direct Contracting is a pilot program, it can and should be stopped in its tracks by the Biden administration while we have the chance. After our experience with commercial Medicare Advantage plans, we already know that inserting a profit-seeking middleman into Medicare ends up costing taxpayers more, with fewer choices and worse outcomes for seniors.

As a physician and a member of Congress, we’ve never heard a senior ask for their health care to be more complicated, or to have their choice of Traditional Medicare taken away. But that’s exactly what Direct Contracting would do. Traditional Medicare has proven its value for more than half a century. Instead of selling it off to the highest bidder, let’s strengthen and improve its benefits while working to expand it to cover every American.

Pramila Jayapal represents Washington’s 7th District in the U.S. House of Representatives where she serves as the Chair of the Progressive Caucus. She is also the lead sponsor of the Medicare for All Act. Dr. Susan Rogers is president of Physicians for a National Health Program, a nonprofit research and education organization whose more than 24,000 members support Medicare for All reform. Dr. Rogers is recently retired from Stroger Hospital of Cook County in Chicago.

https://thehill.com…

By Ryan Grim
Hill.TV, Rising, December 9, 2021

Host Ryan Grim outlines the dangers of private equity taking over Traditional Medicare; the revolving door politics that allows stealth privatization to take root; and the urgent need to freeze Medicare Direct Contracting.

“The name for this is managed care,” he says, “and it’s extremely unpopular with patients, which explains why the industry is doing it so quietly.”

https://www.yahoo.com…

By Ana Malinow, M.D.
Truthout, December 3, 2021

In the face of massive support for Medicare for All and the failure of the U.S.’s for-profit health care system, the inevitable fall of the medical-industrial complex can be predicted, if not with precision, with certainty. Everyone is aware of the impending demise, none more so than those in charge of the for-profit health care system and their supporters in Congress, as evidenced by the frenetic activity at the Centers for Medicare and Medicaid Services (CMS) to transfer the traditional Medicare program to the insurance industry as fast as humanly possible. Given this urgency, physicians representing Physicians for a National Health Program delivered a petition signed by 13,000 individuals, including 1,500 physicians, to Health and Human Services Secretary Xavier Becerra this week demanding the end to the privatization of Medicare.

Privatization, the transfer of a public good to private, for-profit entities, is already true for over 40 percent of Medicare in the form of Medicare Advantage, private insurance plans that have been persistently and pervasively overpaid by Medicare for decades. As Kip Sullivan recently described in “Single Payer Health Care Financing,” this fraud has been going on for decades.

In 1995, the U.S. General Accounting Office (GAO) warned Congress that Medicare was overpaying Health Maintenance Organizations (HMOs), the precursors to Medicare Advantage plans, by 6 to 28 percent compared to what it would have paid had all those HMO enrollees remained in traditional Medicare because most HMOs benefited from “favorable selection,” meaning, healthier patients enrolled in HMOs. In 1999, the GAO again warned Congress that Medicare spent more on beneficiaries enrolled in HMOs than it would have had those beneficiaries been enrolled in traditional Medicare. The following year, the GAO told Congress that it was largely excess Medicare payments to HMOs, not their efficiencies, that allowed plans to attract large numbers of beneficiaries, again exceeding costs expected under the traditional program, adding billions to Medicare spending.

Twenty-six years later, in its 2021 report to Congress, the Medicare Payment Advisory Commission wrote, “The Commission estimates that Medicare currently spends 4 percent more for beneficiaries enrolled in MA [Medicare Advantage] than it spends for similar enrollees in traditional fee-for-service (FFS) Medicare.” This low number is difficult to square with the profit that insurance companies are making and the extra benefits that they offer. What has been clear to Congress for decades, is that Medicare Advantage, which inserts a middleman to “manage” care between CMS and doctors and hospitals, costs more than traditional Medicare, which does not require a middleman between the senior and the provider. From 1972 to 2004, overpayment by Medicare to HMOs was the rule and due mostly to favorable selection. After 2004, overpayment persisted for Medicare Advantage plans (formerly known as Medicare + Choice) for two reasons: favorable selection (“cherry picking,” or selecting healthy patients, as well as “lemon dropping,” or getting rid of sick patients, perfected by HMOs) and upcoding.

What is upcoding? When a doctor bills the insurance company or Medicare for a patient, the doctor uses a diagnosis code. For example, a patient who is seen for pneumonia will be billed with the diagnosis code for pneumonia. But what if instead of just billing for pneumonia, the physician also coded for shortness of breath, hypoxia (low oxygen level), productive cough and exposure to tuberculosis, some of which might or might not be accurate, but could certainly be present in someone with pneumonia? This would be upcoding and would be considered fraud, but in the Medicare Advantage world, upcoding is known as risk-score gaming, and it is perfectly legal.

Risk-score gaming is how Medicare Advantage has been drawing serious overpayments since its full implementation in 2006. Medicare Advantage does this by submitting diagnosis codes that create more CMS Hierarchical Condition Categories (HCCs) for each patient. For example, a 76-year-old female with obesity, type 2 diabetes, major depression and congestive heart failure has an HCC risk score of 1.03. For this patient, CMS pays a Medicare Advantage plan that does not upcode $9,000.

If however, the Medicare Advantage plan upcodes — same patient, same medical conditions but more codes: morbid obesity instead of obesity, diabetes with retinopathy instead of diabetes; a mild, single episode of major depression instead of unspecified major depression; chronic obstructive lung disease instead of asthma and a stage 3 ulcer instead of ulcer — her risk score jumps to 3.63, and CMS pays the Medicare Advantage plan for the same patient $32,000. The plan reaps obscene profits, some of which goes to marketing, some of which goes to improve benefits driving up the number of new members, but most of which go back into profits, all the while draining the Medicare trust fund, driving up Part B premiums (monthly payments made by beneficiaries to Medicare) and diverting taxpayer funds from other social services.

For each 0.1 increase in risk score at current enrollment levels, there are $15 billion in overpayments ($13 billion from CMS, and $2 billion from Part B beneficiaries) and the Medicare Advantage plan takes $3.5 billion in profits. Risk-score gaming is the business model for Medicare Advantage and creates a major transfer of wealth to Medicare Advantage from taxpayers and traditional Medicare recipients.

In addition to greater costs to the federal government, Medicare Advantage plans deny care for enrollees, create cost-related problems for enrollees, limit specialized care due to narrow networks (especially at the end-of-life), have worse health outcomes (including higher mortality), and unenroll high-cost beneficiaries (“lemon drop”) who are in poor health.

All evidence points against using the multibillion-dollar health insurance industry to improve outcomes and save money. But evidence is no match for profit. In 2019, the Medicare budget approached $800 billion, and by 2026, it is projected to be $1.35 trillion. This amount of taxpayer money keeps capitalists up at night, especially the medical-industrial complex types, scheming up ways to grab some for themselves. Lucky for these capitalists, CMS is continuing its march towards privatization, or what is known in the parlance of health economists, “de-risking” all of Medicare, meaning eliminating the risk of providing health insurance to seniors by having someone else bear the risk. But the truth is the exact opposite: These overpayments are allowing the insurance industry to pretend they bear risk when in fact it’s the taxpayer who is bearing risk.

There is much profit to be gained by “bearing the risk” for Medicare through favorable selection and upcoding, as evidenced by the outsized profits for insurers in Medicare Advantage compared to margins in the group or individual market. There should be little surprise, then, that the industry is chomping at the bit to “bear the risk,” that is, be overpaid to insure the remaining 60 percent of seniors who have deliberately chosen not to enroll in Medicare Advantage, those that are safely (or so they thought) enrolled in traditional Medicare.

But safe they are not, and every enrollee in traditional Medicare should take note: A program known as the Global and Professional Direct Contracting model in a little-known government agency known as the Center for Medicare and Medicaid Innovation (“The Innovation Center”) is already moving them, without their knowledge or consent, to “risk-bearing,” for-profit middlemen known as Direct Contracting Entities (DCEs). The goal: to end what’s left of traditional Medicare.

The Innovation Center was created under the Affordable Care Act (ACA) in 2010 with a mandate to test “innovative” payment and service delivery models for Medicare that would decrease costs, and if not improve, at least not worsen care. The ACA gave full authority to the Innovation Center to scale up any model it deemed fit, to all of Medicare without congressional approval. In the past 10 years, 54 models have been developed, 50 of which failed and all of which continue to use market-driven models of care. Not one model has been developed to test out single-payer, which actually would decrease costs and save lives. The latest demonstration project, created in the waning days of the Trump administration and greenlighted by the Biden administration, is the DCE model, which is being rolled out to traditional, fee-for-service Medicare beneficiaries without congressional approval or anyone’s vote.

What is a Direct Contracting Entity? Simply put, it is a “risk-bearing,” for-profit middleman to manage health care for traditional Medicare beneficiaries, just like Medicare Advantage plans are for seniors who have signed up for Medicare Advantage plans. The difference is that while 26 million seniors have voluntarily signed up for a middleman when they chose Medicare Advantage, the 38 million seniors in traditional Medicare have not.

How do you get seniors who have specifically chosen traditional Medicare to switch to a non-traditional Medicare-Advantage-like plan with a mysterious name like “Direct Contracting Entity”? You don’t tell them! You lure their primary care providers to participate in a DCE by promising the doctors much better Medicare reimbursement rates and more time with their patients, and once the doctors sign up with a DCE, all their patients are automatically “aligned” by CMS with the DCE the doctor has chosen. The DCE sends patients a letter they are likely not going to read or understand, and presto! Millions of seniors previously on traditional Medicare now belong to a DCE. That’s how DCEs leverage and monetize the doctor-patient relationship for the profit of corporations.

DCE middlemen accept capitated payments for seniors in traditional Medicare just like Medicare Advantage plans, “cherry pick and lemon drop,” deny care, upcode, spend as little as 60 percent on health care for beneficiaries (compared to Medicare Advantage’s 85 percent), and keep the rest as profit. The playbook is an old one, and it works.

There are 53 DCEs in 38 states and Washington, D.C., mostly owned by for-profit, private equity firms, investor-owned primary care practices, Accountable Care Organizations (a network of doctors and hospitals that is jointly accountable for the health of a group of Medicare patients and that receives financial incentives from Medicare to save money on patient care while meeting certain quality metrics) and Medicare Advantage plans. Many DCEs are owned by publicly traded corporations straight out of Wall Street. These are the corporations that will potentially manage the care of up to 30 million seniors who thought they were free of insurance companies. Instead, their health will be weighed against profit. And in a market-driven, for-profit health care system, the bottom line always wins.

But the most important question still remains: Why the urgency to “de-risk” (privatize) Medicare, no matter the cost? Enter Liz Fowler, architect behind the ACA, an industry darling who ensured health insurance companies would reap billions every year under the ACA, the new director of the Innovation Center brought in by the Biden administration to oversee the full privatization of Medicare. Industry giants and Washington insiders can read the writing on the wall as well as anyone else. They are acutely aware that a majority of Americans say it is the government’s responsibility to provide health care for all. They know that a pandemic has shined a light on the inefficiencies, inequities and indifference of our health care system. They know that Americans died in greater numbers and at increased rates compared to countries with universal health care systems in place. In the face of this inevitability, what would the medical-industrial complex and Congress do? Sell off Medicare, and fast, before Americans actually get Medicare for All.

Health and Human Services Secretary Becerra, a supporter of Medicare for All, and CMS Administrator Chiquita Brooks-Lasure have the authority to terminate the Direct Contracting model program. Congress has the power to hold hearings on the Innovation Center and pass legislation to provide congressional oversight to the Center’s pilot programs. The Innovation Center has put a hold on new DCE applications, to the consternation of industry, but all signs point to the continuation of using DCEs to privatize traditional Medicare. The Innovation Center will put a pretty bow around DCEs and talk about “equitable outcomes” and “person-centered care” but we should not be fooled: The end of Medicare is near. It is up to us to demand DCEs, not Medicare, be ended.

Dr. Ana Malinow is a pediatrician and activist/organizer for national single-payer health care. She is past president of Physicians for a National Health Program, an organization of more than 20,000 health professionals that support a national single-payer health program in the U.S. She is currently lead organizer for National Single Payer.

https://truthout.org…