by Hamilton E. Davis
For the last few years, the Vermont legislature has been wrestling with a marvelously attractive, utterly pernicious proposal to solve the state’s primary care doctor problem at a stroke by shifting financing of the system to state government. The idea was that the state would levy a payroll tax on employers, and use the money to pay primary care doctors to care for all Vermonters at no cost to individuals.
The initiative came from Dr. Deb Richter, a primary care doctor who lives in Montpelier and who has been a strong supporter of health care reform for more than a decade. Richter came up with her proposal in the wake of then-governor Peter Shumlin’s decision in 2014 to drop the financing component of the single payer reform proposal he launched in 2011. The cost containment component of the Shumlin project continued and is well advanced today,
The Richter proposal bounced around for a couple of years, was studied in some depth late in Shumlin’s tenure, and then resurfaced in the current legislature. No one gave it any chance of actual enactment, however, because of the determination of the new Republican Governor, Phil Scott, to oppose any new taxes. The bill forwarding the Richter proposal is all but technically dead.
The whole exercise is worth examining, however, because the issue of primary care is vitaI to the reform project and the performance of the Legislature in dealing with it in the recent session indicates that important elements of that body still don’t seem to understand it. Both health policy committees, Senate Health and Welfare and House Health Care, supported the UPC bill, despite the fact that Al Gobeille and Michael Costa of the Agency of Human Services testified that the whole thing was bad for the system. The key member of the Legislature to get it right was the Senate President Pro Tem Tim Ashe. Ashe, a Chittenden County Democrat/Progressive, who has taken considerable heat in this space for his posture on reform, effectively steered the whole state-paid primary care scheme into the weeds. He apparently has more work to do with some elements of both chambers.
So, Why is Universal Primary Care a Bad Idea?
It is worth noting at the outset that the idea of removing financial barriers to Vermonters receiving primary care is a commendable impulse. The difficulties with the Richter scheme are essentially practical ones that arise in a way it would affect the management both of primary care itself as well as the overall system.
The central problem with the initiative is that it would damage and possibly kill the state’s health care reform effort, which is moving forward steadily. The centerpiece of the reform project is shifting payment to doctors and hospitals from fee-for-service to block financing, or capitation. That shift is embodied in contracts between a group of providers, acting through a device called an Accountable Care Organization (ACO), and payers, such as Medicaid, Medicare and private insurers, to provide all the care necessary to blocks of patients for a fixed price.
The underlying principle for that process is the integration of the health care delivery system from primary care to more complex secondary care, much of it in hospitals, and to tertiary care that is delivered in our region by the University of Vermont and Dartmouth academic medical centers. Modern medical care is so complex, and so expensive, that patients need to move seamlessly up and down the intensity ladder in order to achieve the lowest cost and highest quality.
Carving primary care doctors out of that system and paying and managing them differently from the rest of the system just doesn’t make any sense. An immediate problem is that the carve out would encourage primary care doctors to refuse to attribute their patients to the ACO, and thereby constrain or even block the application of the reform template to Vermont hospitals, which now spend 95 percent of the acute medical bill in Vermont.
That is not a theoretical concept; it is a practical problem on the ground today. Rutland Regional Medical Center, the second-largest hospital in the state, and the most expensive one on a per capita basis, lies outside the reform project. The reason is that the FQHC in Rutland refuses to attribute any of its patients to the ACO, so OneCare has no fixed price contract with Rutland Hospital.
The same dynamic is at work in the hospitals serving the Morrisville, Randolph, and St. Johnsbury areas; and similar FQHC reluctance is holding down the participation numbers in the Burlington and Bennington hospital service areas. That could change, of course, and even if it doesn’t, the Green Mountain Care Board is actively considering changing the attribution rules so that patients could be attributed to ACO by area of residence or by receiving treatment in a specific hospital. The UPC idea would still be highly problematic.
How to manage the whole thing would be nightmarish. The Deb Richter template was based on a panel of 1,200 patients per primary care doc, with the state paying $500 per patient. Richter reasoned that if a doctor’s patients were unhappy with his or her perfomance, they could just leave—vote with their feet. Still productivity could be a challenge. Anyone who doubts that could consider the case of Porter Hospital, which ran onto the financial rocks, mainly because of low work loads by its primary care docs and had to give itself to the UVM system.
A second critical problem, in my view, is that splitting the financing of primary care doctors from the rest of the system could be very damaging to primary care doctors themselves. Primary care docs have been disrespected in the system, and underpaid as well, for decades. From that perspective, getting a reasonable payment from the state looks like a pretty good idea.
The problem is that while the payment might look good in Year One, whenever that might be, the years after that are certain to get worse and worse. The larger system, the hospitals and a majority of the total docs, will be able to demand that they get paid an inflation rate near three percent per year. There is, after all, a reason that they get 95 percent of all the acute health care money now.
Every new penny going to a state funding mechanism for the remaining five percent would have to come through the Legislature’s appropriation process. And there is no way on God’s Green Earth that the primary care docs, on their own, will have enough political weight to match up with the much larger system. The primaries might get a three percent bump in a year when the state is awash in money; but the state is seldom awash in money, and the demands facing the annual spending are ferocious.
What would be much smarter in practical terms would be to take advantage of the favorable political forces for primary care in the reform environment, and work to get their fair share of that huge main flow of money. They will be able to do that only by embracing the whole integration principle, rather than isolating themselves from it.
The primary care docs themselves might figure that out on their own, even though it was apparently a mystery to the House and Senate health policy legislators.