Feds Salute Vermont Health Reform as Best in US in Phase One

by Hamilton E. Davis 

   Federal Medicare and Medicaid officials today issued a pair of detailed studies showing that Vermont’s health care reform project outperformed other key states’ efforts from 2013 through 2016, the first phase of nationwide reform under the umbrella of Obamacare. Over that period, Vermont saved $97 million in Medicaid costs, the main study said.

   The studies compared Vermont against reform projects in Maine, Massachusetts, Minnesota, Arkansas, and Oregon on three key metrics—cost containment, utilization control, and quality. “Only Vermont’s (reform model) …had a statistically significant slower increase in total Medicaid expenditures after two and three years,” the main report said. Vermont also had statistically better performances on utilization—a measure of unnecessary care—and quality control.

   No other state in the studies came close. Minnesota and Massachusetts had no positive effects at all. Arkansas and Oregon made some progress on quality control while Maine did a little better on utilization. But no reform project other than Vermont had solid progress across the cost, utilization, quality front.

   The federal endorsement, which was reported by Governor Phil Scott, electrified the Vermont reform community. Scott said the findings are “incredibly encouraging and demonstrate the validity of our approach.” He credited what he called the “hard work of multiple administrations, and added: “Being innovative in our work to limit growth in health care costs is the key to long term affordability, and I’m pleased that Vermont is leading on that effort.”

    Al Gobeille, Scott’s Secretary of the Agency of Human Services, exulted at the news. "Huge!!!!," was his first notification to his team. Gobeille was first a member and then chair of the Green Mountain Care Board during the period examined in the studies, so he was a central player in the success of that phase.

    “This is concrete evidence that health care reform can work,” Gobeille said. “By working together on cost control and improving quality, we can save money and improve the patient experience.”

   Kevin Mullin, who replaced Gobeille as chair of the Green Mountain Care Board, said he was “proud of the work done by the reform, as well as the state’s providers…the report will function as rocket fuel to propel the reform project the rest of the way.”

   Kevin Stone, interim president of OneCare Vermont, also welcomed the report, which he said “validates the efforts of the provider community to change the way health care is paid for and delivered. This foundation provides the right momentum to build on the early successes of reform.”


   The federal blessing was particularly gratifying to reformers because the Vermont effort has been dogged every step of the way by political opposition across several fronts, including elements in the Legislature, the press, the primary care physician community, and others.

   For example, opponents mounted a strong effort last December to derail the budget of OneCare Vermont, the ACO that represents most of the hospitals in the state. And last summer, the Green Mountain Care Board was ripped for the way it dealt with insurance rates for Blue Cross. Former Gov. Howard Dean tweeted then that the Board had never accomplished anything.


    The Phase One assessment was sponsored by federal Medicare and Medicaid officials under contract with two organizations, RTI International, which included contributions by The Urban Institute, the National Academy for State Health Care Policy and the Henne Group, a market research firm; and the Milbank Memorial Fund, a New York-based group that specializes in population health.

   The RTI effort was massive, more than 650 pages long, including appendices for each state that teased out what appeared to be every tiny bit of data and submitted the results to all sorts of statistical and methodological steps. The Vermont appendix alone was 91 pages. The Milbank effort was more discursive, 37 pages, and less buried in health policy studyese, but its conclusion was the same: “Only Vermont showed clear progress.”

   The RTI study fastened on several aspects of the Vermont program to explain its success. For example:

  • High engagement of state agencies, payers, providers and community organizations

  • Patient-centered medical homes under the Blueprint program

  • Legislatively-granted authority in the Green Mountain Care Board to monitor state expenditures, expand trust and create standards for the ACP in the state.

   It is ironic that while the elaborate analysis of the leading reform players was impressive, the studies covered only the toe-in-the-reform water phase. The first three years of reform, from 2013 to 2016, involved so called one-sided risk, which isn’t really risk at all. Hospitals in Phase One got a wonderful deal: take your last year’s budget and increase it by some reasonable amount. If you spend less than that, you can keep the difference. If you spend over your budget, no problem. You keep that too.

Also, the expert analysis could be misleading in one sense: it credits the Vermont ACO “model,” which is valid as a model, and true in Phase Two, since OneCare is the lone statewide ACO. But during Phase One of the project, Vermont actually had three ACOs—OneCare, plus an ACO run by several of the Federally Qualified Health Centers (FQHCs) in the state. FQHCs are primary care clinics that get federal subsidies. Healthfirst, a smaller group of independent primary care doctors and some independent specialists, also had an ACO for a couple of years. There was never any serious chance that either the FQHCs or Healthfirst could run a functioning ACO, and both went away prior to Phase Two.


   For the last three years, 2017, 2018 and 2019, the situation has changed drastically. Now, your ACO associated hospital has to live with a fixed price contract, with monthly prospective payments. The prospective payments are all the money you get for the patients attributed to the program. You can still keep the budgeted money if you spend less. But if you go over, you have to eat it.

   The cost discipline inherent in a real risk system is orders of magnitude more powerful than the regime the feds studied. The Vermont hospital system that routinely increased its total spending by seven to eight percent in the decade of the ‘oughts has come in at under three percent from 2017 to 2019. That trajectory in a $2.6 billion system makes the $97 million savings cited by the feds look like chump change.

   Unwarranted euphoria, however, needs to be resisted. For one thing, the federal study results weren’t near a perfect score, even though Vermont’s lead over the other players could make it seem that way. Even in the fake risk, warm up period, the feds discovered problems with physician burnout, getting enough resources for mental health patients and similar rough spots and glitches.

   Moreover, the fed studies never really captured the depth and intensity of the political opposition to reform. That opposition is still in place, and vocal. And even the Vermont reformers themselves are just now confronting the challenges posed by taking a wickedly complex and expensive system like health care delivery and rebuilding it from the roots up. Anyone who doubts that is invited to dilate on issues such as the financial crisis in our small rural hospitals, the worsening problems of attracting and keep enough doctors, nurses and other providers, and the demographic shortfalls that plague most of the state.

   For today, though, the reform workers scattered around the state, in Al Gobeille’s shop in Waterbury, and OneCare Vermont in Colchester, and the Green Mountain Care Board on State Street in Montpelier and the medical professionals all over should be forgiven for taking a teeny little victory lap. They are far from perfect, and they have made mistakes; but they are so far ahead in the game in the U.S. that the rest of the states aren’t even in sight.

   Not bad for a tiny, cold state at the end of the road.