Medicare Issues Revisited (ACO REACH)

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Medicare Issues

Reader Advice

Welcome to Medicare season. From October 15th to December 7th those of us who are Medicare subscribers are busy evaluating plans and trying to decide what to do.

I received a good comment on last week’s column on Medicare. I want to share it with all of you. Here it is:

“If you can, go with a Medi-GAP policy—not Medicare Advantage. Start with the best GAP insurance you can. Medicare Advantage banks on having enough healthy participants to offset expensive, unhealthy patients, and guess what? As you age, things aren’t going to improve. In my area, Medicare Advantage has been getting publicity for denying claims, even for in-network care.

Another reason to avoid Medicare Advantage: Once you’re in, it’s very hard to switch out. You have to show you do not have a number of pre-existing conditions before a private, -Gap insurer will take you on. So, get the best -Gap policy you can at the get-go.” Thank you.”

I will add to that this year I found some gap plans in my area were setting rates by neighborhood not by your health.

ACO-REACH - What The Heck Is That?

I received a request from a reader asking if I could clarify ACO REACH and it’s relationship to traditional Medicare and Medicare Advantage. First, the acronym. Accountable Care Organization Realizing Equity, Access, and Community Health.

Traditional Medicare, Medicare Advantage, DC/ACO-REACH

First, thanks to Physicians for National Health Program for their resources. Understanding ACO-REACH requires an understanding of Medicare so let’s review

Traditional Medicare (TM)

TM provides beneficiaries the free choice of any doctor or hospital, and reimburses providers at a set rate for their services. Because of TM’s simplicity, the program spends 98% of its funds on patient care, and only 2% spent on administration.  Remember, hospitalization, Part A, is mostly covered without monthly payment. Part B, medical, requires a monthly payment. Drug plans and gap plans are purchased separately. Medicare is largely an old style 80/20 co-insurance plan where you pay the 20%.

Medicare Advantage (MA)

MA is run mainly by commercial insurers for profit. The government (Medicare) pays MA insurers via “capitation,” a lump sum per enrollee; then MA insurers must spend 85% of those revenues on patient care, keeping the other 15% as overhead and profit. Taxpayers spend $321 more per year to cover a senior through MA compared to TM. Annual gross profit margins for MA plans averaged $1,608 per enrollee between 2016 and 2018. Remember you make more money by charging more (upcoding) patients and providing fewer services (denials).

Due to fraudulent upcoding, risk scores of enrollees in MA are 19% higher than in TM; causing Medicare to overpay MA insurers by more than $106 billion from 2010 through 2019. We have seen that the top Medicare Advantage providers under Department of Justice criminal investigations for this fraud. That includes for profit and not for profit Medicare Advantage insurers. P.S. Billions of dollars of fraud.

Direct Contracting

The Direct Contracting (DC) pilot program was developed during the Trump Administration (by a school roommate of Eric Trump’s) to further privatize Traditional Medicare (TM) using some of the same elements as MA. Here is a factsheet on it from PNHP. I recommend it.

Instead of paying providers directly for care, Medicare gives a capitation payment to middlemen called Direct Contracting Entities (DCEs). DCEs are then allowed to keep what they don’t pay for in health services, a dangerous incentive to restrict seniors’ care that did not previously exist in TM.

A majority of beneficiaries choose TM over MA because they value the free choice of providers and the power to manage their own care. However, millions of beneficiaries who actively chose TM were being automatically enrolled into third-party DCEs without their full knowledge or consent.

Direct Contracting Business Model

DCEs are incentivized to increase capitation payments by “upcoding” diagnoses, and to decrease expenses by spending as little as possible on care. However, opportunity for profit is much higher in DC: While MA insurers must spend 85% of Medicare payments on patient care, DCEs can spend as little as 60% of revenues on care, keeping up to 40% as profit and overhead.  

Virtually any type of company can be a DCE, including commercial insurers, venture capital investors, even dialysis centers. Applicants are approved by CMS without input from Congress.

The DC pilot officially launched in April 2021 with 53 DCEs in 38 states, enrolling 344,000 beneficiaries. A majority (28) of the 2021 cohort of DCEs were controlled by investors. Of the investor-owned DCEs, six were owned by four different MA insurers. CMS paid DCEs a cumulative $3.6 billion. 

Impact on Patient Choice - How it Works

Medicare “auto-aligns” beneficiaries into a DCE based on their relationship with a DCE-affiliated primary care provider. To do this, Medicare automatically searches two years of beneficiaries' claims — without their knowledge or consent — for any recent encounters with a DCE-affiliated provider. They are then automatically assigned to that DCE. If a senior is auto-aligned to a DCE, the only way to remove themselves from the DCE is to change primary care providers.

DCE-aligned patients are allowed to get medical care outside of their DCE’s network; out-of-network providers are then paid directly by Medicare at Medicare-contracted rates, and CMS reconciles those costs back to the DCE. Therefore, the DCE has a financial incentive to steer patients to specialists within its network, where the DCE has direct influence over the payment model. If the patient now chooses out of network providers, then TM takes over. It is still complicated.

Direct Contracting Becomes REACH

A large public outcry caused the department of Health and Human Services (HHS) to stop the DCE experiment. In fact, in January 2022, 54 members of Congress sent a letter to Sec. Becerra demanding an end to the DC program, and in early February, Sen. Elizabeth Warren spoke out against the program in the Senate. 

In response to this growing opposition, The HHS Organization, the Center for Medicare and Medicaid Services (CMS) announced in late February of 2022 that it was canceling DC at the end of 2022, but replacing it with a nearly identical privatization program called “ACO REACH” which went live on Jan. 1, 2023.  Providers have to demonstrate quality care but it is really like students grading their own exams. I found they typically gave themselves A’s. They must submit a health equity plan based on a fill-in-the-blank worksheet; which is neither measurable nor enforceable. 

Despite the rebranding, ACO REACH retains all the most dangerous elements of DC.

• Investor- owned middlemen who can pocket up to 40% of Medicare payments as profit and overhead;

• Automatic enrollment of beneficiaries who must change providers to opt out;

• Opportunities to increase profits by “upcoding” and restricting care

• The potential to expand privatization to all of Traditional Medicare.

As one industry analyst put it, the ACO REACH rebranding  is a “public relations exercise ... that should not tangibly impact the for-profit entities currently participating in the model.” 

Here is a link to the Government’s ACO-Reach webpage. You can sign up for regular email updates near the bottom of the page.

ACTIONS

1. Sign on to PNHP’s Organizational Letter

Organizations can sign on to PNHPs letter protesting the implementation of ACO REACH here. If you work at a medical organization, are part of a non profit, or other activist group, think about adding your group.

2. Sign the PNHP Petition to Congress

You can do that here. It asks them to halt the program.

3. You Can Ask Congress to Stop It

Ask your Senators and Congressional Representative to send a letter to Xavier Becerra (HHS) and Laquita Brooks=LaSure (CMS) to halt ACO.

You can call/email using the links in the Resources section or use RESISTBOT and text SIGN PPQSTW to 50409 to send the email below.

“I am your constituent and I am appalled that the Department of Health and Human Services and the Center for Medicare and Medicaid Services are operating the ACO REACH program.

Here is a brief summary of this Trump Era giveaway to private companies. Traditional Medicare recipients are signed up without their knowledge into medical networks and have to change doctors to go back to Traditional Medicare. ACO REACH middlemen get to keep 40% of the money the government gives them to care for patients as profit. There is huge incentive to deny service. There is also an incentive to list patients as sicker than they are to get larger capitation fees from the government.

I want you to send a letter to both Xavier Becerra, Secretary of the Department of Health and Human Services and to Chiquita Brooks-LaSure, head of CMS and tell them that this is a huge giveaway of public funds, takes choice away from seniors, and, like Medicare Advantage, is set up to be rife with fraud. Let seniors have the Medicare they were promised. Here are their email addresses.

xavier.becerra@hhs.gov

Chiquita.Brooks-LaSure@cms.hhs.gov”

Thank you.”

RESOURCES

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Contact State and Federal Representatives

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Important Healthcare Resources

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Organizations to Contact

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One Payer States

Healthcare Now

Reproductive Health

NARAL - Pro Choice America

Charley. chatbot abortion resource - make sure to use a secure incognito browser if you live in a state that has banned abortion

Planned Parenthood

Miscarriage and Abortion Hotline has references about where to procure abortion medications. They also assist women in the process of self managed abortion or miscarriage by phone or text and will respond in an hour. Details and hours of operation at their website.

United State of Women Reproductive health page (bottom of the page) has important resources such as medical support, access to Telehealth, prescriptions by mail, and legal support references.

Practice careful communications - The Digital Defense Fund has a number of tips to keep texts, calls, and internet use private. Here is their site.

If you need financial help with an abortion try abortionfunds.org

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Cybersecurity Infrastructure Security Agency

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Specific Advice

Save Democracy

Chop Wood, Carry Water by Jessica Cravens

RESISTBOT

Link to the RESISTBOT site to learn more

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