Government Healthcare Agency Giving ‘Fraud and Abuse’ Waivers to Private Equity, Venture Capital Firms

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By Kay Tillow

The Centers for Medicare and Medicaid Services (CMS), the federal agency that oversees those national healthcare programs, has the dubious distinction of being light years ahead of other government regulators in excusing fraudulent conduct.

CMS doesn’t just allow healthcare companies to repeatedly commit fraud and abuse with fines amounting to a tiny fraction of the profit; CMS goes much further.

CMS formally authorizes the violation of anti-corruption laws by granting “Fraud and Abuse” waivers to the corporate entities involved in experimental programs within its Center for Medicare and Medicaid Innovation.

It’s true. CMS has an official webpage, “Fraud and Abuse” waivers, which lists the programs entitled to their absolution.

CMS regularly issues “Fraud and Abuse” waivers to the healthcare industry giants that participate in its Center for Medicare and Medicaid Innovation programs impacting millions of people.

If it’s an accountable care organization (ACO), the new form of the hated managed-care organization of the 1990s infamous for drive-through mastectomies, it won’t be held accountable to the laws of the land.

How can this be possible?

The Affordable Care Act of 2010, among its many provisions, set up the Center for Medicare and Medicaid Innovation within CMS to promote experimental models in Medicare that would save money while maintaining or improving quality or that would cost the same while improving the quality of care.

Models approved by CMS can be automatically implemented into Medicare without congressional approval.

The Center for Medicare and Medicaid Innovation models are not working to accomplish the stated purposes of quality and cost savings.

“The majority have not saved money, and several are on pace to lose billions of dollars,” reports Bill Frist, former senator and owner of the giant hospital chain, Hospital Corporation of America.

The majority of models do not show significant improvements in quality, says Brad Smith, former Center for Medicare and Medicaid Innovation director.

The models are neither saving money nor improving care, but the Center for Medicare and Medicaid Innovation has $10 billion to spend each decade and keeps churning out new models, the latest on June 8.

The Center for Medicare and Medicaid Innovation models are the ones to which CMS grants the “Fraud and Abuse” waivers.

Let’s take for instance Medicare Advantage plans that are advertised to offer cash back on your Social Security check or up to $900 a year in grocery money. Those offers would logically be a violation of the law that forbids the offer of inducements to buy a certain plan.

But these plans operate under the Center for Medicare and Medicaid Innovation experiment called “Medicare Advantage Value-Based Insurance Design Model” or VBID.

That model has the “get out of jail free card” from CMS.

For the plan year 2023, the VBID model has 52 participating Medicare Advantage Organizations with a total of 9.3 million people projected to be enrolled.

CMS waives the Beneficiary Inducements Civil Monetary Penalty and the Federal anti-kickback statute to allow Medicare Advantage VBID plans to provide these cash, grocery and other incentives.

The excuse is that these payments are contributing to equity by ending disparities.

The reality is that such plans provide incentives for seniors and the disabled to choose for-profit plans rather than traditional Medicare. That’s convenient for the Medicare Advantage companies that are using the Medicare Trust Fund as their cash cow.

Medicare Advantage plans cost the nation more than traditional Medicare yet deny, delay and limit care.

So why is CMS promoting the growth of these plans?

Among the long list of ACOs and other models that CMS excuses from obeying the law is the “Vermont All-Payer ACO Model Vermont Medicare ACO Initiative” which is called OneCare ACO Vermont.

The League of Women Voters of Vermont and the Physicians for a National Health Program of Vermont, among others, urged an end to the Center for Medicare and Medicaid Innovation’s One Care ACO experimental model stating that the for-profit OneCare ACO, by design, does nothing to improve access to care and that the ACO was supposed to reduce costs, but, instead, spending continues to rise even faster than established targets.

The Vermont organizations issued a press release and listed 11 reasons why the program should be ended, including the assertion that both hospitals and primary care are suffering from the program.

“It is time to redirect wasteful administrative spending on the ACO to actually providing healthcare, especially as the coronavirus pandemic exposes and exacerbates inequities in our system,” the Vermont organizations concluded.

That Vermont experiment by the Center for Medicare and Medicaid Innovation has the “Fraud and Abuse” waivers.

The for-profit OneCare Vermont is exempted from the federal physician self-referral law and the anti-kickback law. The program is scheduled to continue through the end of 2024 despite the community’s protests over the damage that OneCare Vermont has done to the healthcare of the state.

The Center for Medicare and Medicaid Innovation granted the “Fraud and Abuse” waivers to the “Direct Contracting Model” and to its successor program “ACO REACH.”

ACO REACH currently has 132 participants in states across the country and places seniors and the disabled who chose traditional Medicare into for-profit, private Medicare ACOs.

Seniors are assigned, without their consent, to ACO REACH plans owned by private equity, venture capital and insurance companies which can take upwards of 25% of the Medicare money for profit and overhead.

In addition, ACO REACH creates an incentive that increases profits with the denial or restriction of care.

The Center for Medicare and Medicaid Innovation models are not working to produce cost savings and quality.

CMS continues them anyway ignoring a storm of protest by healthcare advocates. The Center for Medicare and Medicaid Innovation plans continue because they serve a different purpose — an unnamed purpose.

They serve the privatization of the Medicare program. All of these plans have private managers, and middlemen intervening between patients and their physicians or other caregivers.

Why would a government agency issue waivers for fraud and abuse?

Why would that agency give venture capital, private equity, and health insurance entities the freedom to violate anti-corruption laws without penalty?

What possible good can come from this and why should the Center for Medicare and Medicaid Innovation be allowed to continue to exist?

The privatization of Medicare, through Medicare Advantage and the Center for Medicare and Medicaid Innovation models, requires the freedom of corporate medical and insurance entities to collect overpayments, escape oversight, avoid regulation and violate anti-corruption laws without penalty.

CMS allows massive overpayments, bribes and denials of care, as it places our cherished Medicare into private hands. As CMS issues waivers of fraud and abuse laws, privatization is unleashed on an unsuspecting population.

Originally published by Common Dreams.

Kay Tillow is the coordinator of the All Unions Committee for Single Payer Health Care, which builds union support for national single-payer healthcare.