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Demonstrators protest Medicare cuts

Protesters call for an increase in taxes on the wealthy and voice opposition to Medicare cuts during a demonstration on December 6, 2012 in Chicago. (Photo: Scott Olson/Getty Images)

Jayapal to Biden: Stop Trump-Era Medicare Privatization Scheme 'While We Have the Chance'

"Since Direct Contracting is a pilot program, it can and should be stopped in its tracks by the Biden administration."

Jake Johnson

U.S. Rep. Pramila Jayapal on Thursday joined the growing chorus of physicians and advocates urging the Biden administration to immediately end Direct Contracting, a Trump-era pilot program that could result in the total privatization of traditional Medicare by the end of the decade.

In an op-ed for The Hill, Jayapal and Dr. Susan Rogers—president of Physicians for a National Health Program (PNHP)—called Direct Contracting (DC) "the biggest threat to Medicare you've never even heard of," alluding to how little attention the pilot program has received from the press and members of Congress, few of whom have spoken out against it.

 "Wall Street investors are already tripping over themselves to get into the DC program."

"Starting this year, millions of seniors are quietly being enrolled into a program run by third-party middlemen," the pair wrote Thursday. "This is occurring without their full knowledge or consent. If left unchecked, the DC program could radically transform Medicare within a few years, without input from seniors or even a vote by Congress."

Established by the Center for Medicare and Medicaid Innovation (CMMI) at the tail-end of the Trump administration, the DC model places so-called Direct Contracting Entities (DCEs) between traditional Medicare and healthcare providers—a business-friendly alternative to traditional Medicare's direct reimbursement model.

DCEs—which can be Wall Street-backed startups, private insurance giants, and other corporate interests—are paid monthly by the Centers for Medicare and Medicaid Services (CMS) to cover a defined portion of a patient's medical care. Because DCEs can pocket what they don't spend on patients, critics fear the pilot will incentivize the contracting entities to provide lower-quality care.

As Jayapal and Rogers noted in their op-ed, "Wall Street investors are already tripping over themselves to get into the DC program." A recent analysis published in Health Affairs pointed out that 28 of the 53 DCEs currently operating in 38 states are controlled by investors, not healthcare providers.

"This should be a huge red flag for taxpayers and anyone concerned about funding Medicare for future generations," Jayapal and Rogers wrote. "While traditional Medicare spends an impressive 98% of its budget on patient care, Direct Contracting Entities only spend 60% of our tax dollars on patient care—keeping up to 40% of revenues for their own profit and overhead."

"Since Direct Contracting is a pilot program, it can and should be stopped in its tracks by the Biden administration while we have the chance," they added. "After our experience with commercial Medicare Advantage plans, we already know that inserting a profit-seeking middleman into Medicare ends up costing taxpayers more, with fewer choices and worse outcomes for seniors."

Jayapal and Rogers' call came nearly two weeks after physicians from across the country traveled to Washington, D.C. to call on the Department of Health and Human Services (HHS) to immediately halt the sprawling DC experiment.

"The Direct Contracting pilot model has been greenlighted by the Biden administration to completely privatize Medicare by 2030," Dr. Ana Malinow, the former president of PNHP, warned during a rally last month outside HHS headquarters, where physicians attempted to deliver 13,000 petition signatures demanding an end to the DC pilot.

"The innovation center has the authority to scale up any model that fulfills its criteria to all of Medicare, without congressional oversight or approval," Malinow added. "If we don't act now, there won't be any Medicare for All left to fight for."

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