House lawmakers call on HHS and CMS to permanently end Direct Contracting, a Trump-era privatization tactic that has removed millions of seniors from Traditional Medicare without their knowledge or consent
WASHINGTON — U.S. Representative Pramila Jayapal (WA-07) led more than 50 lawmakers today in urging the Biden Administration to protect Medicare by ending a Trump-era privatization effort that has taken Traditional Medicare away from millions of seniors without their knowledge or consent. The letter — written to Department of Health and Human Services (HHS) Secretary Xavier Becerra and Centers for Medicare and Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure — calls for eliminating these profit-first Direct Contracting Models, restoring care for millions of seniors, and ensuring Medicare remains a reliable public benefit that offers the highest quality of care to people across America.
“Direct Contracting Entities pose a threat to patient care and outcomes due to the encroachment of profit-driven organizations on their care,” said the lawmakers. “We ask that you permanently end the programs and coordinate the transition of traditional Medicare beneficiaries currently in these programs back into the traditional Medicare model by July 1, 2022.”
Developed in the Trump administration, the Medicare Direct Contracting (DC) program allows commercial insurers and other for-profit companies to “manage” care for seniors enrolled in Traditional Medicare. The current DC pilot phase potentially includes 30 million Traditional Medicare beneficiaries in 38 states who have been automatically enrolled without their knowledge or consent.
Instead of paying doctors and hospitals directly for seniors’ care, Medicare gives Direct Contracting Entities (DCEs) a monthly payment to cover a defined portion of each seniors’ medical expenses. DCEs are then allowed to keep what they don’t pay for in health services, a dangerous financial incentive to restrict and ration seniors’ care. While Traditional Medicare spends an impressive 98 percent of its budget on patient care, DCEs only spend 60 percent of tax dollars on patient care — keeping up to 40 percent of revenues for their own profit and overhead.
A majority of the 53 DCEs in place today are investor owned and controlled. Owners of DCEs include private equity firms, Wall Street investors, and large private health insurance companies. DC is a pilot program and can be stopped by the Biden administration before it expands.
Today’s letter follows an earlier effort by Congresswoman Jayapal to stop the privatization of Medicare. The effort is also supported by doctors across the nation and groups including Physicians for a National Health Program who have called on HHS to immediately end the DC program.
“HHS allows Direct Contracting Entities to keep as profit what they don’t pay for in medical services, establishing a dangerous incentive to ration and restrict seniors’ care,” said Dr. Susan Rogers, a retired internal medicine doctor and president of the 24,000-member Physicians for a National Health Program. “If left unchecked, Medicare Direct Contracting will hand Traditional Medicare to Wall Street investors, without input from seniors, doctors, or even Congress. We applaud Rep. Jayapal and the more than 50 members of Congress who stood up to protect Medicare today and for future generations.”
The letter was signed by U.S. Representatives Pramila Jayapal (WA-07), Alma Adams (NC-12), Karen Bass (CA-37), Donald S. Beyer Jr. (VA-08), Earl Blumenauer (OR-03), Suzanne Bonamici (OR-01), Jamaal Bowman, Ed.D. (NY-16), Cori Bush (MO-01), Salud Carbajal (CA-24), André Carson (IN-07), David Cicilline (RI-01), Yvette D. Clarke (NY-09), Steve Cohen (TN-09), Gerald E. Connolly (VA-11), Jim Cooper (TN-05), Jason Crow (CO-06), Danny K. Davis (IL-07), Peter A. DeFazio (OR-04), Rosa L. DeLauro (CT-03), Mark DeSaulnier (CA-11), Debbie Dingell (MI-12), Mike Doyle (PA-18), Adriano Espaillat (NY-13), Sylvia R. Garcia (TX-29), Jesús G. “Chuy” García (IL-04), Raúl M. Grijalva (AZ-03), Jared Huffman (CA-02), Mondaire Jones (NY-17), John B. Larson (CT-01), Barbara Lee (CA-13), Mike Levin (CA-49), James P. McGovern (MA-02), Joseph Morelle (NY-25), Jerrold Nadler (NY-10), Joe Neguse (CO-02), Marie Newman (IL-03), Eleanor Holmes Norton (DC-At Large), Alexandria Ocasio-Cortez (NY-14), Ilhan Omar (MN-05), Donald M. Payne, Jr. (NJ-10), Mark Pocan (WI-02), Katie Porter (CA-45), Ayanna Pressley (MA-07), Jamie Raskin (MD-08), Mary Gay Scanlon (PA-05), Jan Schakowsky (IL-09), Robert C. “Bobby” Scott (VA-03), Mark Takano (CA-41), Dina Titus (NV-01), Rashida Tlaib (MI-13), Bonnie Watson Coleman (NJ-12), Peter Welch (VT-At Large), Nikema Williams (GA-05), and John B. Yarmuth (KY-03).
A copy of the letter is available here.