Lame CMS Defense of REACH, the Corporate Takeover of Traditional Medicare

May 5, 2022

Summary: Medicare’s funder is defending its plan to yield control of the traditional fully public side of Medicare to private investors. The evidence they present is flawed, and the story they tell is misleading. This is abetting a corporate Medicare money grab.

Expanding Accountable Care’s Reach among Medicare Beneficiaries
By Douglas Jacobs, Purva Rawal, Liz Fowler, and Meena Seshamani
New England Journal of Medicine
April 27, 2022

The CMS Medicare ACO [Accountable Care Organization] portfolio consists of the Center for Medicare’s Shared Savings Program and the Center for Medicare and Medicaid Innovation’s ACO models. The Shared Savings Program, now 10 years old, includes 483 ACOs serving more than 11 million Medicare beneficiaries and more than 525,000 participating clinicians. Such ACOs have been found to perform better on certain patient-experience and performance measures than physician groups participating in the Merit-Based Incentive Payment System (see table). The Innovation Center has tested several ACO models, of which the Pioneer ACO and ACO Investment Models have achieved net savings; others, including the Advance Payment ACO Model and the Next Generation ACO Model, have not. …

The Innovation Center is currently testing the Global and Professional Direct Contracting Model, which has been redesigned as the ACO Realizing Equity, Access, and Community Health (ACO REACH) Model. This model will examine the effects of new risk-sharing arrangements in traditional Medicare, additional flexibility for beneficiaries (such as the ability to receive in-home care management), provisions for advancing health equity, and reduced administrative burdens for providers on quality of care and Medicare’s costs.

Comment by: Jim Kahn

This is a defense by CMS (the Medicare funder) of the new ACO REACH program, the relabeled “Direct Contracting Entities”. Dr. Fowler runs CMMI, the part of CMS that oversees these programs. HJM has already critiqued REACH. And this new defense is unconvincing. Scrutinize the key assertions:

Assertion 1: ACO programs saved $6 billion for CMS over five years.

Sounds like a lot of money, but it’s only 0.3% of relevant Medicare spending in that period.

And, it’s imaginary, for three reasons:

(a) It’s based on a strain-credulity extrapolation from data pre-2016 to after 2018. That is, it’s a structured guess.

(b) The estimated small savings pre-2016 come from ACOs that remained in the Pioneer program, yet the ACOs that dropped out – and thus were omitted from calculations – had near zero savings (see here, page 74). In medical research, that’s called biased attrition, and violates “intention to treat” analysis standards. It exaggerates the effect, even creates an effect where there isn’t one.

(c) To make matters worse, we have very good evidence that ACOs upcode diagnoses. This is another way to create apparent savings when there aren’t any.

Assertion 2: ACOs improved quality

The table lists some quality improvements. However, note the small (and mostly statistically non-significant) differences between ACOs and the comparison group. More importantly, note that only 10 measures are listed out of at least 40 — cherry-picking the favorable findings.

Assertion 3: REACH builds on this ACO success

Even if ACOs did work (unlikely, see above!), to equate DCEs and ACOs is ridiculous.

ACOs were predominantly medical provider organizations. In contrast DCEs are predominantly investors – private equity. They are flocking to this business opportunity because they see big dollar signs. They can upcode diagnoses to raise payments from Medicare, reduce care, and keep all of the net savings up to 25% (and more after that).

REACH, though packaged more cleverly than DCEs, is also designed for and dominated by investors. REACH highlights equity, but the fundamental profit-taking structure is intact.

CMS is slanting the playing field toward corporate investors, enabling private companies to steal hundreds of billions from Medicare right in front of our eyes.

When will we say, “Medicare is for patients, not profits”? When will we say, “Medical care is for patients, not profits”? When will we say, “Time for single payer”?