By Russell Mokhiber, editor

July 10, 2023  Corporate Crime Reporter


Health care corporations in a Medicare privatization program set up by the Center for Medicare and Medicaid Services (CMS) are being granted fraud and abuse waivers.

The program is called the Center for Medicare and Medicaid Innovation (CMMI or Innovation Center).


Kay Tillow, who is with the group National Single Payer, came across a CMS page titled Fraud and Abuse Waivers that lists the programs that are entitled to the waivers.

Tillow says that the Affordable Care Act of 2010, among its many provisions, set up the Innovation Center within CMS to promote experimental models in Medicare that would save money while maintaining or improving quality, or that would cost the same while improving the quality of care. Models approved by CMS can be automatically implemented into Medicare without congressional approval.

Tillow says that the Innovation Center models are not working to accomplish the stated purposes of quality and cost savings.

“The majority have not saved money, and several are on pace to lose billions of dollars,” reports Bill Frist, former senator and an owner of the giant hospital chain HCA.

‘The majority of models do not show significant improvements in quality, says Brad Smith, former Innovation Center director. He adds, “The models are neither saving money nor improving care, but the Innovation Center has $10 billion dollars to spend each decade and keeps churning out new models.”

Corporate Crime Reporter put additional questions to Kay Tillow:

How did you come across the fraud and abuse waivers page?

“For a period of time a number of us have been working on the privatization of Medicare,” Tillow told Corporate Crime Reporter in an interview last month. “We are concerned about that. And we are concerned about people who chose traditional Medicare being placed into Direct Contracting Entities. They were renamed ACO Reach. We were looking into the extent to which the Centers for Medicare and Medicaid Services (CMS) is actually handing over this public program to private equity, private venture capital, and big insurance companies.”

“I’ve been wandering around, exploring it, working to explain it to senior groups and other organizations to try and get a movement against this privatization. Medicare Advantage is being overpaid and is gouging the Medicare Trust Fund.”

“I read what I can about it. And I came across a CMS web page called Fraud and Abuse Waivers. It’s an official government CMS website that lists all of these programs that are given the green light to commit fraud and abuse.”

How many programs like this are there?

“Dozens I think. I don’t know the exact number. They are part of the Center for Medicare and Medicaid Innovation (CMMI). It was born as part of the Accountable Care Act of 2010 when it was created. All of these programs are within the CMMI.”

“That is the privatizing machine to turn over healthcare to private industry, to recreate a kind of managed care organization with middle men who make money. I don’t know if it’s all of the programs created by CMMI, but it certainly is many of them.”

What percentage of Medicare enrollees are enrolled in these programs?

“Just barely over 50 percent are in Medicare Advantage programs. Then there is another 2.2 million in ACO Reach. I think it’s probably two-thirds or so that are now in one of the privatized programs under CMS.”

But not all Medicare enrollees are in programs eligible for fraud and abuse waivers.

“No. But there is a program called Value Based Insurance Design (VBID). It’s a model under the CMMI. That program seems to have something like over nine million people in it. That program is eligible for Medicare fraud and abuse waivers.”

“They offer so many dollars a month for groceries, which can be meaningful for someone who has a very modest income. That’s $70 or so a month. But that’s peanuts compared to the amount of money the company will make by getting you into their plan. They can make a lot of money off of each person who goes in.”

If they weren’t exempt, those companies would be liable under federal criminal laws?

“There are several laws they are exempt from. One is the anti-kickback law. One provides a monetary penalty for offering beneficiaries inducements. And then there is a self-referral law. There are several of these laws that they are being exempted from in order to proceed with their models.”

Don’t Medicare Advantage do this all the time – offer inducements for seniors to get out of traditional Medicare and sign up with Medicare Advantage?

“The major inducement is a lower monthly payment. You can get away with a low or no premium. Because we have millions of seniors on inadequate fixed incomes, that’s all that is needed to get people to switch to Medicare Advantage.”

Is Congress taking a close look at these waivers?

“As far as I know, no one in Congress has said a word about them. I didn’t know about them until I stumbled on the waiver web page.”

“The insurance companies have a history of violation of law and paying fines and then going ahead with what they do. Those companies are being given contracts within the ACO Reach program. They are never kicked out of the CMS programs.”

The overriding drive behind all of these programs is to privatize Medicare. What portion of Medicare has been privatized?

“It’s over half. Medicare Advantage is 50 percent or so. Then all of these programs under the ACO Reach program. I would say the overall number in privatized Medicare is now probably about two-thirds. The Innovation Center has an announced objective of having all seniors into these programs, which are privatized, by 2030.”

If you were to ask the average person on the street, they would say that Republicans are into privatizing Medicare while Democrats are into defending Medicare, keeping it public.

But here you have the Biden administration saying explicitly, if I’m understanding you correctly, that they want to privatize Medicare by 2030.

“Yes. Elizabeth Fowler, the head of CMMI, served in the Obama administration. She was the advisor to Senator Max Baucus and she wrote the Affordable Care Act. In the Affordable Care Act, she created this Innovation Center through which the privatization is occurring. And now she is the director of it. She comes from the insurance industry. She was with Wellpoint. And then she worked on the Affordable Care Act. And then she went to Johnson & Johnson. She is an industry person and government official. And now they are the same people. That’s the problem.”

“Whether it’s Trump appointees or whether it’s Democratic appointees they are all doing the same thing, which is privatization through that Innovation Center.”

Wouldn’t most liberals be shocked to learn that Biden has someone in his administration whose explicit goal is to privatize Medicare?

“People in general don’t know or understand it. This gets complex and that’s why it becomes difficult for people within the movement to build an understanding. They never go under the names that admit what they are doing. They don’t call it privatization. They call it moving people into value based payment models. They say they are moving away from fee for service and into value based payment, that they are going to pay for quality rather than volume. And that’s their plan for how they are going to cut back on the cost.”

“The reality is that the value based payment plans include putting people into the hands of a middleman that manages the care and cuts back and denies care. It’s a privatization plan, but they don’t call it that. It’s difficult to explain it to everyone.”

[For the complete Interview with Kay Tillow, 37 Corporate Crime Reporter 25(14), June 26, 2023, print edition only.]