By Ana Malinow, MD

October 20, 2023  LA Progressive


California hands a win to seniors—and a loss to Wall Street! California is on the record opposing the “value-based” payment scheme ACO REACH.


Seniors and people with disabilities on Traditional Medicare can celebrate the passage of Assembly Joint Resolution 4, which puts California on record opposing the “value-based” payment scheme ACO REACH (Accountable Care Organization Realizing Equity, Access, and Community Health) and corporate profiteering in Medicare. Passage of the resolution is a David versus Goliath victory for grassroots activists, seniors, and people with disabilities fighting to protect Medicare from privatization by health insurance companies, private equity, and venture capital.

In California, the small group Movement to End Privatization of Medicare, along with the larger California Alliance for Retired Americans, worked with California state legislators to pass a resolution opposing ACO REACH, a “value-based” payment program out of the Innovation Center.

The Innovation Center was established by the Affordable Care Act in 2010 and was tasked with developing “value-based” payment models that lower Medicare spending and improve or, at least, not worsen care in Traditional Medicare. But these “value-based” models have nothing to do with “value.” They insert a for-profit middleman between Medicare and the doctor and between the doctor and the patient and tie financial incentives to performance measures such as cost, quality, and health outcomes. In practice, these models incentivize doctors to cheat on performance metrics, cherry-pick healthy patients, avoid sick ones, skimp on care, and make healthy patients look sick on paper (“upcoding”) without providing more care. Further, beneficiaries on Traditional Medicare are enrolled into “value-based” programs such as ACO REACH without their knowledge or consent.

To recruit industry, the Innovation Center has been extremely generous in setting up financial arrangements. ACO REACH middlemen can take from 25 percent to 40 percent of Medicare beneficiary payments as profit and overhead. Compare this with Traditional Medicare’s 2 percent overhead. Small wonder the Medicare Trust Fund is going broke.

In its first decade of operation, the Innovation Center wasted billions of Medicare dollars on 49 “value-based” models and is on track to waste billions more, according to the Congressional Budget Office report published last month. These “value-based” models include Accountable Care Organizations, the Medicare Shared Savings Program, Direct Contracting Entities, and ACO REACH.

Worst of all, CMS plans to scale the “value-based” model to all Traditional Medicare beneficiaries by 2030. Good or bad, right or wrong, evidence or no, “value-based,” according to the Innovation Center, is here to stay.

Assemblywoman Pilar Schiavo, who led the fight in the Assembly, said, “California houses 20 percent of the nationally approved ACO REACH programs, posing a significant risk to seniors and vulnerable populations who rely on Medicare in our state.”

She and the California State legislature said, not so fast. And by a vote of 63 to 15 in the Assembly, and 30 to 6 in the Senate, the state of California was the first to tell President Biden, and Health and Human Services Secretary, Xavier Becerra, this state will not threaten the care or choice of seniors, or the solvency of the Medicare Trust Fund.

It’s time to put a lid on “value-based” models like ACO REACH and start looking for solutions that don’t funnel hard-earned Medicare tax dollars to corporate profiteers. Single payer is used around the world and fulfills the Innovation Center’s criteria: controls costs and improves outcomes. Why not run a national “single-payer-based” model instead?


-Source: LA Progressive