Medicare Payment Option May Empower Fraudsters, Democrats Warn

A Medicare pilot program could be letting health care companies with a history of defrauding the government “further encroach on the Medicare system,” congressional Democrats warn.

A number of insurers and other groups participating in previous accountable care models have been accused of health care fraud, or settled fraud allegations, the lawmakers said in a Thursday letter to Chiquita Brooks-LaSure, administrator of the Centers for Medicare & Medicaid Services. The accountable care model is meant to help the agency lower costs by offering lump sums to doctors instead of the typical fee-for-service payments.

The move is the latest pushback by progressive members of Congress on areas of Medicare delegated to private insurers. CMS’s so-called ACO REACH model “provides an opportunity for health care insurers with a history of defrauding and abusing Medicare and ripping off taxpayers to further encroach on the Medicare system,” they wrote.

Progressive Democrats, led by Sen. Elizabeth Warren (Mass.) and Rep. Pramila Jayapal (Wash.), have been pushing the Biden administration to curb or end the program, which was once known as the global and professional direct contracting model, started under the Trump administration. CMS changed the name to ACO REACH and promised changes aimed at promoting health equity after lawmakers warned it could limit access to care.

Chip Somodevilla/Getty Images)

Sen. Elizabeth Warren speaks at a Capitol news conference in March 2021 as Rep. Pramila Jayapal looks on. The two progressive Democrats now are challenging a Medicare payment model that they say risks opening the door to fraud.

“I was vocal about the risks of this program when the Trump Administration put it in place, and I appreciate that the Biden Administration has made key improvements,” Warren said in a statement. “But I am still concerned it could serve as a back-door channel to privatizing more of Medicare, risking taxpayer dollars and beneficiaries’ health.”

The premise of the program is doctors can collect lump sums in lieu of billing the government for each service provided. Organizations that participate get a fixed budget to treat a group of patients and can reap some of the savings if those patients stay healthy and need less care.

Program participants say Medicare should shift toward this model to improve patient care because doctors reap more money from the program only when people get and stay healthy.

CMS officials have said the redesigned model will also reduce the incidence of providers overstating the seriousness of a patient’s condition in order to get higher payments.

Pushback

But progressive groups have claimed the program is a way to start privatizing traditional Medicare for the elderly and the disabled. Organizations including Physicians for a National Health Program that have lobbied on this issue have also broadly argued Medicare should be run and administered primarily by the government.

The doctors’ group, which advocates for a single-payer national health system, conducted a “preliminary review” and found that nine companies that participated in the old Trump-era model face allegations of fraud and abuse in various insurance programs — though not in the direct contracting model specifically. The review prompted lawmakers to write to CMS seeking information about how the agency screens participants.

These companies were accepted in the program in 2021 and have continued to operate in it as the model has grown, according to the letter.

“The exponential growth of the program heightens our concerns about the potential for fraud and abuse of taxpayer Medicare dollars,” according to the letter from Warren, Jayapal, and 19 other lawmakers, including Sens. Cory Booker (D-N.J.) and Bernie Sanders (I-Vt.).

Companies such Centene Corp., which owns three entities in the program operating in 27 states, and Sutter Health have paid to settle allegations they’ve inflated insurance claims or gamed Medicare programs to get larger payments, according to the letter.

Humana Inc., the second-largest Medicare Advantage insurer, and Cigna Corp. were also named in the letter.

With assistance from John Tozzi (Bloomberg News)

To contact the reporter on this story: Alex Ruoff in Washington at aruoff@bgov.com

To contact the editors responsible for this story: Robin Meszoly at rmeszoly@bgov.com; Anna Yukhananov at ayukhananov@bloombergindustry.com