FOR IMMEDIATE RELEASE: Feb. 24, 2022
Media Contact: Clare Fauke, Physicians for a National Health Program communications specialist, clare@pnhp.org
Today, the Centers for Medicare and Medicaid Services (CMS) announced the agency will terminate the controversial Medicare Direct Contracting (DC) program four years ahead of schedule, and replace it with a virtually identical pilot called the ACO REACH model. Physicians for a National Health Program (PNHP), an organization of 25,000 doctors that support Medicare for All and oppose Medicare privatization, rejected the ACO REACH model and called on CMS and Health and Human Services (HHS) to eliminate all profit-seeking in Medicare.
“ACO REACH is Direct Contracting in disguise,” said Dr. Susan Rogers, an internal medicine physician and president of PNHP. “This new model doubles down on Direct Contracting’s fatal flaws, inserting a profit-seeking middleman between beneficiaries and their providers.”
PNHP identified several ways that ACO REACH perpetuates the dangerous flaws of Direct Contracting.
First, like the DC model, ACO REACH will pay middlemen a flat fee to “manage” seniors’ health, allowing them to keep 40% of what they don’t spend on care as profit and overhead. “The ACO REACH payment model establishes a dangerous incentive for middlemen to restrict patient care, an incentive that has never previously existed in Traditional Medicare,” said Dr. Rogers.
Next, Traditional Medicare beneficiaries will still be automatically enrolled into ACO REACH entities without their full understanding or consent, and once enrolled cannot cannot opt out of an ACO REACH entity unless they change primary care providers. “Changing primary care providers is a burden for anyone on Medicare, but especially for those in rural and other underserved communities,” added Dr. Rogers.
Like DCEs, the ACO REACH program has virtually no limits on what type of company can participate; entities can be owned by commercial insurers, private equity investors, and other profit-seeking firms, including current Direct Contracting entities.
The new program increases provider governance from 25% to 75% (with loopholes built into the application process), but ACO REACH entities are ultimately accountable to investors. In response, Dr. Rogers said, “Investors want a return on their investment, creating a dangerous incentive for ACO REACH middlemen to both maximize revenues through upcoding, and minimize expenditures by restricting patient care.”
Dr. Rogers explained that the ACO REACH pilot will be haunted by the ghosts of Direct Contracting, which was problematic even before it began: “Direct Contracting was designed by industry insiders like Adam Boehler, who had previously founded Landmark Health, later approved as a Direct Contracting Entity (DCE). HHS then ignored its own General Counsel’s ethics warning that the program was being designed to benefit specific companies, which has haunted the program ever since.”
Rep. Pramila Jayapal (WA-07) joined PNHP in calling for an end to the program. “Trump-era Direct Contracting is a major threat to Medicare coverage, hidden in bureaucracy,” said Congresswoman Jayapal. “While I’m glad to see the administration taking steps to redesign this flawed program – I am disappointed that these changes will not be enacted for 10 months and that there are no limits on how many seniors are funneled into this experimental model. More needs to be done, and I will continue to fight tooth and nail against any and all efforts to privatize Medicare.”
“You can’t slap a band-aid on a tumor and call it cured,” added Dr. Rogers. “Direct Contracting — and now ACO REACH — threatens the health of beneficiaries and the future of Traditional Medicare. As physicians committed to the health of our patients, we urge HHS to abandon this rebranding effort and focus the agency’s efforts towards strengthening and protecting Traditional Medicare.”
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.