‘Direct Contracting Entities’: The Latest Ploy to Kill Medicare

Ted Millar
4 min readFeb 20, 2022
Image credit: Northcarolinahealthnews.org

It’s no surprise republicans want to eliminate anything resembling a social program that helps the poor, elderly, and middle class.

Since its passage in 1965, Medicare has been on the list of items at which the republican party, and even some members of the Democratic party, have been steadily chipping away.

The George W. Bush administration landed a major blow to it in 2003 with the passage of the “ Medicare Modernization Act” that created something called “Medicare Advantage” under Medicare’s Part-C provision.

The following year risk-adjusted large-batch payments offering Advantage plans started to make insurance companies even more insanely rich.

But the “Medicare” label is a ruse.

Medicare “Advantage” isn’t Medicare.

It’s private for-profit health insurance that fools recipients into believing they are enrolled in Medicare.

It’s still around, still advertised on television, and it’s about to get a major boost sure to further weaken traditional Medicare.

In the twilight of the Trump administration, we saw the rise of a third-party-run program called Medicare Direct Contracting (DC) that permits commercial insurers and other for-profit companies to “manage” care for seniors enrolled in traditional Medicare.

Under this system, instead of having the freedom to choose healthcare providers as they are with traditional Medicare, older Medicare-enrolled Americans are automatically enrolled into a “Direct Contracting Entity” (DCE) without their knowledge or consent.

If any primary care physician happens to be affiliated with a particular DCE, his or her patients may be “auto-aligned” with that DCE.

We would like to assume this program was eliminated or at least reformed when Trump left the White House.

But it wasn’t.

Congress hasn’t acted on it, which means millions of seniors will continue to be surreptitiously enrolled in DCE, threatening further harm to Medicare over the next few years.

But even though there has been no vote in Congress, there has been movement to address it.

Late last year, Washington Rep. Pramila Jayapal joined physicians and advocates urging the Biden administration to immediately end DCE.

Jayapal and Physicians for a National Health Program (PNHP) president, Dr. Susan Rogers, explained in an op-ed for The Hill:

“Instead of paying doctors and hospitals directly for seniors’ care, Medicare gives these middlemen (called Direct Contracting Entities, or 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.”

They added:

“This should be a huge red flag for taxpayers and anyone concerned about funding Medicare for future generations. While traditional Medicare spends an impressive 98% of its budget on patient care, Direct Contracting Entities only spend 60% of our tax dollars on patient care-keeping up to 40% of revenues for their own profit and overhead.

“Since Direct Contracting is a pilot program, it can and should be stopped in its tracks by the Biden administration while we have the chance. After our experience with commercial Medicare Advantage plans, we already know that inserting a profit-seeking middleman into Medicare ends up costing taxpayers more, with fewer choices and worse outcomes for seniors.”

Former PNHP president, Dr. Ana Malinow, warned at a rally in November outside Health and Human Services (HHS) headquarters:

“The Direct Contracting pilot model has been green-lighted by the Biden administration to completely privatize Medicare by 2030.

“The innovation center has the authority to scale up any model that fulfills its criteria to all of Medicare, without congressional oversight or approval. If we don’t act now, there won’t be any Medicare-for-All left to fight for.”

Rep. continued her advocacy to stop the program in a January letter to HHS Secretary Xavier Becerra, stating:

“We respectfully request a meeting with you to discuss how to stop the expansion of these Direct Contracting Models and oversee the sunsetting of these programs. This is a critical step to ensure Medicare continues to be a public benefit that offers the highest quality care to seniors. We stand ready to work with you to achieve a safe end to Direct Contracting programs in Medicare.”

Our lawmakers need to know our thoughts on this matter, particularly since the mainstream media is jamming its time slots with a possible Russian invasion of Ukraine and the temper tantrum Canadian truckers are throwing over COVID vaccine mandates.

The number for the congressional switchboard is 202–224–3121. If you don’t know your House member or senators, provide the operator your zip code.

You can also fins out who represents you here.

Originally published at https://theleftplace.substack.com on February 20, 2022.



Ted Millar

Ted Millar is a teacher, poet, and political writer for The Left Place blog on Substack: https://theleftplace.substack.com/. Twitter: @tedmillar