The Center for Medicare and Medicaid Services “Innovation Center” is “piloting” a program in North Carolina and other states that will move traditional Medicare enrollees into third-party private, for profit middlemen — labeled “Direct Contracting Entities” — without your knowledge or consent, and without congressional oversight. 

Traditional enrollees are to be auto-aligned in DCEs if their primary care physician becomes affiliated with a DCE. CMS automatically searches two years of a senior’s claim history to find any visits with a participating DCE provider and assigns the enrollee to that DCE. This is all done without your knowledge or consent. The payment model is similar to Medicare Advantage plans, which means it incentivizes DCEs to both “upcode” diagnoses to increase capitation payments and then to spend as little as possible on patient care.

Upcoding is fraud in that the provider is getting paid a higher rate for a service that was not provided. It encourages rationing of care, because the DCE can keep as profit any of the capitation payment that is not spent on patient care. It is also about twice as lucrative as Medicare Advantage plans. Advantage plan are required to spend 85% of revenues on patient care. It is estimated that DCEs will only spend 60% of revenue on patient care while 40% can be kept for overhead and profit compared to 15% for Medicare Advantage plans.

It should be noted that traditional Medicare spends 98% on patient care and only 2% on overhead and nothing on profit. 

A recent Kaiser Health News report that ran at npr.org on 11/11/2021 showed that switching seniors to Medicare Advantage plans has cost taxpayers tens of billions of dollars more than keeping them on original Medicare. Medicare overpaid private health plans by more than $106 billion from 2010 through 2019 because of the way private plans charge for sicker patients.

Author of the report, Richard Kronick, former federal health policy researcher and a professor at the University of California- San Diego, called the growth in Medicare Advantage costs a “systemic problem across the industry,” which CMS has failed to rein in. Medicare Advantage plans have demonstrated that injecting a profit motive into patient care actually leads to higher costs for taxpayers with tragic consequences for patients. Why should we think that DCEs, with double the profit incentives, would be an improvement for traditional Medicare enrollees?

If you want to keep traditional Medicare, call your congressional delegation and ask them to demand HHS halt this insidious DCE program immediately; hold hearings on DCEs; and establish congressional oversight of the Center for Medicare and Medicaid Innovation Center.

Jane Harrison 

Haywood County