Working to Stop ACO REACH from Destroying Medicare

Based on AREF research and under lobbying pressure from the NRLN and others CMS will end Direct Contracting and transition to ACO REACH beginning January 1, 2023. CMS is doubling down on subsidies.

The Centers for Medicare and Medicaid Services (CMS) under President Biden’s administration was moving ahead in 2022 with Direct Contracting (DC), an ill-conceived plan announced, but not fully implemented by December 2020 under President Trump’s administration. Based on AREF research and under lobbying pressure from the NRLN, some other retirement advocacy groups and a few members of Congress, CMS announced on February 24, 2022, it would end Direct Contracting and transition to ACO REACH beginning January 1, 2023.

Rather than retract subsidies and require that insurance companies compete on a level playing field, Congress is funding CMS to double down and that has created a new Accountable Care Organization (ACO), called ACO REACH. It will receive even more subsidies, doctors can be paid increased salaries and bonuses. ACO REACH private ownership can keep up to 100% of savings generated. Outside investors can control 25% of an ACO REACH.

ACO REACH is for those in original (also called traditional) Medicare only and includes those who are also covered by a Supplemental or Medigap plan that covers the 20% that Medicare does not pay. A scary and unexplained feature is that while ACO REACH is supposed to serve non-MA plans for retirees, they can and are selling MA plans. The NRLN expects ACO REACH enrollees to experience service delays, closure of rural care hospitals and clinics, benefit denials, even more private networks, and ultimately total privatization of Medicare.

What the AREF has uncovered for the NRLN so far (end of October 2022) is that Congress, through CMS, will spend even more tax dollars to get private business to take over Medicare. MA plan insurers and now ACO REACH contractors are and will be sustained at higher profit levels through provider bonus and cost sharing plans that will increase, not lower, the cost of healthcare. Increased healthcare costs and built-in inefficiencies will be dumped on enrollees. This is a political cost conundrum that will cascade to all Americans and lead to significant reductions in purchasing power. Is this what Congress, the Executive Branch and political parties want for retires and the country?

There is evidence that ACOs benefit from about 11-12% in benchmark increases and expenditure reduction adjustments combined, and that again, Congress, CMS and the healthcare industry are reinventing another loser and reproving that they can’t compete without taxpayer subsidies. The apple does not fall far from the MA tree!