Save Medicare from ACO REACH


What is ACO REACH and why did the California State Assembly just overwhelmingly pass a resolution (AJR 4) against it? I first heard about this bit of alphabet soup at a CDP Senior Caucus Meeting (at minute 31:19). It began, like so many bad ideas, with the Trump Administration. 

Over 63 Million Americans – including nearly 6.6 Million Californians – receive health care coverage through Medicare. Beneficiaries have the option of enrolling in “Traditional” Medicare (TM) or they can enroll in a managed care plan, typically offered by private insurers, also known as Medicare Advantage (MA). TM generally allows patients to see any doctor who is enrolled in Medicare, and the program is able to keep its administrative costs to a minimum by generally paying providers directly.

But Trump thought it would be a really swell idea to privatize Traditional Medicare by enrolling millions of Medicare recipients in private (for-profit) direct contracting entities (DCEs) without the recipients’ consent, or even knowledge. Instead of paying providers directly for care, Trump’s Medicare sends payment to the DCE’s as middlemen who are then allowed to keep what they don’t pay in health services. The DCE program was launched without congressional approval, oversight, or even discussion. What could possibly go wrong?

The Biden Administration responded to the predictable protests against the DCE program by renaming it Accountable Care Organization (ACO) Realizing Equity, Access, and Community Health (REACH) model. (One doctor quipped that the “REACH” means that the middlemen “reach” into your wallet!) 

The REACH payment model creates dangerous incentives to restrict care. Traditional Medicare pays doctors and hospitals directly for care, but the REACH payment model pays ACOs a monthly payment to cover a defined portion of each senior’s medical expenses. ACO’s are then allowed to keep as profit and overhead what they do not pay for in health services, a powerful financial incentive to ration seniors’ care.

The REACH payment model not only threatens seniors’ care; it would drain Medicare of billions of dollars of needed revenue each year. Traditional Medicare spends 98 percent of its budget on patient care, but REACH ACOs could spend as little as 60 percent of Medicare payments on care, keeping up to 40 percent of revenues for their own profit and overhead. 

Assembly Joint Resolution 4 (AJR 4) calls on President Biden to end ACO REACH immediately, thereby eliminating corporate profiteering of Traditional Medicare. AJR4 passed the Assembly with an overwhelming number of votes including that of our AD55 Assembly Member Isaac Bryan who was a co-author. It has now gone to the State Senate. 

At our July 12, 2023 meeting, Club members will be asked to authorize the Corresponding Secretary to send letters in support of AJR 4.