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Progressive lawmakers call on CMS to cull companies with history of Medicare fraud from ACO REACH

At least 10 organizations with records of healthcare fraud and abuse participated in the direct contracting program last year despite CMS screening requirements, the letter said.

Healthcare Dive

Reporter Rebecca Pifer


More than 20 progressive lawmakers are raising concerns about ACO REACH in a new letter to the CMS, arguing the model gives insurers with a history of defrauding Medicare another toehold in the program and asking regulators to eject those entities from the alternative payment model.


ACO REACH, slated to begin in January, is a redesign of the direct contracting model called the Global and Professional Direct Contracting Model. It’s meant to tie traditional payments in Medicare to value and improve care coordination. Direct contracting entities from the original model are allowed to enroll as ACOs in REACH provided they meet the new requirements, and the majority are expected to stay on as the program swells from 99 participants in 2022 to as many as 202 currently planned in 2023.


At least 10 of those organizations have records of healthcare fraud, abuse and lawbreaking prior to 2021, but might still be allowed to transition into ACO REACH, according to the letter.


“Given our concerns, we ask that CMS closely examine the participants in the ACO REACH program, including those transitioning from the GPDC program, and take action to prevent those with histories of fraud and abuse from participating in the newly designed program in 2023,” the lawmakers, led by Sen. Elizabeth Warren, D-Mass., and Rep. Pramila Jayapal, D-Wash., wrote.


The direct contracting program, which allows private and for-profit entities to assume full or partial risk to manage patient care in traditional Medicare, has proved controversial. Single-payer advocates and progressive Democrats have called the model a veiled effort to privatize the Medicare fee-for-service program. However, providers and ACO groups have argued that criticisms of privitization aren’t based on facts and that direct contracting allows physicians to better provide team-based, preventative care.


Following the controversy, the CMS announced in February it was retaining the model with some fundamental changes and a new name: the Accountable Care Organization Realizing Equity, Access, and Community Health Model. Among other tweaks, ACO REACH has a stronger focus on health equity and provider governance.


However, the CMS did not bar companies that include private equity investors or other profit-seeking entities from participating — a key criticism levied by the program’s detractors and one re-upped by the legislators in the letter. As a result of such organizations’ participation, ACO REACH poses a “significant threat” to traditional Medicare by “extending the reach of many of the same bad actors that have driven tens of billions in excess costs in Medicare Advantage,” the lawmakers argued.


The review of DCEs was conducted by Physicians for a National Health Program, an adversary of the direct contracting model. It found at least 10 organizations with a history of defrauding government programs, including Medicare, were accepted into direct contracting despite the CMS’ screening requirements.


Those organizations include Centene, the parent company to three DCEs operating in 27 states, which paid over $97 million last year to setting allegations that it overbilled the Department of Veterans Affairs. In addition, its pharmacy benefit manager has faced allegations from multiple state Medicaid programs over overcharging, leading to settlements last year with seven states totaling more than $260 million.


Meanwhile, nonprofit Sutter Health operated a DCE while it settled with the government for $90 million last year for MA fraud. The integrated system also settled allegations of price gouging and anticompetitive practices in Medicare for $575 million in 2019.


Other organizations that operate DCEs called out for past abuse of Medicare include Clover Health, AdventHealth, Humana, Vively Health, Cigna, Bright Health and Nivano Physicians.

“We respectfully ask the agency to reevaluate the decision to allow these DCEs to participate in the program,” the lawmakers wrote to CMS Administrator Chiquita Brooks-LaSure.


CMS did not respond by time of publication to questions on its model screening processes and whether it planned to reconsider the companies’ participation in REACH.

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