Protect traditional Medicare from direct contracting

In 2020, the Trump administration launched a new direct contracting program designed to privatize traditional Medicare. The Biden administration has continued the program but renamed it REACH.

REACH has moved millions of traditional Medicare beneficiaries into for-profit plans run by thirdparty middlemen called direct contracting entities, without enrollees’ full knowledge or consent. It is a stealth effort by Wall Street investors to privatize Medicare — and is an egregious transfer of public and beneficiary dollars into private hands.

DCEs have a financial incentive to interfere with care decisions when compared with the efficiency of traditional Medicare. Instead of paying doctors and hospitals directly, Medicare gives these third-party middlemen a monthly payment to cover some or all of each senior’s medical expenses — allowing these companies to keep as profit what they don’t spend on care. Any type of company can apply to be a DCE without oversight from Congress.

Traditional Medicare is based on fee-for-service and pays doctors according to the procedures used to treat a patient. Capitation (when doctors are paid a set amount for each patient they see) establishes dangerous financial incentives to restrict the care of our elders. While traditional Medicare spends an impressive 98% of its budget on patient care, DCEs spend only 60% of our tax dollars on patient care.

Both Republicans and Democrats collect significant campaign donations and are subject to intense lobbying from both the health care and insurance industries. If left unchecked, Medicare direct contracting could radically transform Medicare in a few years. Medicare direct contracting is in its infancy. Please contact your representatives to fight this threat to Medicare before it grows.