Medicare is a successful and valuable government program that provides health care to the elderly, disabled, and people with end-stage kidney disease. The Traditional Medicare (TM) approach provides needed, quality health care with much lower administrative costs than private health insurance such as Medicare Advantage (MA). However, this much-loved public program now risks being turned into yet another cash cow for Wall Street investors and the private health insurance industry at the expense of the public.
How is it going ? Well, the Affordable Care Act of 2010 created the Center for Medicare and Medicaid Innovation (CMMI). The goal of this center was to identify “ways to improve the quality of health care and reduce costs in Medicare, Medicaid, and Children’s Health Insurance Program (CHIP)”.
Importantly, this innovation center was authorized to test alternative payment and service delivery models nationwide without congressional approval. Being able to avoid Congressional politics makes sense as long as there is assurance that these public programs will not be undermined.
The CMMI file
Initially, the CMMI focused on relatively small pilot projects. In a December 2021 article, Ryan Grim of The Intercept discussed CMMI and its plans. Grim cited a February 2021 article by Brad Smith, who became CMMI’s director in January 2020. Smith wrote, “The vast majority of Center models haven’t saved any money, with several on the verge of lose billions of dollars. Similarly, the majority of models do not show significant improvements in quality. Smith identified “inflated benchmarks” – in which providers grossly overestimate what they expect a patient to cost – and providers’ ability to “game” payment models as major drivers of wastage for the patient. government. Smith’s concern about inflated benchmarks and playing with the system probably also applies to private MA plans that cost more than the TM approach.
Former President Trump’s appointees to lead the CMMI greatly expanded the scope of the pilot project idea and focused on a Direct Contracting Entity (DCE) model. According to Physicians for a National Health Program (PNHP), these DCEs are essentially third-party intermediaries who receive a monthly per capita payment from the Centers for Medicare & Medicaid Services (CMS) to cover a set portion of each enrollee’s medical expenses — and can keep what they don’t pay for in care. PNHP added, “Virtually any company can apply to become a DCE, including investor-backed startups that include primary care physicians, (Medicare Advantage) plans and other commercial insurers, responsible care organizations ( ACO) or ACO-like organizations, and for-profit hospital systems.
This profit-based incentive model could threaten the health of enrollees and quickly lead to the privatization of this vitally important public program. This privatization is a long-held dream of many conservative ideologues as well as Wall Street.
The Biden administration and the DCEs
I had hoped that President Biden’s administration would have stopped the implementation of DCE models. However, according to PNHP, the CMS Innovation Center’s director of strategy said in late October 2021 that the agency “envisions a future where every Medicare beneficiary and most Medicaid beneficiaries are in a responsible care relationship by 2030,” signaling their intention to rapidly expand the ECD Program to cover all TM recipients over the next eight years. Note that this change would likely occur without the understanding or consent of TM recipients. However, the Biden administration has delayed the worst kind of proposed DCE models, but two other kinds are moving forward.
The PNHP added, “Currently, the pilot involves 53 ECDs in 38 states, DC and Puerto Rico, covering 30 million of the 36 million TM beneficiaries. … The majority of DCEs (28 out of 53 in total) are controlled by investors – not providers – and most have ties to commercial MA insurers. It’s not really a pilot project.
what you can do
PNHP asks you to call your congressman at 202-224-3121 and ask them to demand that Health and Human Services end this Medicare DCE program; hold hearings on ELDs; establishing congressional oversight of the Center for Medicare and Medicaid Innovation; and sign his petition at pnhp.org.