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…

KPFA Radio, Flashpoints, December 2, 2021

Single-payer organizer Kay Tillow of Kentuckians for Single Payer Health Care spoke with KPFA Radio in Berkeley, Calif. about the threat posed by Direct Contracting Entities, shadowy groups that are often funded by private equity and that have their sites set on privatizing Traditional Medicare.

When it comes to pushing back against this program, Tillow says “we have a lot of work to do to make our government listen to the people.”

For more information on Medicare Direct Contracting, visit https://pnhp.org/StopDCEs.

http://kfpr.org…

By Joyce Frieden
MedPage Today, December 1, 2021

WASHINGTON — Medicare’s direct contracting program, if it is allowed to continue, will be the end of traditional Medicare, a physician group said here Tuesday.

Two dozen members of Physicians for a National Health Program (PNHP), which supports a single-payer healthcare system, and other healthcare groups attended a rally in front of the Department of Health and Human Services (HHS); they brought with them petitions to HHS Secretary Xavier Becerra asking him to stop the program.

“We all benefit when everyone has access to healthcare,” said Susan Rogers, MD, PNHP’s president and a retired internist from Chicago. “And the only way to do that is to have a system that does not include profit margins or shareholder dividends disguised as a middleman. We cannot allow the ongoing onslaught of privatization with these direct contract entities.”

The direct contracting program, which began under the Trump administration, “creates opportunities for a broad range of organizations to participate with the Centers for Medicare & Medicaid Services (CMS) in testing the next evolution of risk-sharing arrangements to produce value and high quality healthcare,” according to a CMS fact sheet. “The payment model options available under direct contracting also leverage innovative approaches from Medicare Advantage and private-sector risk-sharing arrangements.”

The program, which includes three different types of direct contracting models, will offer “both capitated and partially capitated population-based payments that move away from traditional fee-for-service” and seeks to broaden participation “by allowing model participation by organizations new to Medicare fee-for-service, such as physician managed organizations that currently operate exclusively in the Medicare Advantage program … and innovative, new organizations that seek to assume responsibility for Medicare fee-for-service beneficiaries in a geographic target region,” according to CMS.

This is bad news for the program on several fronts, PNHP members say. First, it allows insurers and other commercial entities to enter the Medicare fee-for-service market. “I personally used to think it was a great idea” to let for-profit entities get involved in healthcare, PNHP board member Ed Weisbart, MD, a retired family physician from St. Louis who attended the rally, said in a phone interview Monday.

“I went to medical school because I loved the idea of having financial interests aligned with making us healthier; I thought that was a great idea … And I worked inside the managed care industry for years and years because I really did think that. But what I actually learned was that that’s the opposite of the truth. In reality, when you have a for-profit entity in charge of your health, the best way to make money is to impede the care of people who are sick with high-end, expensive illnesses,” Weisbart said.

Another problem is the program’s “auto-enrollment” feature, he continued. “The way this is set up is for CMS to data-mine their claims and find — or think they find — your primary care physician. And if your primary care physician has signed a contract with a direct contracting entity, they will automatically capitate the direct contracting entity for your care, and you won’t be told that. Or you might be told that, but it will be a typical bureaucratic letter that will say at the very top, ‘You don’t need to take any action about this.’ So you might get a letter, but you certainly won’t be asked for your approval. If you actually learn about it and decide you don’t like the idea, there is no opt-out alternative. You can’t get yourself out of this.”

Melinda St. Louis, director of Public Citizen’s Medicare for All program, agreed. “This direct contracting experiment could lead CMS to auto-assign as many as 31 million people involuntarily to a Medicare Advantage-type health plan that they specifically opted not to join when they signed up for traditional Medicare,” she said at the rally.

“This is an unacceptable ‘bait and switch’ that presents real threats to people enrolled and to the Medicare program overall. With private insurers and the for-profit investors in the program, maximizing revenues, not quality of care, will become the central focus, and that is the problem with our current broken, expensive, and cruel healthcare system,” St. Louis said.

Currently, 53 direct contracting entities — including physician practices, health systems, and insurers, have signed up for the program, “but there are six [entities] that are really big ones,” with the vast majority of potential members, Weisbart said. “And those six are all insurance company-owned.”

The group brought petitions signed by 13,000 people, including 1,500 physicians, asking for the program to be stopped. However, they were not allowed to present their petitions to the HHS secretary, and no one at the building’s reception desk would accept them.

“Their department knew we were coming; we had made multiple phone contacts with them,” said Claire Cohen, MD, a child psychiatrist from Pittsburgh. “Despite that, when we got in, we were not able to deliver our petitions.”

CMS was unable to comment by presstime on the issues the group raised about the direct contracting program. HHS also did not respond to a question about why the group’s petitions were declined.

https://www.medpagetoday.com…