Physicians for a National Health Program Leaders Express Disappointment in ACO REACH Model

March 11, 2022
Two leaders from Physicians for a National Health Program spoke with Healthcare Innovation about the redesign of the Accountable Care Organization model and their opposition to direct contracting overall

As Healthcare Innovation reported on Feb. 25, the Centers for Medicare & Medicaid Services (CMS) announced a redesigned Accountable Care Organization (ACO) model “that better reflects the agency’s vision of creating a health system that achieves equitable outcomes through high quality, affordable, person-centered care.”

The release stated, “The ACO Realizing Equity, Access, and Community Health (REACH) Model, a redesign of the Global and Professional Direct Contracting (GPDC) Model, addresses stakeholder feedback, participant experience, and Administration priorities, including CMS’ commitment to advancing health equity.”

The week before, on Feb. 18, this editor published an interview featuring Don Crane from America’s Physician Groups (APG), who was the president of the organization at the time, and two other value-based leaders from Oak Street Health, who all are in favor of the GPDC model.

But there are two sides to every story. This editor had the opportunity to speak with two members of Physicians for a National Health Program (PNHP), Ed Weisbart, M.D., chair of the Missouri chapter of PNHP and assistant professor of clinical medicine at Washington University in St. Louis.; and Ana Malinow, M.D., past president of PNHP and professor of pediatrics at the University of California-San Francisco. PNHP is a single-issue organization advocating a universal, comprehensive single-payer national health program. PNHP has more than 20,000 members and chapters across the U.S. The two members shared their thoughts regarding the REACH Model announcement and their general opposition to direct contracting.

When asked about the redesign and his reaction to the announcement, Weisbart says, “I would say it's disappointing but not surprising. It does little it does nothing to address our concerns. And if anything, it actually works a bit in the wrong direction. I think it's sad that they haven't changed any of the core issues. In essence, the things we're concerned about is that this model now still has for profit middlemen right at the center, who make their most money from interfering with patients who access care. If they can find a way to block people going to care, then they're going to make more money. The calculation of how much they can retain is unchanged from the exact same table from the GPDC model.”

Malinow says that “It’s a huge disappointment, but not unexpected. I think that would pretty much sum it up. We knew that CMS and CMMI have vision to fold in every Medicare beneficiary and most of the Medicaid beneficiaries into Accountable Care relationships by 2030. They put that out several months ago; we knew that that was where they were heading,” she says. “It's no surprise that what they did is they rebranded direct contracting entities, because that term had become toxic, into the ACO REACH program or model, I suppose. But they really didn't make very many substantial changes, as evidenced by the fact that the original 53 direct contracting entities that have been in operation now for a year in April are going to be allowed to continue to operate pretty much as they have been. They do need to meet the new ACO REACH requirements, but the requirements are really pretty mild.”

Weisbart adds, “The article by Berwick and Gilfillan a few months ago calculated that the table [from the GPDC model] means an implicit potential medical loss ratio of an implicit 40 percent. A 40 percent medical loss ratio is just astonishing when you look at traditional Medicare that has a 2 percent overhead and you look at the commercial insurance industry that has roughly 12 to 15 percent overhead. We’ve introduced this new set of middlemen that have an implicit ability to retain 40 percent. That's just breathtaking. So that’s unchanged.”

He adds that “The strategy of having Medicare automatically enroll its traditional members and the members of traditional Medicare into one of these new entities is unchanged. So once again, this new program now is targeting the very people that are seniors and people with disabilities who already made the decision that they didn't want to be in a version of Medicare that introduces these for-profit middlemen. These the people who saw those ads on TV with Joe Namath and decided no, that's not for me. I want to stay with good old fashioned traditional Medicare where it's a simpler, cleaner direct program. All those people are still under this new program being automatically switched, or will be automatically switched, into one of these new programs. So that's unchanged. That's disappointing.”

As to whether there are tweaks CMS can make that would be acceptable in his eyes, Weisbart says “You want to get from here to there, and you've got a really good superhighway that works, I would say it's imperfect but it's pretty good—this is traditional Medicare. Then you have a really crummy road that's got all kinds of collisions and accidents and problems on it, like a windy mountain road that you haven’t fixed. The solution to the mountain road is not tweaking it—putting up better guardrails—the solution is to encourage as many people as you can to go on another good superhighway. A better guardrail, a minor tweak to a really badly designed road is not the road forward. It's just fodder for stretching out the discussion when we know we're on the wrong road. So, no. They've built a program on a very flawed premise that is not based in evidence. You can't fix that by putting on better color lipstick or stronger band aids on it. You're on the wrong road here.”

“No,” Malinow says. “Basically, the only thing that they could have said would be that they're terminating the DCE program altogether. Because of that fatal flaw which DCEs have, and now ACO REACH has, which is the profit motive, and there's nothing you can do to tweak that.”

Regarding philosophical complaints, Weisbart says that “One of the things that we're hearing the most in terms of value-based programs is seeing fee-for-service as the as one of the root problems in healthcare economics. We agree that one of the problems in the U.S. is that is that we spend twice as much per person on healthcare as really almost any other modern nation does. We spend twice as much. And our health outcomes are often near the worst among modern nations. We recognize that it’s a problem, we're spending way too much on healthcare and clearly not getting the value in return for it. 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 fee-for-service. And so, they want to move everything over to capitation. And that to me is, on its face, just ridiculous. If you look at it, almost every other country in the in the world pays doctors on some version of fee-for-service with some subtle nuance variations but fee-for-service is the dominant way that physicians are paid around the world. And yet those countries that do that, miraculously do it and spend half of what we spend here.”

“You can't explain the doubling of cost in the U.S. based on applying the same method of paying doctors in these countries that spend half of our costs,” Weisbart adds. “So that's on its base ridiculous. Then second, if you look at the way fee-for-service is supposed to be driving up costs is by stimulating doctors to do all sorts of extra bits of healthcare because if you pay me more, I'm going to do more. Well, then how do you reconcile that root issue with the global data that says that for almost every procedure, Americans get fewer of that procedure, not more of the procedure? We tend to be pretty near the middle or slightly below average, in terms of how much we do anything. Well, then the fee-for-service is supposed to be driving up our costs by making doctors do unnecessary things. Why don't we have more things being done? It just makes no sense that this is being looked at as a real problem. Instead, we know what the real problems are. The root problems are that there's no good way to control prices in the U.S., and that we waste a third of what we spend on administrative malarkey that we build to manage this complex system. And frankly, that's one of my concerns about the REACH program, is that if anything, it exacerbates the administrative overload within the system. It doesn't simplify the administrative complexity in the U.S., it exacerbates that problem.”

Malinow says that “It all goes back to value-based care and advanced payment models. And then Medicare Advantage. It's all about this risk sharing that we started at the beginning, where you make providers share the risk of providing care for their patient, or you make that entity or the insurance plan, share the risk for providing care. They're getting these monthly sums at the beginning of the month to provide care and when this is what you have that at the core of your model the incentives are always going to be to try to get the most amount of lump sum money at the beginning. And to try to decrease what goes out because you're sharing the risk. If you don't make money at the end of the month, at the end of the year, you're not going to be around, your practice is just not going to be around.”

When asked about a proposed alternative to the direct contracting model, Weisbart says that “When you fall in a hole, stop digging. We know that the Medicare Advantage plan is costing us significantly more than the same people in traditional Medicare. The first thing you have to do is stop supporting and driving people into Medicare Advantage—and the REACH program is only going to make that worse. The REACH program is going to give insurers more access to these people that are in traditional Medicare today, and they will find ways to drive people further into Medicare Advantage rather than into traditional Medicare. The first rule when you have a problem, stop making it worse. The second thing that you should do is do the things that we know would work. What's one of the biggest problems that the average American has with healthcare in the U.S.? It's that it's so darn expensive for them personally. Even if you have Medicare you have to go into either Medicare Advantage or buy a Medicare supplement, or you could be exposed to bankruptcy.”

“We really should eliminate the co pays and deductibles or at least greatly reduce the copays and deductibles of traditional Medicare” Weisbart adds. “There should be a limit on what the total of copays and deductibles and other out of pocket expenses. 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. Those are the next immediate steps.”

Malinow comments that “Traditional Medicare is working pretty well. Now, the truth is, that it is costly, and the costs do go up. This is true compared to Medicare Advantage and DCEs that are going up less. 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. What would make it better? A national health program would make it better. What we need to do is to control costs, but it's very difficult to control costs. For example, in Medicare, you’re trying to control costs for 50 percent of the individuals and the other 50 percent of the people are out of control with Medicare Advantage. You need to have a fair fee schedule for physicians and hospitals that everybody agrees on. And that's how you're going to be able to control costs under a national health program that everyone is in, not only just the people in Medicare, but everybody in the country. Believe it or not, it costs you less money in the end. How? Because you're getting rid of all those administrative costs, all those profit costs, and that will save you billions and billions of dollars right off the bat. And the other thing that you do is you negotiate with pharmaceutical companies, just like every other country in the world is negotiating with Johnson and Johnson and Pfizer and with all pharmaceutical companies, everybody else gets to do it except for Americans. Except for the VA, actually the VA negotiates the price, and usually gets prices for half of what Medicare pays for, or for what everybody else pays for. Therefore, we already have a model out there. If you do those two things, you get rid of that waste of the administration and profit and if you negotiate your pharmaceutical prices, you will save enough money to be able to provide healthcare for everybody at less cost. And that's how you control costs. Not by incentivizing doctors, DCEs, ACOs, and Medicare Advantage plans to come up with innovation. That's not innovation. That's just plain old. profiteering.”

When wrapping up her final thoughts, Malinow says that “This is an attempt to privatize Medicare, which is a public good. And what does privatization mean? It means the transfer of a public good into private hands. Now, there's nothing wrong with having TVs and cars and all that be competitive. But with healthcare, healthcare really is a public good because it's a human right and you cannot privatize a human right. What we need to do is find ways where we can promote healthcare as a human right and as a public good. And as a result, we really have to get away from the profit motive. What we're talking about, if healthcare is a human right, then then we cannot sell it off to the highest bidder. Or to the lowest bidder, which is really what's happening. So, I suggest that we treat healthcare as a human right. Politically feasible or not, we still need to tell people fight and to educate everyone about a National Health Program, which is what is going to be able to provide healthcare for everyone at a lower cost. Are there going to be losers? Absolutely. The insurance companies are going to lose a lot of money. Pharmaceutical companies are going to lose a lot of money. But they've been raping us for years and years and years. It's time for us to take that back. It doesn't belong to them; they stole it from us. And it's time for us to take it back.”

Sponsored Recommendations

Data: The Bedrock of Digital Engagement

Join us on March 21st to discover how data serves as the cornerstone of digital engagement in healthcare. Learn from Frederick Health's transformative journey and gain practical...

Northeast Georgia Health System: Scaling Digital Transformation in a Competitive Market

Find out how Northeast Georgia Health System (NGHS) enabled digital access to achieve new patient acquisition goals in Georgia's highly competitive healthcare market.

2023 Care Access Benchmark Report for Healthcare Organizations

To manage growing consumer expectations and shrinking staff resources, forward-thinking healthcare organizations have adopted digital strategies, but recent research shows that...

Increase ROI Through AI: Unlocking Scarce Capacity & Staffing

Unlock the potential of AI to optimize capacity and staffing in healthcare. Join us on February 27th to discover how innovative AI-driven solutions can revolutionize operations...