Doctors, Lawmakers See Danger in Moving Medicare Toward Privatization

In addition, The Senior Citizens League has “seen no reports to indicate whether savings [with the ACO program] will be financially advantageous for beneficiaries as well. Will ACOs slow the rate of increase in base Medicare Part B premiums (currently at $170.10) or pricey supplemental Medigap insurance premiums that currently average $235 a month for beneficiaries?” writes Mary Johnson, the advocacy group’s Social Security and Medicare policy analyst, in its May newsletter.

However, some proponents of the new program stated that “criticism against the [ACO] model are misleading and flat out false,” in a February letter from the National Association of ACOs, which was signed by 200 various health care organizations.

“Traditional Medicare patients maintain their freedom of choice to see any willing provider. They keep all of their rights and protections, and in fact, get more benefits and lower cost care through the model,” they stated. ”This is not the end of traditional Medicare … but a way to provide additional beneficiary and provider tools as part of the whole-person approach.”

Private Equity and SPACs

But the fear of having ACOs become a key part of traditional Medicare is that the owners are not necessarily health care organizations, such as large physician practice groups. Indeed, there has been a “surge” in investment in ACO groups by private equity firms and insurance companies.

This has become a ripe investment area as the U.S. population ages. And as Miller noted, “most of the investment activity is coming from special-purpose acquisition companies or SPACs, private equity firms and health insurance companies already dominant in the Advantage business.”

And though an AARP spokesperson said in an email to ThinkAdvisor that it had not “commented specifically on the ACO Reach program,” in its letter regarding MA programs, it said that it shares the concern by CMS on third-party marketing of MA programs and a “rise in marketing-related complaints from beneficiaries.”

They note that in 2021 there were 33 different plan options, and determining which is best is a “daunting process for even the most knowledgeable consumers. This challenge has been exacerbated by the MA program’s history of marketing abuses involving enrollment.”

Further, they “strongly” support the proposal to “restore network adequacy review standards when an MA plan applies for a new or expanded service area,” stating that per the previous administration’s rules, a network had to only “attest that it has an adequate network.”

Even the HHS inspector general had some concerns with MA programs, stating in an April report that it found a 13% to 18% rate of denied prior authorization and payment requests that met Medicare coverage rules.

Fixing Medicare

Many practitioners have advocated keeping Medicare as is, with some tweaks to strengthen it. Dr. Ed Weisbart, chair of the Missouri chapter of PNHP and assistant professor of clinical medicine at Washington University in St. Louis, told Healthcare Innovation in March 2022:

“There’s a school of thought that drives Medicare Advantage, and drives a lot of the innovation out of Medicare Innovation Center, which says that the root problem is [traditional Medicare] fee-for-service. And so, they want to move everything over to capitation. And that to me is, on its face, just ridiculous,” he said.

“We really should eliminate [or] greatly reduce the copays and deductibles of traditional Medicare. … This could fix the personal finance aspects of traditional Medicare and then other things could be experimented with like adding in hearing, vision, and dental. These are things that improve health outcomes and should be inexpensive to offer. So, improve traditional Medicare and stop giving an unfair advantage to Medicare Advantage.”

Likewise, Dr. Ana Malinow, past president of PNHP and professor of pediatrics at the University of California-San Francisco, told Healthcare Innovation that “traditional Medicare is working pretty well. … we should be looking at what it is that traditional Medicare is doing better than Medicare Advantage. The profit motive there is not making things better.”

ThinkAdvisor contacted several members of Congress and health organizations who had signed the various letters, as well as the CMS and HHS. They had not responded by deadline.

But as Miller stated: “The ACO model has important implications for the future of one of our most important social insurance programs. It shouldn’t be implemented without a robust discussion — and without the approval of Congress.”