Lawmakers Ask CMS to Inspect ACO REACH Model to Prevent Fraud, Abuse

A group of lawmakers, spearheaded by US Senator Elizabeth Warren (D-Mass.) and Representative Pramila Jayapal (D-Wash.), has asked CMS to examine the ACO REACH model to prevent organizations with a history of fraud and abuse from participating in the program in 2023.

In a letter to CMS Administrator Chiquita Brooks-LaSure, the lawmakers voiced concern that the model may still allow healthcare insurers and providers to cause harm to the Medicare system.

In February 2022, CMS announced that the ACO REACH model would replace the Global and Professional Direct Contracting (GPDC) model starting in January 2023. Participants in the GPDC model will be allowed to enroll in the ACO REACH model if they maintain a strong compliance record and agree to meet the requirements of the ACO REACH model.

As the number of program participants has grown since the launch of direct contracting, the lawmakers noted concerns about the potential for fraud and abuse of taxpayer Medicare dollars, especially as several Direct Contracting Entities (DCEs) have records of healthcare fraud and abuse.

In addition to asking CMS to examine ACO REACH participants, the legislators requested CMS to clarify whether DCEs accepted into the GPDC model will be automatically grandfathered into ACO REACH, even if they do not meet the program’s stated standards.

The letter claimed that the GPDC model introduced a for-profit model and privatized healthcare plans into traditional Medicare, threatening the Medicare program and beneficiaries. Most DCEs in 2021 were private equity and investor-controlled, leading the legislators to worry that these organizations view direct contracting as a backdoor to higher profits.

According to findings from the preliminary review conducted by Physicians for a National Health Program (PNHP), 10 DCEs that participated in the GDPC model in 2021 had prior records of healthcare fraud.

For example, Centene, the parent company to three DCEs operating in 27 states, paid over $97 million in 2021 to settle allegations of duplicate and inflated claims submitted to the Department of Veterans Affairs. Centene’s pharmacy benefits managers also allegedly overcharged state Medicaid programs on prescription drugs, leading to settlements with seven states totaling over $260 million.

Humana, which operates a DCE in 13 states, improperly collected almost $200 million in 2015 through upcoding and overstating how sick patients were, according to an audit from the HHS Office of Inspector General (OIG).

Other DCEs with records of fraud and abuse include Sutter Health, Clover Health, AdventHealth, Vively Health, Cigna, Bright Health, and Nivano Physicians.

“The inclusion of these DCEs in the Global and Professional Direct Contracting Model is a significant concern after these companies’ previous failures to follow the law,” the letter stated.

“The ability of organizations with known histories of fraud and abuse to take part in the program increases the risks for Medicare beneficiaries, and raises concerns that CMS screening procedures for participants are inadequate, putting taxpayer dollars at risk. We respectfully ask the agency to reevaluate the decision to allow these DCEs to participate in the program.”

The legislators have also requested CMS provide written responses to several questions by January 16, 2023.

They want to know how organizations that have already been accepted into the GPDC model have been screened for acceptance into the ACO REACH model and what specific methods CMS will use to screen participants.

In addition, they requested an up-to-date list of all ACO REACH participating organizations that indicates which organizations have a history of misconduct or fraud and which have been the subject of any civil or criminal actions related to participating in a federal healthcare program.

The letter also asked what other protections CMS will include in the ACO REACH program to protect Medicare beneficiaries from fraud and abuse and if CMS has found evidence of fraud and upcoding from any DCE with a history of these practices.