In the final<\/u> year of the Trump administration, government attorneys expressed ethics concerns about a Medicare privatization scheme being set up by Adam Boehler, a\u00a0former\u00a0dorm-mate of Jared Kushner\u2019s who was made director of the Center for Medicare and Medicaid Innovation, also known as CMMI or the Innovation Center.<\/p>\n
In January 2019, ahead of the launch of a new direct contracting model, the Office of the General Counsel for the Health and Human Services Department warned, in comments on a draft of the proposal, that it appeared as if the new project was being set up to benefit specific companies.<\/p>\n
\u201cWe are concerned based on [Centers for Medicare and Medicaid Services]\u2019s regular references to organizations like Chen Med, Oak Street Health, and Verily in the comments and otherwise, that this model has been designed with specific private sector entities in mind. If accurate, this could create ethics concerns, as the creation of this model would give those entities a leg up in the market,\u201d read the guidance, a copy of which was obtained by The Intercept.<\/p>\n
The direct contracting model was announced publicly in April 2019<\/a>\u00a0and began its implementation phase in October 2020. The project pays private companies a predetermined but individualized amount per year, per patient, regardless of what the company spends on care, and has persisted and grown under the Biden administration.<\/p>\n Boehler, prior to working in the Trump administration, ran a startup called Landmark Health, which was backed by venture capital money, including the\u00a0firm Oxeon. Multiple Oxeon-funded health companies, such as Oak Street Health, were directly referenced in the documents setting up the new project, which drew scrutiny from the Office of the General Counsel. Under Boehler, CMMI contracted with Oxeon to recruit the noncareer staff for CMMI<\/a>, who then went on to design the program. Once the project was set up, Landmark Health announced it would be\u00a0contracting with CMMI<\/a> to become a direct contracting entity \u2014 meaning Boehler\u2019s model was shoveling money to the firm he had left. Boehler is now CEO of Rubicon Founders<\/a>, a venture capital and private equity firm operating in the health care industry.\u00a0(Before taking his position in the administration, he had divested from any Landmark, along with other healthcare-related investments.)<\/p>\n\n In May 2019, a calendar alert went out to staff reading \u201cdiscussion with Landmark on the direct contracting model.\u201d Career staff were appalled. \u201cThis shit is so fucking gross,\u201d wrote one in a group text with other aides which was shared with The Intercept. \u201cUgh. What the fuck,\u201d replied another, with a third sending a link to the Office of the Inspector General, suggesting it be reported. (It does not appear to have been reported.)<\/p>\n The payment model is designed to be lucrative for firms contracting with the government: The government pays a set amount of money annually per patient based on a risk score that is easily gamed by the health care company, and there is no requirement that a minimum percentage of the money be spent on care, a requirement known as a \u201cmedical loss ratio\u201d that is typically used to constrain insurance firms or providers from eating the bulk of the funding.<\/p>\n Brad Smith, a recruit of Boehler\u2019s who briefly served as director of CMMI after Boehler was appointed to an unrelated position by President Donald Trump, wrote an article for the New England Journal of Medicine<\/a> in February of this year that was highly critical of\u00a0similar payment models the organization was rolling out, noting with unusual frankness that \u201cthe vast majority of the Center\u2019s models have not saved money, with several on pace to lose billions of dollars. Similarly, the majority of models do not show significant improvements in quality.\u201d Smith identified \u201cinflated benchmarks\u201d \u2014 in which providers wildly overestimate what they expect a patient will cost \u2014 and providers\u2019 ability to \u201cgame\u201d the payment models as key drivers of losses for the government.\u00a0Smith expressed hope for direct contracting as a fix, though the project\u2019s critics note it has the same elements.