by Hamilton E. Davis
OneCare Vermont, the state’s primary Accountable Care Organization, presented its 2018 budget to the Green Mountain Care Board last Friday, outlining a major expansion of the state’s health reform project to include seven hospitals, up from four, and a shift of nearly $800 million in health care spending from fee-for-service to “risk” contracts, or capitation. That would amount to about a third of the total $2.4 or so billion spent on acute medical care per year.
OneCare is now operating a more limited program—a $93 million effort that serves 31,000 Medicaid recipients in the northwest quadrant of the state. As of Jan. 1, 2018, the OneCare budget calls for expanding the Medicaid project and extending capitation to a portion of the state’s Medicare population, as well as contracting for the same system if possible with Vermont Blue Cross and Blue Shield for some of its patients.
The expanded effort would bring an estimated 137,000 Vermont residents into what are called “risk” contracts, in which OneCare and a payer—the state Medicaid Agency; the federal government, which manages Medicare; or Blue Cross for commercially insured Vermonters--negotiate a fixed price for a specific block of patients. If the doctors and hospitals providing the care bring the cost in below the target, they can keep some of it; if they go over the target, they have to pay for some of it themselves.
The importance of the OneCare move lies in the fact that it is the first tangible step toward getting costs to a sustainable level in Vermont. Since 2013, the Green Mountain Care Board has cut the annual inflation rate in the state nearly in half through standard regulation; but even those lower rates are still nowhere near acceptable year over year.
Both federal Obamacare and the basic health care reform law in Vermont are based on the proposition that successful reform depends on shifting payment to doc tors and hospitals from fee-for-service to capitation. That depends on integrating the currently atomized delivery system so that providers can deliver all the necessary care to blocks of patients for a single price. The vehicle for doing that is called an Accountable Care Organization (ACO).
There are now two ACOs in Vermont, but one is very small and has no interest in taking risk contracts. OneCare Vermont includes a large majority of the medical assets in the state and is built specifically to take risk. Under federal law, risk contracts could not begin until Jan. 1 of this year. So, OneCare made its initial foray in the limited Medicaid project beginning in February. The 2018 budget sets out the dimensions of first full year of the program, which will involve risk contracts for Medicaid, Medicare, and commercial insurance.
The aim is to limit the annual increase in health care spending to 3.5 percent, about half the expected trajectory in the rest of the country. A second major thrust of the OneCare budget is to increase payments to primary care physicians, both within and without the OneCare organization itself. A piece of that assistance is continuance of the Blueprint program, which supports social services that enhance the efficacy of acute medical care, particularly that delivered by primary care doctors.
Federal support for the Blueprint has been cancelled, but the Green Mountain Care Board negotiated an agreement with CMS (federal Medicare and Medicaid officials) to include nearly $8 million in Blueprint money in the base of the spending on Vermont Medicare recipients. A second component is a multi-faceted program to steer increased financial support to primary care physicians; the latter includes increased payments to doctors who take care of the sickest patients, and to the community support elements participate in that care. More about this below.
The most critical part of the project now is the expansion to Medicare, an agreement that was worked out over the last two years between the Green Mountain Care Board’s then-chairman, Al Gobeille, and CMS. CMS has said that it hopes that Vermont’s development of an alternative payment model (the federal euphemism for moving fee-for-service to capitation, or block financing) can lead the country the promised land of sustainable costs. On its website, CMS had this to say about the project:
The Vermont All-Payer ACO Model is an exciting advancement in CMS’ partnerships with states to accelerate delivery system reform. CMS has been partnering with Maryland since 2014 as part of the (effort) to shift hospital payments to global budgets that reward value over volume. The Vermont All-Payer Model builds on the Maryland All-Payer model by bringing statewide healthcare transformation beyond the hospital. This Model will provide valuable insight for other opportunities for CMS to participate in state-driven all-payer payment and care delivery transformation.
While the feds love the Vermont project, the reform project nonetheless still faces very heavy headwinds at home. The new Governor, Phil Scott, has been indifferent to it. The Legislature, especially the Senate, has been focused on trying to increase reimbursement for independent physicians, which requires sticking with fee-for-service reimbursement and the kind of competition among doctors and hospitals that has driven health care costs in Vermont from roughly six percent of the gross state product in the late 1960s to 20 percent today.
The most intractable opposition, however, has come from elements of the primary care community. There are about 700 primary care doctors in the state. Of those, about 300 are employed by hospitals. There are about 275 in Federally Qualified Health Centers (FQHCs), which get extra payments from Medicare to support a primary care network; and possibly 30 to 40 in HealthFirst, the organization that represents independent physicians. The FQHCs are joined in an organization called Community Health Accountable Care (CHAC), most of whose units are opposed to risk contracts
Primary care physicians have a critical role in reform because federal law posits that a person can’t be covered by an ACO unless he or she is referred there by a primary care physician. The effect of the primary care resistance, therefore, has been to limit OneCare’s writ to the northwest quadrant of the state and the southern tier, Bennington, Windham, Windsor counties. Those two sectors comprise a bit over 300,000 people, or about half the state’s population. Still, it’s very patchy. A major hole is Rutland County, where the local FQHC will not join the reform effort, so the hospital in Rutland, the state’s second biggest, can’t participate.
The eastern part of the state north of Springfield has no reform presence, nor does a swatch of the north central part of the state served by Copley and Gifford hospitals.
Moreover, there are portions of the OneCare coverage that are soft. The four hospitals that serve the northwest quadrant—the UVM Medical Center, Northwestern Medical Center in St. Albans, Central Vermont Medical Center in Berlin and Porter Medical Center in Middlebury—appear solid. They are already participating in the Medicaid project.
Of the three new hospitals that have asked to be included in the 2018 OneCare budget, Southwestern Vermont Medical Center in Bennington appears solid, given its size and the fact that it has its own primary care physicians. However, the two hospitals in the southeastern corner of the state—Brattleboro Memorial and Springfield—are less certain.
They have said they wish to be considered in the consideration of the 2018 OneCare budget, but their ability to take risk is problematic because both are so dependent on Dartmouth-Hitchcock, the tertiary center that is just a short ride north on I-91. D-H. Although it is a founding owner of OneCare, Dartmouth is unwilling to take financial risk, apparently because of the serious budgetary difficulty it has experienced over the last couple of years.
Brattleboro and Springfield are both smaller than Bennington, so they send relatively more patients to Dartmouth They could absorb all the financial performance risk for the 18,000 potential enrollees in their sector, but that would be challenging, so they can’t commit until fall.
A second soft spot is Burlington, where the Community Health Services of Burlington, an FQHC, is considered close to a decision to come into OneCare, but they haven’t done so yet. If they don’t, roughly 10,000 of the lives they serve would have to be taken out of the proposed 59,000 lives for risk contracts in Burlington and its suburbs.
If all the soft spots were to withdraw before final decision making in the fall, the total of 137,000 lives contemplated in the OneCare budget would drop to just over 100,000, triple the number covered in the current year, but nonetheless a painful reduction.
Support for Primary Care
OneCare has built a considerable array of financial supports for primary care doctors to encourage them to join the reform effort; it also plans to support to the kind of community services that aid in moving toward better population health. A first step was to build continued support for the Blueprint into the OneCare budget; that amounts to something over $7 million in 2018. For any FQHC’s that come in, OneCare will pay $3.50 per member for month for the lives they attribute to the ACO. Given that the average panel for a full-time primary doctor ranges from 1000 to 2000 patients, the additional income per year could run to $84,000, with no reduction in the enhanced reimbursement that flows from FQHC status. Independent primary care doctors would get the same benefit for participating.
In addition, the OneCare budget contemplates an additional $15 to $25 per member per month to doctors caring for the most severely ill patients, up to 10 percent of their practice. OneCare would also contribute to those community social service organizations that enhance the health of the population by mitigating non-medical problems that contribute to illness. Their contribution is a particular concern of the Green Mountain Care Board.
The fact remains, however, that CHAC remains a strong negative influence on OneCare’s efforts. At least one of its members, the FQHC in Richford that serves Franklin County, supports the OneCare project, but the FQHCs in places like Bennington and Rutland remain hostile. CHAC can be counted on to put all the pressure it can on the big FQHC in Burlington to stay out of the integration movement and stick with fee-for-service medicine, along with any other FQHC that considers joining OneCare.
As for the Green Mountain Care Board, it will consider the OneCare budget in July. The Board has supported the movement toward integration on the one hand, but it has not put any pressure on CHAC to participate.
So, OneCare is moving forward, but the headwinds persist. No one knows whether the Governor will take an interest in the reform issue, no one can say what impact the legislature will have on reform going forward, and no one yet can predict whether and how the Green Mountain Care Board will try to resolve the essential question of whether Vermont sticks with the fee-for-service-competition model, or shifts to integrated care with block financing.
We will know a lot more about that by Thanksgiving.