In 2020, the Trump administration launched a plan to hand traditional Medicare over to Wall Street. Inexplicably, the Biden administration is playing along.
The overwhelming evidence demonstrates that the plan will drive up healthcare costs, inhibiting people from getting needed care.
So-called Direct Contracting Entities, DCEs, must pay for the care of the people assigned to them.
Here's the sweet part for Wall Street: In addition to the normal profits from providing services, these firms can keep as much as 40 percent of the money they don't spend on care. Talk about a financial incentive to deny treatments.
In addition, a new safe harbor rule lets DCEs owned by the same investors shuffle money between them without risking civil or criminal penalties for paying kickbacks. That's the kind of system that makes profiteering easy.
In phase one of this healthcare experiment, the Centers for Medicare and Medicaid Services, CMS, pays 53 DCEs. They receive a fixed amount of money to cover care for each traditional Medicare enrollee whose primary care doctor signs up with that DCE. The government already auto-assigned hundreds of thousands of people to DCEs.
Since people on Medicare did not sign up for this, they likely do not know or understand what's in store. Yes, they should have received written notice of their new status. But CMS treats the change as if it does not affect the quality of care provided to these older and disabled people.
Hiding a Right
Astonishingly, CMS does not require DCEs to tell people that they have the right to opt-out, let alone alert them that there is good reason to do so. Unfortunately, the only way to opt-out is to switch to a new primary care doctor who is not a part of a DCE. You can call 800-MEDICARE for further information.
Anyone enrolled in a DCE should worry that their primary care doctors will limit their access to costly necessary care. The DCEs are likely paying these doctors more to keep patients away from specialty care or providing them with guidance to delay and withhold care. We have seen this profit-maximizing before, and it isn't pretty.
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With Medicare Advantage, which corporate health insurers administer, the Office of the Inspector General found widespread and persistent inappropriate delays and denials of care and coverage.
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The Biden administration continues to mislead people about Medicare Advantage or Part C of Medicare with information claiming it offers people more than traditional Medicare without explaining its risks, including considerable financial and administrative barriers to care.
Conflicts of Interest Abound
These business models mean that providing quality health care and abiding by their legal obligations is at odds with profiting handsomely, reports by government agencies and independent researchers have shown again and again.
Private equity firms and corporations that own or operate dialysis centers, hospice programs, long-term care programs and even dermatology practices put their own interests first, to the detriment of their patients, government watchdogs found.
Similarly, the DCEs can deliver more for their investors when they avoid paying for costly care.
How can they do that? Unlike other wealthy countries and large employers in the United States, our government pays a flat fee per person to insurers regardless of the amount they spend on care. Unlike other wealthy countries, our government does not dictate the terms for providing care. Instead, our government lets DCEs decide when to cover care and to do so without accountability. The DCEs don't even have to make public their coverage policies.
Covering Medicare benefits, which DCEs must do, is very different from providing people with the medically necessary services and treatments they need.
For example, as far as a DCE is concerned, three physical therapy visits might be all that is medically necessary after a hip replacement, even though many more are needed. Likewise, a DCE may decide a plain old X-ray will suffice when the treating physician has determined that an MRI is required.
What Wall Street Loves
Why would the Biden administration want to give corporations control over the health care of the most vulnerable Americans?
Wall Street loves it. And the Trump administration, which promised to drain the swamp and stop Wall Street predations, instead turned Washington into a prosperous paradise for the worst Wall Street predators.
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This move away from quality healthcare service to profit-oriented denials of care is worth hundreds of billions of dollars a year in taxpayer money flowing to private industry.
The CMS description of the program shows how much it is directed at Wall Street, not to the quality of care.
The DCE approach "draws upon private sector approaches to risk-sharing arrangements and payment with reduced administrative burden commensurate with the level of downside risk.
"The risk-sharing options… also includes a reduced set of quality measures that focuses more on outcomes and beneficiary experience than on process.
"By providing flexible options with regard to, for example, risk-sharing arrangements, financial protections, and benefit enhancements" they are expected to be attractive to people with Medicare but also to "organizations that have experience with risk-based contracts." That's a euphemistic way to refer to the DCEs financed by Wall Street.
That description, interestingly, is contained in an announcement about a new rule that effectively exempts related DCEs from civil and criminal liability for paying kickbacks so long as they pay in accord with the new rule.
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If that sounds like a license to loot the Treasury, it's because that is precisely what it can and likely will become.
Basically, one DCE can make payments to a brother or sister entity, which can become a way for these related businesses to keep more of the money taxpayers pay them.
President Joe Biden won in part because of his commitment to science and data. Yet politics, so far, has gotten in the way of cost-effective health care.
Consequently, the Biden administration is forcing our nation's elderly into DCEs, essentially a new form of Medicare Advantage plans, against their will and generally without their knowledge or consent.
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These private business dis-Advantage plans are a far less cost-effective, quality-questionable arm of Medicare.
Pilot Program Metastasizes
Direct contracting is supposed to be a pilot program, yet Medicare has no plans to limit the number of people it enrolls in these new plans. Instead, Medicare has announced plans to enroll 100% of traditional Medicare members into DCE-like programs by 2030.
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This massive handover appears to violate the limited authority that Congress granted to conduct an experiment. Without any Congressional oversight, CMS is moving all people on Medicare into these private business plans by the Orwellian redefining of its direct contracting authority with providers and suppliers.
Through the Medicare Innovation Center, Congress gave CMS authority to test new models for paying for care provided that they neither increase costs nor undermine quality.
Our Congress did not authorize models that are known to be more costly, that are subject to large-scale inappropriate denials of care or to systems that involve private insurers and investors as intermediaries with complete control over people's care.
Our Congress did not authorize the wholesale overhaul of traditional Medicare, so why is this happening?
The Biden administration should be held to account immediately and pressured to halt this dangerous and costly Medicare transformation. And members of Congress, especially on the committees that oversee Medicare, need to hold public hearings where people denied care would testify to their experiences.
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