Express Yourself: Medicare and Direct Contracting Entities

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This is part two of a three-part series that takes a dive into the history of Medicare, Direct Contracting Entities, and how citizens can make their voices heard to make change for Medicare.

By Wally Pearce
Special to the Express

The roots of Medicare Advantage go back to the 1970s. However, it wasn’t until the passing of the Balanced Budget Act in 1997, the program, then called “Medicare Choice,” became official.

The Medicare Advantage (MA) program, formally Part C of Medicare, originated with the 1982 Tax Equity and Fiscal Responsibility Act, which authorized Medicare to contract with risk-based private health plans, or plans that accepted full responsibility (of risk) for the costs of their enrollees’ healthcare.

But starting with the Balanced Budget Act of 1997, Medicare Advantage (MA) was officially created and began to contract with private insurers, like Kaiser, Blue Cross, Anthem, Cigna, etc., to provide health care coverage to beneficiaries and enrollees paid a fixed monthly amount. MA is another way to get Medicare Part A, Part B, and even Part D coverage.

Additionally, an MA plan offered only a limited network of doctors, which interfered with a patient’s choice. Moreover, enrollee’s that were unsatisfied with their choice of MA, discovered that it wasn’t easy to change to another plan during an enrollment year; and if an enrollee decided to switch their plan, they were subject to a lifetime of penalties. It’s no different today. In fact, in 2022, around 40 percent of Medicare beneficiaries were covered under Medicare Advantage plans.

Medicare offers Direct Contracting Entities (DCEs), payments to cover beneficiaries’ healthcare expenses. In addition, DCEs profit off any funds left over after costs are paid. Unfortunately, the target population for DCE’s are those uninformed senior citizens depending on Traditional Medicare as their healthcare provider.

DCE issues
Starting in 2022, many senior citizens are covertly being enrolled into a program run by third-party middlemen called Medicare Direct Contracting Entities (DCE), and they’re by their existence and clandestine intent ⎯ vermin preying on the defenseless. This is occurring without the senior citizens knowledge or consent. Absent oversight and accountability, in a few years, the DCE program is designed to privatize Medicare, without input from senior citizens or even a vote by Congress. It’s the first move where billions of dollars will be given over to Wall Street investors.

Senior citizens, and the disabled, that choose Traditional Medicare over Medicare Advantage, do so because they value having free choice of providers and the power to manage their own healthcare. But under the Medicare’s Direct Contracting Entities (DCE) program, senior citizens who chose Traditional Medicare, are automatically enrolled into a DCE without their permission. Senior citizens enrolled in Traditional Medicare may be aligned to a DCE if any of the primary care physician’s they’ve visited in the past two-years is affiliated with a DCE.

That means that Medicare automatically searches two years of a senior citizens claim history without their consent to find any visits with a participating DCE provider as the basis for enrollment. It’s no wonder that the current DCE pilot phase includes potentially over 30-million Traditional Medicare beneficiaries. California is an impacted state but all but three DCE’s reside in Southern California — so far. There are three DCE types, Standard, New Entrant, and High Needs, each of which is Medicare eligible with various risk arrangements.

As of April 18, 2021, in California there are at least 12-DCE’s:

  • CareConnect
  • Humana (throughout California)
  • Axceleran DCE1, LLC
  • Advanced Value Care II
  • 360 Health DCE Inc
  • Regal Medical Group
  • United Physicians Association, Inc.
  • CareMore Aspire Medical Innovation Partners, PC (now Anthem)
  • American Choice Healthcare, LLC
  • Vively Health (Livermore)
  • Nivano Physicians, Inc. IPA (Sacramento)
  • Central Valley Community Partners LLC (Freson, Modesto, and Bakersfield)

Centers for Medicare and Medicaid Services Administrator
The Centers for Medicare and Medicaid Services (CMS) is a federal agency and therefore the individual that runs the Medicare, Medicaid, and Children’s Health Insurance Programs, is appointed by the President, and confirmed by the Senate.

Expect more alarms going forward
Virtually any type of company can apply to be a DCE, including commercial insurers, venture capital investors, even dialysis centers. In fact, DCE applicants are approved by Medicare without oversight from Congress. This opens the door to ownership by for-profit entities with no health care expertise at all.
Wall Street investors are already tripping over themselves to get into the DCE program, and this should be a huge red flag for taxpayers, and anyone concerned about funding Medicare for future generations.

While Traditional Medicare spends an impressive 98 percent of its budget on patient care, DCE’s spend 60 percent of our tax dollars on patient care — keeping up to 40 percent of costs for their own profit and overhead and this could be a huge incentive to limit healthcare and build a pile of money.

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