By Robert King
Fierce Healthcare, February 3, 2022

Sen. Elizabeth Warren, D-Massachusetts, called for the Biden administration to pull the direct contracting payment model over fears it would turn Medicare over to “corporate profiteers.”

Warren also called for reforms during a hearing Wednesday of the Senate Finance Committee to risk adjustment practices she said Medicare Advantage plans are using to get overpayments from Medicare. The senator’s remarks come amid higher scrutiny of the popular MA program that has become a lucrative market for insurers.

“It is completely baffling to me that the Biden administration wants to give the same bad actors in Medicare Advantage free rein in traditional Medicare,” Warren said during the hearing on the solvency of the Medicare hospital insurance trust fund expected to run out of money in 2026. “President Biden should not permit Medicare to be handed over to corporate profiteers. Doing so is going to increase costs and put more strain on the hospital insurance trust fund.”

Warren took aim at the Direct Contracting Model, which aims to give capitated and partially capitated payments to providers to move away from fee-for-service.

The senator was concerned that the direct contracting entity can pocket any money it doesn’t spend on patient care, creating more incentives for squeezing money out of Medicare.

She said private investors and insurance companies have started to buy up providers in the hopes of using similar practices employed in MA, including up-coding to inflate beneficiary risk scores that can result in higher quality bonus payments.

“I appreciate the potential that coordinated care models have to lower the cost of quality of care, but give me a break,” Warren said. “Wall Street is not racing to buy up clinics because they want to expand coordinated care models. Private equity and insurance companies want the eye-popping profits that are possible when the federal government lets them pocket whatever it is they can avoid spending on seniors and people with disabilities who need healthcare.”

Warren also called for changes to the risk adjustment system for MA plans, pointing out that over the past 12 years MA plans have cost the federal government $143 billion more than traditional Medicare.

An MA plan gets paid based on a benchmark, which is based on the traditional fee-for-service spending in a geographic area. But those payments can be adjusted based on a patient’s risk scores, with higher scores equaling larger payments due to the need for more healthcare services.

Some critics have charged that there are issues with how the risk adjustment system is calibrated, and having a higher risk score in MA doesn’t necessarily mean the patient gets more or better care.

“Medicare Advantage plans are not finding new diagnoses so they can help people find more care,” Warren said. “They are doing it so they can make more money from Medicare, because that is how the system is set up.”

Medicare already takes some money out to adjust for miscalibration, but the Medicare Payment Advisory Commission (MedPAC), an independent panel that advises the federal government and Congress on Medicare issues, has called for them to do more.

“If you took out another three to four percentage points, which is our estimate of the added payment, in 2021 you would have saved about $10 billion,” testified MedPAC Chairman Michael Chernew, Ph.D., during the hearing.

Warren said cracking down on MA could help shore up the hospital insurance trust fund and help fund lowering the Medicare eligibility age or adding dental benefits to traditional Medicare. Progressive lawmakers had originally called for the new benefits in a massive $3.5 trillion social spending package that has been abandoned after concerns from centrists.

MA traditionally has wide bipartisan support in Congress, but progressives have been ratcheting up scrutiny of the program.

Before the social spending package was abandoned, Sen. Bernie Sanders, I-Vermont, endorsed looking into cuts to MA to help pay for it.

MA advocacy group Better Medicare Alliance pushed back on Warren’s remarks, tweeting out a report that MA delivers $32.5 billion in additional value to seniors via lower out-of-pocket costs and provides key supplemental benefits not covered by traditional Medicare.

https://www.fiercehealthcare.com…

By Jake Johnson
Common Dreams, February 3, 2022

Sen. Elizabeth Warren on Wednesday joined physicians and dozens of her House Democratic colleagues in urging the Biden administration to immediately halt Medicare Direct Contracting, a Trump-era pilot that could result in complete privatization of the cherished public healthcare program by decade’s end.

“It is completely baffling to me that the Biden administration wants to give the same bad actors in Medicare Advantage free rein in traditional Medicare,” Warren (D-Mass.) said during a hearing held by the Senate Finance Subcommittee on Fiscal Responsibility and Economic Growth.

“My view is that President Biden should not permit Medicare to be handed over to corporate profiteers,” Warren added. “Doing so is going to increase costs and put more strain on the Hospital Insurance Trust Fund. The Biden administration should shut down the Direct Contracting model.”

The Direct Contracting (DC) pilot was first publicly announced by the Trump administration in 2019 and launched with little notice in the final months of the former president’s tenure. The program is administered through the Centers for Medicare & Medicaid Services (CMS) Innovation Center, an agency that the Affordable Care Act empowered to experiment with alternatives to traditional Medicare’s payment model, which directly reimburses healthcare providers.

The DC pilot, by contrast, inserts private middlemen called Direct Contracting Entities (DCEs) between patients and providers, allowing insurance giants and Wall Street-backed startups to keep as profit the public funding that they don’t spend on care.

A majority of the 53 current DCEs—which are paid monthly by the federal government to cover a specified portion of a patient’s medical care—are investor-owned. Unlike Medicare Advantage, which Medicare patients choose voluntarily, the DC pilot automatically assigns seniors to DCEs, often without their knowledge or consent.

“Wall Street is not racing to buy up clinics because they want to expand coordinated care models and limit profits,” Warren argued Wednesday. “Private equity and insurance companies want the eye-popping profits that are possible when the federal government lets them pocket whatever it is they can avoid spending on seniors and people with disabilities who need healthcare.”

“The number of corporate vultures hoping to feed on Medicare continues to grow,” said Warren, the first Democratic senator to publicly criticize the Biden administration for letting the DC pilot proceed. “This invites fiscal disaster, and I hope this administration will reverse this decision.”

Among the witnesses who testified at Wednesday’s hearing was Dr. Susan Rogers, president of Physicians for a National Health Program (PNHP), an advocacy group that has been leading the opposition to the DC pilot and urging the Biden administration to stop the experiment in its tracks.

During her testimony, Rogers noted that “DCEs may spend as little as 60% of their Medicare payments on patient care, keeping the other 40% as profit and overhead.”

“Medicare was designed as a lifeline for America’s seniors and those with disabilities, not a playground for Wall Street investors,” Rogers said. “If middlemen in healthcare actually saved money and improved outcomes, the U.S. wouldn’t have the most expensive and ineffective healthcare system in the world. We don’t need to put seniors through another failed experiment to prove this.”

Despite mounting pressure from advocacy groups and members of Congress—including more than 50 House Democrats led by Rep. Pramila Jayapal (D-Wash.)—the Biden administration has not yet provided any signal that it intends to stop the DC pilot.

As Buzzfeed reported last week, the administration’s “current plan is to run the program through the end of Biden’s term, potentially allowing a future president to expand its scope and further erode Medicare, the pillar of public healthcare in America.”

While the Biden administration paused the most extreme form of Direct Contracting—known as the Geographic (GEO) Model—last March, it has let the rest of the pilot program move forward as planned despite internal questions over its legality.

One unnamed Senate Democratic aide told Buzzfeed that “because companies had already spent a substantial amount of money preparing for the program, his administration would have faced fierce industry backlash if they shut it down.”

In her opening statement at Wednesday’s hearing, Warren argued that the federal government needs “to make changes to Medicare.”

“But not the cuts and privatization that my Republican colleagues have sought in past efforts to so-called ‘reform’ Medicare. No,” Warren continued. “Instead of undermining the system and the benefits that we deliver, we need to crack down on greedy drug manufacturers, on private insurers, and on private equity firms.”

“The Medicare system is hemorrhaging money on scams and frauds,” said the Massachusetts Democrat. “It is critical that we stop the flow, and, if we do, the system will have more than enough money to operate at its current level and increase coverage.”

https://www.commondreams.org…

February 1, 2022

Former Nevada public health official and self-described conservative Dr. Joseph Jarvis describes why markets are not the answer to what ails American health care.

“Health care does not have buyers,” he says, “it does not have shoppers, it does not have consumers. Health care has patients.”

Additional episodes will be uploaded twice monthly. Subscribe in iTunes, or access a complete archive of the podcast, below.

https://medicareforallexplained.podbean.com

By Paul McLeod
BuzzFeed News, January 28, 2022

The Biden administration is quietly continuing a little-known Trump-era pilot program that clears the way for doctors and private health insurers to switch patients from Medicare to privately run insurance. Though there has been little public discussion of the program, it has the potential to expand to the wholesale privatization of Medicare.

Progressive lawmakers and doctor and patient groups are now scrutinizing the program, after a year of it flying under the radar.

“I think there’s a lot of interest in stopping this,” Rep. Jan Schakowsky said. “To privatize Medicare without the knowledge of people who chose Medicare is scandalous. We can’t let that happen.”

Despite calls to shut down the pilot project, the Biden administration has no plans to do so. The current plan is to run the program through the end of Biden’s term, potentially allowing a future president to expand its scope and further erode Medicare, the pillar of public healthcare in America.

The pilot program, known as direct contracting, allows for doctors to transfer their patients off of core Medicare to a private model, where a third party is paid a fee to manage their benefits. The government says it will preserve patient benefits while experimenting with new ways to “produce value and high quality health care.” Opponents say it is a backdoor method of privatizing Medicare against the desire or consent of patients.

For decades, private insurers have pushed to get a piece of Medicare, the public health insurance program created in 1965 for people age 65 and older. The government created a private Medicare stream in 1997, now called Medicare Advantage, and companies spend a great deal of money advertising such plans. They’ve won over more than 26 million enrollees, making up more than 40% of the Medicare population, to the over 3,500 Medicare Advantage plans, according to the Kaiser Family Foundation.

The privatization of Medicare has been lucrative for the industry. Medicare Advantage plans are more expensive but have not been shown to provide better health outcomes. That disparity grows wider every year. The added costs born by the public to fund the program are believed to add up to tens of billions of dollars. At a time when Medicare is facing insolvency in the near future, the more expensive Medicare Advantage plans are projected to soon overtake traditional Medicare.

But there remains one major hurdle to Medicare Advantage expansion: You have to convince enrollees to actively switch out of the default public plan.

In the waning months of his administration, then-president Donald Trump launched a program, lobbied for by private industry, to circumvent this. It would allow insurers to bypass the will of patients altogether. Formally known as the Global and Professional Direct Contracting Model, the program allows insurers to negotiate with doctors to move their patients from straight Medicare plans to privately run insurance.

Direct contracting flips the onus. Instead of patients having to actively choose to leave core Medicare, they are transferred by their doctor and only need to be told in an annual notification. They may have to switch doctors to opt out.

The tactic is an experiment in finding new ways to lower costs at a time when Medicare is facing insolvency. It also opens up a new front for privatizing Medicare. On the front end, insurers can buy ads advertising their plans to Medicare enrollees. On the back end, they can try to sell doctors on moving their patients to private plans.

When Biden took office, his administration faced the choice of what to do about direct contracting. At the time it had not yet launched and was set to be far more sweeping.

The Trump administration’s plan was for mass privatization of Medicare, with whole geographic regions being shifted from public to private plans with no patient input or ability to opt out. The Biden White House shut down the so-called geographic stream. But when it came to the rest of the direct contracting program, the Biden administration allowed it to go ahead.

One Democratic Senate aide said that because companies had already spent a substantial amount of money preparing for the program, his administration would have faced fierce industry backlash if they shut it down.

The Centers for Medicare and Medicaid Services (CMS) approved 53 companies across 38 states to kickstart direct contracting in 2021. CMS is not saying how many people have been filtered into the direct contracting model but said that information will be released in the second quarter of 2022.

The Biden administration essentially chose a middle ground. Medical industry companies were disappointed because new companies applying to be part of the program were frozen out. On the other side, the group Physicians for a National Health Program wanted the program to be shut down altogether.

By neither closing nor expanding the program, the White House was able to mostly avoid high-profile scorn of industry and progressives for a year. But that is starting to change.

Earlier this month, more than 50 progressive members of Congress signed a letter to CMS asking for the program to be shut down and patients to be returned to the traditional Medicare model by July 1, 2022.

The program is set to run for five years, from 2021 until 2026. Crucially, that extends its life past Biden’s current term. If a Republican wins in 2024 and is looking to increasingly privatize Medicare, they would not need to come up with a plan from scratch. They could simply expand the direct contracting model, which by then would be well established.

“I don’t think there’s any question that that would be part of the agenda if that happened. It’s a good reason why this pilot program should not even be allowed to take off,” Schakowsky said. “It’s time for us to stop it before it really gets going.”

So far, that isn’t happening.

Asked about the future of direct contracting, CMS spokesperson Raymond Thorn said his organization is considering public input. “The CMS Innovation Center is actively listening to the comments being made about the Global and Professional Direct Contracting Model,” he said. “This feedback is invaluable as we consider the future of the model.”

Thorn defended the pilot project by saying CMS was experimenting with “opportunities to improve Original Medicare.” He described direct contracting entities as “doctors, hospitals, and other health care providers that work together to improve quality of care and patient experience.”

Under regular Medicare, doctors are paid a fee for providing care to patients. Under direct contracting, CMS pays a per-patient rate to what is known as a direct contract entity to manage care. If these entities can deliver care at a cheaper cost, they reap a profit. If not, they break even or take a loss. Entities can opt to take on 100% of the profit/loss risk or split it 50/50 with the government.

As for patients, many may not even understand they’re in a new program. Nine out of ten people likely won’t understand the changes even if they are notified, said Michael Abrams, managing partner at Numerof & Associates, a healthcare consulting firm.

“This whole area is a bit of a mystery to most people. Even people in the industry,” he said. “And yet, there’s real money in this particular game. More people will figure it out over time. Whether that is to the advantage or disadvantage of patients we’ll have to wait and see.”

https://www.buzzfeednews.com…

By Wendell Potter
Wendell Potter Now, January 27, 2022

As I noted in my last post, UnitedHealth Group made more profits last year than any health insurer has ever made for its shareholders–and considerably more than Wall Street financial analysts had expected. Investors were so impressed they rushed to buy shares of the company’s stock.

That might not have surprised you. United and other big insurers have reported record profits every year over the past decade. What might surprise you, though, is that even if you are not enrolled in a United health plan, some of your money likely wound up in the pockets of United’s already rich shareholders. That’s because you and America’s other taxpayers increasingly are fueling United’s profits.

In its press release last week, United bragged about the growing number of people it “serves,” including the number of people in its health plans. The release said the company had 10.5 million more “members” in its health plans in 2021 than in 2011. But when you look more closely at the numbers and do some math, you’ll see that very little of that growth has been in the private sector.

Here are some details the company’s executives didn’t point out:

• In 2021, United insured nearly 1.6 million fewer people in its commercial risk division–the part of the company in which United is actually the insurer–than it did in 2011. The 7,985,000 people in United’s commercial risk plans last year (including people who buy coverage on their own through the ACA marketplace) are folks who typically don’t have access to coverage through an employer. (In 2011 United had 9,550,000 in its commercial risk plans.)
• The number of people covered in plans United administers for employers and other large groups grew by only 2,275,000 between 2011 and 2021. Keep in mind that United and its competitors do not insure people enrolled in these group plans. They make money by charging their employer (and in some cases union) customers (who are the actual insurers) a hefty fee to administer their workers’ health plan benefits. When you combine the number of people in United’s risk-based plans with those in the fee-based plans, you’ll find that United’s private sector membership increased by only 710,000 between 2011 and 2021.
• By doing a little more math, you’ll discover that 94% of its total U.S. membership growth over the past decade was in government programs, specifically Medicare through its Medicare Advantage and Medicare supplement plans (marketed largely with AARP); and the state Medicaid programs it administers.
• And when you do just a little more math, you’ll discover that 72% of the $222.9 billion in revenue United’s health plan division took in last year came from you and me through the taxes we fork over to our Uncle Sam and the additional premiums many Medicare beneficiaries pay the company to cover their out-of-pocket expenses.

Considering all of that, it’s neither accurate nor appropriate to refer to United and its peers as insurers, or, for that matter, as “payers” (except in the sense that they use our employers’ and our Uncle Sam’s money to pay doctors and hospitals for treating us).

A brand new reason why it isn’t accurate to label United as an insurer or payer is the fact that last year, for the first time in the company’s history, it made more money from a fast-growing division called Optum than from the division that administers health insurance plans for employers and the government and the shrinking number of people it actually insures (the division the company calls UnitedHealthcare).

This is a huge change at United in just 10 years, and it tells a lot about where the company will be focusing most of its attention in the future. And if you are a health care provider (doctor, hospital or clinic administrator, pharmacist, etc.), you need to understand this, and, in my opinion, be very worried.

In 2011, Optum took in just $29 billion in revenues, a relatively small percentage of the company’s total revenues for that year. It grew fivefold over the next 10 years; last year it contributed $155 billion to United’s total revenues.

And of the company’s $24 billion in profits last year, more than half of it for the first time came from Optum for the first time.

It is Optum that operates one of the country’s largest pharmacy benefit management companies. It is Optum that now owns and operates thousands of physician practices and outpatient facilities, including kidney dialysis giant DaVita. And it is Optum that is now the country’s largest employer of doctors, now well north of 50,000.

United certainly is not alone. Aetna is now part of CVS, which owns and operates thousands of retail pharmacies and clinics and has its own PBM. And Cigna, where I used to work, more than doubled in size a few years ago when it merged with Express Scripts, one of the country’s biggest PBMs.

I’m not suggesting that these companies are going to get out of the health insurance business anytime soon. Even though that business is not growing as fast and is contributing increasingly less to those companies’ overall profits, they nevertheless have figured out how to take more and more money from us and our employers year after year.

Consider these final numbers for today:

An employer-sponsored family plan cost an average of $13,770 in 2011 (and $5,791 in 1999). Last year it was $22,221.

Meanwhile deductibles that families have to meet before their coverage kicks in has more than doubled over the past ten years.

And when you combine premiums and deductibles that families have to pay before their coverage kicks in, the total is now more than 10% of a family’s household income in 37 states, up from just 10 a decade ago.

As the Commonwealth Fund reported earlier this month, “because incomes have not kept pace (with increases in premiums and deductibles), health insurance is taking up a larger and larger percentage of household budgets. To make matters worse, workers are making wage concessions for company benefits that often cover less of their health care costs.”

The bottom line here, which our politicians and, sadly, even our employers pay precious little attention to, is this: American families are sacrificing more and more every year, sending more and more money that should have gone into their paychecks (and that they pay in taxes) to companies like United. So those companies can make their already rich investors even richer.

https://wendellpotter.substack.com…

By Kip Sillivan
Health Affairs, Comment, January 24, 2022

Response to “The Case For ACOs: Why Payment Reform Remains Necessary,”by Michael E. Chernew and J. Michael McWilliams

This defense of CMS’s never-ending ACO experiment is unconvincing. The authors ignore evidence that is inconsistent with their assertions, and the evidence they do cite does not support their claims.

The authors would have us accept these assertions:

(1) There is “a lot” of overuse of medical services within the traditional Medicare program, and the cause of this overuse is the fee-for-service (FFS) method of payment;

(2) ACOs and direct contracting entities (DCEs) are the solution to the alleged rampant overuse;

(3) ACOs/DCEs can improve equity, the FFS Medicare program cannot;

(4) The toxic consequences of ACOs/DCEs (consolidation, upcoding, denial of services, wasting tax dollars on profit for shareholders) either do not exist or can be “mitigated.”

These assertions are wrong or at best inaccurate.

Assertion 1. The authors avoid stating that research supports their claim about “a lot” of overuse. Instead, they assert that the claim “is widely acknowledged” and go on to cite the Choosing Wisely campaign and two studies that contradict their claim.

The Choosing Wisely campaign is a useful educational project, but its website makes it clear that its list of “low value” services should not be construed to be a measure of overuse. The website states: “Choosing Wisely recommendations should not be used to establish coverage decisions or exclusions. Rather, they are meant to spur conversation about what is appropriate and necessary treatment. As each patient situation is unique, providers and patients should use the recommendations as guidelines to determine an appropriate treatment plan together.” Moreover, the website sheds no light on what role, if any, FFS plays in causing over- or underuse of these services.

The two studies the authors cite are one they co-authored (Schwartz et al.) and a “preliminary” report by the Institute of Medicine (IOM). The study by Schwartz et al. examined the frequency with which “low value” services (including some listed by Choosing Wisely) are used within traditional Medicare. For example, Schwartz et al. inquired how often bone mineral density tests are repeated at intervals of less than two years. They concluded that “low-value” services could account for somewhere between 0.6 and 2.7 percent of total spending, and the larger number probably included appropriately used services. The authors made no attempt to compare these small percentages with the cost of rooting out all inappropriate use of bone mineral density testing etc. Nor did they attempt to demonstrate that FFS is the cause of inappropriate use of “low value” services.

The second study cited – the final report by the IOM on the brouhaha about regional variation in spending — did not demonstrate that variation is caused by either overuse or underuse, nor did it determine causes of over- and underuse. As Kaiser Health News noted, the IOM’s “researchers did not provide any definitive answers to the overarching questions about regional variation.” The literature on regional variation in spending should be viewed as a possible source of hypotheses worth further research, not as the basis for any conclusions on the extent and causes of inappropriate use.

Despite a half century of claims that Medicare beneficiaries get too much medical care, and that HMOs, PPOs, ACOs, and now DCEs must be inserted into Medicare to combat overuse, no study has demonstrated widespread overuse within Medicare, and none has demonstrated that what overuse exists is caused by FFS payment.

Assertion 2. The authors’ assertion that ACOs are the solution to the alleged overuse in traditional Medicare ignores evidence that CMS’s ACO programs have all failed to reduce Medicare spending and may increase systemwide spending when ACO overhead costs are taken into account. This failure is due in part to the absence of “a lot” of overuse; the difficulty of distinguishing appropriate from inappropriate use; the poor definition of ACOs; and disinterest in ACO boosterism among physicians and patients.

ACOs have had small and mixed effects on the few (crudely adjusted) quality measures used.

Assertion 3. The authors opine that “the ACO framework can greatly facilitate equity-oriented initiatives by directing more resources for populations with unmet needs” while FFS Medicare cannot. This claim defies common sense and, not surprisingly, is unsupported by evidence. The reverse is true. The method by which ACOs are paid – on a per enrollee/assignee basis – guarantees worsening of disparities because it shifts resources from ACOs and providers that treat sicker patients to those that treat healthier patients. This happens because the per-enrollee/assignee payments require “risk adjustment” to ensure the per-head payment is lower for the healthy and higher for the sick. But risk adjustment is extremely crude (the risk adjuster CMS uses for ACOs and DCEs explains just 12 percent of the variation in spending), and one consequence of crude risk adjustment is overpayment for healthy beneficiaries and underpayment for the sick (see page 30 of MedPAC’s June 2014 report).

Some evidence indicates ACOs respond to the grossly inaccurate risk adjustment of per-head payments by cherry-picking and lemon-dropping doctors and patients.

The authors concede that “[r]isk adjustment is a central component of population-based payment models,” then go on to ignore completely the disparity-worsening impact of crude risk adjustment of per-head payments.

Assertion 4. The authors are merciless in their criticism of FFS, but they can’t find any problem caused by ACOs (consolidation, upcoding, etc.) that can’t be fixed or at least ameliorated. Again, we are expected to accept their evidence-free opinion on these important issues. Their last refuge: They ask us to believe that the toxic consequences of ACOs/DCEs are trivial compared with the alleged epidemic of overuse in traditional Medicare. Reasonable people might be willing to put up with toxic side effects of ACOs/DCEs (consolidation, upcoding, cherry-picking, lemon-dropping, denial of necessary services, higher administrative costs, and diversion of scarce resources to venture capitalists) if we had any evidence that ACOs and DCEs work as advertised. However, the evidence indicates ACOs have failed, and DCEs, which are slightly tweaked ACOs, will fail as well.

In conclusion: If we count CMS’s first ACO experiment (the Physician Group Practice Demonstration which began in 2005), the ACO experiment is now 17 years old. All four of CMS’s ACO programs – the PGP demo, the Pioneer ACO program, the Medicare Shared Savings Program, and the Next Generation program – have failed to cut costs, and have had trivial and mixed effects on the tiny handful of quality measures. It is time to terminate the ACO experiment. The Biden administration should immediately terminate the DCE demonstration, and Congress should repeal the sections of the Affordable Care Act that authorized experimentation with ACOs and DCEs.

Original article:
https://www.healthaffairs.org…