About Medicare privatization

Sadly, getting the fraudsters out of ACO REACH will not improve a program designed to enrich corporations and harm patients. This entire apple cart needs to be overturned. Graphic from an Indivisible Twitter feed.

No amount of fraud deters government
agencies when it comes to privatizing Medicare

by Ana Malinow & Kay Tillow — Common Dreams

On January 17, the Center for Medicare and Medicaid Innovation (CMMI) announced 48 new model participants in a controversial pilot program called Accountable Care Organization: Realizing Equity, Access, and Community Health, better known as ACO REACH. CMMI, created by the Affordable Care Act, is supposed to test alternative payment models for Traditional Medicare to lower costs and improve, or at least not worsen, the care of 30 million seniors and people with disabilities.

The program, launched in the waning days of the Trump Administration as Direct Contracting, was greenlighted by the Biden Administration in 2021 and renamed ACO REACH in 2022. The model, which started with 53 contracting entities under Trump has grown to 132 participants with 131,772 health care practitioners and organizations providing care to over 2 million beneficiaries on Traditional Medicare under President Biden. Startling research found many of the ACO REACH participants have a history of Medicare fraud. Nevertheless, Medicare continues to sign contracts with them.

ACO REACH is a program designed to privatize what is left of public Medicare. Half of Medicare has been privatized through Medicare Advantage plans, which receive up-front “capitated” payments for Medicare beneficiaries from the Center for Medicare and Medicaid Services (CMS) and have the power to decide whether and how much of those Medicare dollars to spend on the beneficiaries who signed up for their plan. The Affordable Care Act allows Medicare Advantage plans to keep up to 15% of these Medicare dollars for administrative fees and profit (although they have clever ways to get around this restriction). To make these profits, Medicare Advantage plans create narrow networks for their beneficiaries, deny and delay care, and get overpaid by CMS, cashing in on billions of Medicare dollars.CO REACH uses similar tactics to those found in Medicare Advantage to profit from Medicare by overcharging Medicare, financially incentivizing providers to control healthcare costs for beneficiaries, and increasing the number of beneficiaries in their plans. But while some seniors “choose” to participate in Medicare Advantage, seniors and people with disabilities are auto-enrolled into an ACO REACH through their primary care physicians (PCPs). Thus, it is physicians and physician practices which are being lured into or forced to join the ACO REACH (Many physician practices are being swooped up by private equity or created whole-cloth). Physician practices, or their controllers, are enticed by the “shared savings” they will collect if they save money on their patients, shredding the trust between doctors and patients.

Once the PCP joins, their patients are automatically enrolled into the ACO REACH, without their informed knowledge or consent. While Medicare Advantage plans are allowed to keep 15% of the capitated fee for profits and administration, ACO REACH organizations, which include private equity and venture capital firms, as well as Medicare Advantage plans and insurance companies, can keep up to 40% of the capitated, up-front fees from Medicare as profit, guaranteeing themselves excessive payouts as they play out the eventual demise of the Medicare Trust Fund.

We were assured by CMMI that the new vetting process for all applicants was supposed to “ensure participants’ interests align with CMS’s vision.” They promised to protect beneficiaries and the model with “more participant vetting, monitoring, and greater transparency.” They pledged to employ “increased up-front screening… monitoring… and stronger protections against inappropriate coding and risk score growth.”

Yet, in a letter sent by Senator Elizabeth Warren (D-Mass.) and Congresswoman Pramila Jayapal (D-Wash.) to CMS Administrator Chiquita Brooks-LaSure in December 2022, they called on CMS to investigate nine organizations that had signed contracts to become an ACO REACH: Centene, Sutter Health, Clover Health, Adventist Health System/AdventHealth, Humana, Vively Health, Cigna/CareAllies, Bright Health/NeueHealth, and Nivano Physicians. The letter pointed out that all these organizations have been accused, investigated, settled claims, and/or sanctioned by governmental agencies for Medicare fraud and abuse.

Recently, CMMI Director Liz Fowler—a poster child for the revolving door in D.C.—was a guest speaker at the ACO REACH educational forum held by the California Public Employees Retirement System, the largest public pension fund in the country. When asked about private equity in ACO REACH, Fowler responded, “My personal opinion, you can’t say that private equity is inherently bad or good, but the way we viewed it, we want to make sure that the organizations in our program are in it for the right reasons.” And the right reasons for Fowler might very well be profit, given that six of the nine organizations identified by Warren and Jayapal are publicly traded in the stock market.

Given Director Fowler’s personal opinion of private equity firms, it comes as no surprise that most of the Medicare fraudsters—including: Cigna/CareAllies, accused by the Justice Department of using a primary care program to defraud Medicare; Bright Health/NeueHealth, fined $1 million by the Colorado Division of Insurance for complaints from consumers and providers; Clover Health, which failed to let investors know it was under investigation by the DOJ as it was going public and even fined by CMS in 2016 for engaging in marketing activities that misled their beneficiaries; AdventHealth (formerly Adventist Health System), that paid $115 million to settle allegations of improper financial arrangements with referring physicians and for miscoding claims; Humana that overcharged Medicare by $200 million according to a federal audit; and Nivano Physicians, previously under a corrective action plan with the Department of Managed Health Care for lacking financial solvency—all made it through and became approved as ACO REACH.

Only three of the original nine identified in the Warren-Jayapal letter failed to get a contract with CMS: Centene, Sutter Health, and Vively Health. Fowler refuses to say whether these corporations pulled out on their own or were rejected.

The Centene Corporation, with Medicaid contracts in 29 states, settled potential fraud claims in a dozen states to resolve Medicaid fraud claims for an estimated $1.25 billion. Sutter Health, a major California-based healthcare system, agreed to pay $90 million to settle allegations of knowingly submitting inaccurate information about the health of beneficiaries in the Sutter Medicare Advantage plans. DaVita HealthCare Partners Inc., one of the largest for-profit kidney dialysis providers and parent company of Vively Health, paid $450 million in 2015 to settle a whistleblower lawsuit, which accused DaVita of “intentionally wasting medications in order to overbill Medicare.”

What earthly reason would there be to exclude companies from ACO REACH but allow them to continue their plunder in Medicaid, Medicare Advantage, and subsidized on the ACA Exchanges?

The hypocrisy of CMS and CMMI is on full display. As is their collusion with the profiteers. Sadly, getting the fraudsters out of ACO REACH will not improve a program designed to enrich corporations and harm patients. The entire apple cart needs to be overturned and replaced with a national, non-profit, single-payer healthcare system that covers everyone from birth to death with all necessary medical services including long-term care, hearing, vision, dental, and prescription drugs. Only then can we stop worrying about the fraudsters.


Dr. Ana Malinow is a retired pediatrician living in San Francisco. She is one of the lead organizers for National Single Payer, an organization that works locally for national single payer health care.

Kay Tillow is the coordinator of the All Unions Committee for Single Payer Health Care, which builds union support for national single payer health care. She lives in Louisville, Kentucky.


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