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Protect Medicare: Fight plan to code high, treat low

Medicare was enacted in 1965 after a fierce fight with doctors and the health industry. The same fears of socialized medicine and rationed care were shouted in 1965 as they are today.


Fifty-six percent of the elderly in 1965 and earlier couldn’t afford the cost of health care and were often living in poverty. Doctors and health care corporations were afraid a national program would cut into their profits. After enacting Medicare, health care became more equitable, allowed the elderly to live longer, healthier lives and increased physicians’ profits.

In 2019, the Centers for Medicare and Medicaid Services piloted a program called Direct Contracting Entities. DCEs are groups of doctors, hospitals and private equity firms that form “preferred provider” networks. Medicare pays DCEs a flat monthly amount per patient to cover a portion of each senior’s medical expenses.

Traditional Medicare spends about 98 cents of every dollar on direct patient care. The last administration developed the DCE program, allowing it to spend only 60 cents of every dollar, and keep the rest as profit. A dangerous financial incentive.

The previous administration piloted this DCE program in 10 large cities, which had large Black Indigenous People of Color populations, and enrolled those seniors in the program involuntarily. Direct contracting isn’t a matter of law – Congress never voted on this. If you haven’t heard of DCEs, that was by design.

After pushback from tens of thousands of seniors, including doctors and nurses, in February 2022, CMS announced the termination of the controversial DCE program. Unfortunately, it replaced it with an identical pilot called the ACO REACH model. As of March 2022, DCEs are now called “ACO REACH” (Accountable Care Organization – Realizing Equity Access and Community Health). The nonpartisan Congressional Budget Office’s recent research has shown that ACOs have performed below their estimates of cost-effectiveness claims.

Medicare pays a middleman, ACO REACH, a flat fee to manage seniors’ health. The ACO REACH payment model establishes an incentive for middlemen to restrict patient care, resulting in higher profits, this has never previously existed in traditional Medicare.

Traditional Medicare beneficiaries are still being automatically enrolled into ACO REACH entities without their consent, and once enrolled, cannot opt out unless they change primary care providers. This is a burden for anyone on Medicare, but especially for those in rural communities.

Investors want a return on their investment, a dangerous incentive for ACO REACH middlemen to both maximize revenues through “upcoding,” and minimize expenditures by restricting patient care. Upcoding is when the insurance company makes its seniors appear sicker: If the patient has hypertension, it will say the patient has malignant hypertension. If the patient is prediabetic, it will code the patient as diabetic. This gets them larger reimbursements from CMS. This is also a well-documented problem with Medicare Advantage programs, which serves 42% of Medicare enrollees. They both code high and treat low.

Privately run Medicare Advantage programs’ upcoding has fraudulently cost the Medicare Trust Fund over $106 billion as of 2019. Money that could have been spent on seniors’ care. Initially, Medicare Advantage programs claimed they could run insurance more efficiently than the government, improve care and save more money in the process. Medicare Advantage programs have cost $143 billion more than traditional Medicare, looting public funds and depreciating care.

Inserting private programs in Medicare threatens seniors’ lifelines.

Twenty-five thousand doctors oppose the ACO REACH model and called on CMS to eliminate all profit-seeking in Medicare.

Please call our senators, requesting they stop the ACO REACH program immediately and all profit-seeking private plans in Medicare. The only change we need for Medicare is to improve and expand the coverage. Put an end to ACO REACH and Medicare Advantage. Save the Medicare Trust Fund for future generations.

Jan Phillips, a retired small business owner, is a health educator, advocating for health care reform.