By Alec Pruchnicki, MD
The budget for Medicare is almost a trillion dollars a year, and for decades the private sector has been trying to get more of this under its control so it can skim off considerable profits. A new scheme, Direct Contracting Entities (DCEs) has appeared and is a major threat to Medicare.
First, some history. The use of HMOs (Health Maintenance Organizations) to control costs of Medicare started during the Nixon administration, but the organizations were so unpopular that they were rebranded to disguise them (first as Medicare Plus then Medicare Advantage). Up to the end of 2005 almost 90 percent of Medicare enrollees opted for “original” or “straight” Medicare. But in 2006, when Medicare Part D, which provided some drug coverage, was passed, it was entirely privatized and many people who picked Part D plans joined HMOs. Medicare itself was prohibited by law from offering its own plan or even establishing cost guidelines. Medicare Advantage Plans grew until about 40 percent of Medicare recipients were in managed care plans. But, the 60 percent that weren’t provided a target for privatizers.
The Affordable Care Act established the Center for Medicare and Medicaid Innovation (CMMI) to see if new models of care and payment could be found. To protect it from political attacks it was given some independence and protection from congressional oversight. During the Trump administration, privatization advocates invented DCEs. In these plans, primary care physicians can sign up with a managed care organization and all of his/her patients automatically become enrolled in that plan without their prior approval or sometimes even their knowledge. They may be told by their doctors or by a mailing, joining the countless other solicitations they get in the mail. Many won’t know what happened until the DCE starts denying medical coverage which is what HMOs do and which is why they are so unpopular.
Why would a doctor sign on with a DCE? The majority of doctors are employed by doctor’s groups, hospitals, universities or HMOs themselves, and won’t have a choice unless they want to quit their jobs. Also, the DCEs, and HMOs in general, usually give bonuses for doctors who keep costs low and penalties for those who don’t. So, a doctor who never challenges the plan’s restrictions, prior approvals, lack of coverage, or other decrease of services can profit, and those who don’t can be hurt financially or by having to engage in time-consuming and often futile appeals. If many doctors, or their employers, sign up for these plans, it will be harder to find doctors who accept original Medicare coverage for patients. The patients themselves can always leave their primary doctors and hunt around for others, as suggested by Liz Fowler, CMMI’s director, but that is also often easier said than done. And, that’s just the beginning. Once the DCEs have an overwhelming share of the market, there is no telling what pressure they will impose on doctors or their employers. Once the DCEs have the power, they will use it to increase their profits and patients will suffer.
What can be done? Representatives Nadler and Maloney both support a letter from the Congressional Progressive Caucus asking President Biden to kill this program, and contacting them to show approval of their positions might help. Individuals, older adult advocacy organizations, or political organizations can ask Senators Schumer and Gillibrand to oppose the program. Perhaps a direct appeal to President Biden, who is pretty busy with other problems, can help. Physicians for a National Health Program (PNHP), a single payer advocacy group of which I am a member, is organizing doctors to oppose this.
A decision on DCEs may be made in the next few months. The damage they will likely cause, like the damage to medical care by all HMOs, could be extensive. If they are allowed to proceed, the answer to the question in the title of this article will be “Yes, this is the end of Medicare, or at least Medicare as we know it.”