Dear Secretary Becerra and Administrator Brooks-LaSure,

Thank you for your efforts to protect Medicare, a program vitally important to the health and economic security of seniors and people with disabilities. We are writing to express our concern about ACO REACH, a pilot program launched by the Center for Medicare and Medicaid Innovation (CMMI) as a rebranding of the controversial Direct Contracting model.

Unfortunately, REACH retains the most dangerous elements of Direct Contracting, and under the guise of promoting equity, provides even more opportunities for middlemen to profit at the expense of beneficiaries and the Medicare Trust Fund. If allowed to continue, REACH would completely transform Traditional Medicare by allowing third-party middlemen to manage seniors’ care, without seniors’ full understanding or consent.

A majority of seniors choose Traditional (fee-for-service) Medicare over Medicare Advantage — the version of Medicare run by commercial insurers — because they value the free choice of health providers and the power to manage their own care. However, millions of seniors who actively chose Traditional Medicare will be automatically enrolled into REACH entities, many of which will likely be run by for-profit businesses, such as commercial insurers, venture capital and private equity investors, and even dialysis centers.

Full letter

Story on Common Dreams

“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. Full story

On February 2, 2022, PNHP President Susan Rogers, MD, testified at a hearing of the Senate Finance Committee’s Subcommittee on Fiscal Responsibility and Economic Growth. The topic was Medicare Financing, and she was invited by committee chair Sen. Elizabeth Warren to discuss Medicare Direct Contracting and the threat of privatization to Traditional Medicare.

“This was a historic moment both for PNHP and our campaign against Medicare privatization. When I led a delegation of physicians to the capitol just two months ago, almost no one in Congress had even heard of Medicare Direct Contracting (DC). Thanks to the hard work of PNHP members, this threat to the Medicare program is now being actively debated in the halls of Congress,” said Dr. Rogers. Below are some highlights from the testimony. You can watch a recording of the hearing HERE (Dr. Rogers’ opening remarks start at 42:50; DCE discussion at 1:49:30), find a full transcript of her remarks HERE, read her more detailed written testimony HERE, and share PNHP’s live-tweet of the hearing HERE.

Below is the delegation that delivered petitions opposing DCEs to Sec. of HHS, Xavier Becerra.

• 

by Kip Sullivan, PNHP Minnesota

Many of us have heard the statement that capitated direct contracting entities (DCEs) are allowed to keep 40 percent of their payments from CMS (Center for Medicare and Medicaid Services) or, conversely, they have an effective “medical loss ratio” of 60 percent. To my knowledge, the first time the public learned of the 60 percent MLR was last September when Berwick and Gilfillan announced it in their two-part article for Health Affairs.
Medicare Advantage, Direct Contracting, And The Medicare ‘Money Machine,’ Part 2: Building On The ACO Model | Health Affairs

Berwick and Gilfillan calculated the MLR from CMS documents describing the four “risk corridors” DCEs will be subject to. Yeah, I know, “corridor,” what the hell is that? It refers to the amount of savings and losses DCEs can incur. So, if the DCE spends 25 percent less than its “benchmark” (it’s target) for 2022, it can keep all of the (alleged) savings, and if it spends 25% more than its target, it will lose all of it. But if it spends more than 35% less than its target, it can’t keep the entire profit for itself; it keeps all of the first 25 percent, and “only” half of the next chunk — 25-35 percent. And so on: The DCE can only keep 25% of the next chunk or corridor (35-50 percent), and only 10% of the final corridor (50-100 percent).Um hmm, I know, it’s nuts to plan for a DCE totally eliminating all medical costs for its assignees, but that’s the mindset at CMS these days.

So, if you multiply each corridor times the percent CMS allows the DCE to take to the bank, you get this table:

Corridor 1 (<25%): 1.0 x 25% =  25%
Corridor 2 (25-35%): .5 x 10% =  5%
Corridor 3: (35-50%): .25 x 15% = 4%
Corridor 4: (>50%): .1 x 50% =   5%
Total:                      39%

This means, to put it the other way around, that DCEs must spend a minimum of 61 percent of their loot on patients. The other 39 percent can finance yachts and stuff.

You can find a discussion of this delightful topic at pages 27-28 of this document, and a table laying out the numbers above (Table 6-7).

Direct Contracting Model Request for Application Global and Professional Options (cms.gov)

You can fight more effectively for single payer health care when you understand health policy. Here you have access to a slide set from Drs. Steffie Woolhandler and David Himmelstein. For instance, this slide shows that in traditional Medicare only a little over 2% goes to overhead, while in the private, for-profit Medicare Advantage plans almost 14% goes for overhead and profit. Learn and share. Knowledge is powerful.

The letter was a response to this article in the C-J.

Over 50 Congresspersons, including Rep. John Yarmuth of KY, call on the Biden Administration to end the Direct Contracting Entities (DCEs) that are privatizing traditional Medicare.

Press release

The letter to Health & Human Services Secretary Xavier Becerra signed by 54 representatives

Physicians for a National Health Program’s many resources, articles, and media links about the fight to end the DCEs.

In the windy, late morning of Saturday, December 11, Kentuckians for Single Payer Health Care and community allies gathered outside the headquarters of Humana in downtown Louisville where they demanded an end to Medicare Direct Contracting Entities (DCEs), a program that could fully privatize Traditional fee-for-service Medicare without a vote by Congress.

Humana is one of 53 for-profit DCEs into which seniors who have chosen traditional Medicare can be placed without their consent.

As the post tornado winds howled through Humana’s marble pillars, Stephen Bartlett played his trumpet.  Dr. Garrett Adams and the Rev. Ron Robinson read a poem about DCEs, “How the Grinch Stole Medicare”, while Steven Katz, in full Grinch costume, performed.  Jill Harmer and Brian Daly led the group in holiday and health care songs, including one by Lee Stanfield of Tucson with the line about Medicare “Don’t Privatize It, Supersize it.”

Ann Hagan-Grigsby spoke from her vast community health care experience to point to the need to both save Medicare from privatization and to win a national single payer system that will cover everyone.

Kay Tillow urged everyone to take action by calling congress (1-202-224-3121) and Health and Human Services Secretary Xavier Becerra (1-202-205-5445) demanding that they end the DCE program.  Local singer, songwriter John Gage had everyone joining him as he closed out the event with Pete Seeger’s “God’s Counting on Me, God’s Counting on You.”

Photos here and here.  Press release

Ron Hargrove 3 min video

Rolf Friis 36 min video

Thank you to Harriette Seiler for providing the sound equipment, taking photos, and handling the media release, to Peg Box and Charlie Casper for making the phone calls, to Ron Hargrove and Rolf Friis for videos (see above), to NationalSinglePayer.com for the poem, and to all who worked and participated to make it happen.

As a result of publicity about the December 11 protest at Humana, Kentuckians for Single Payer Health Care has had the opportunity to do a number of interviews on DCEs.  Here are two of them.

Building Bridges with Mimi Rosenberg and Ken Nash

Talk World Radio with David Swanson
 

Event by Kentuckians for Single Payer Healthcare

Join our protest at the Humana Bldg

500 W. Main St, Louisville, KY 40202

Save Medicare from Wall Street–Stop the DCEs

Don’t Privatize It, Supersize it!

Saturday, December 11, 2021, at 11:00 am EST

There must be a public outcry or we will lose Medicare.

Under a Center for Medicare & Medicaid Services (CMS) program now underway, more than 30 million seniors and disabled who chose traditional Medicare could be placed into largely investor-owned Direct Contracting Entities (DCEs) without the beneficiaries’ understanding or consent. We must not allow hedge fund managers to oversee our health care.

We will hold our protest in front of Humana headquarters because Humana has been identified as a DCE.

DCEs are yet another scheme to privatize Medicare. Like Medicare Advantage plans sold by the big insurers, the DCE program threatens traditional Medicare, and is designed to thwart the system our nation desperately needs–a publicly funded, improved Medicare for All. Everybody in; nobody out!

Tell Health & Human Services (HHS) Secretary Xavier Becerra to put a stop to DCEs. Call 1-877-696-6775.
Also call your member of Congress urging a hearing on this topic. House 202-225-3121; Senate 202-224-3121. Learn more about DCEs at www.nationalsinglepayer.com

Kentuckians for Single Payer Health Care www.kyhealthcare.org (502) 636-1551

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