by Hamilton E. Davis
No single issue in reform has been so subject to ignorance, misinformation, bias and political manipulation as OneCare Vermont, the state’s Accountable Care Organization (ACO). And none is so critical to success. The essence of reform is the shift from fee-for-service reimbursement to block financing to doctors and hospitals, and there is no way to do that without an ACO. In essence, an ACO is simply a shell or a box that allows doctors and hospitals to combine to deliver care to large groups of people for a single fixed price. This innovative device was established in the federal law known as Obamacare.
While the basic role of OneCare seems straightforward enough on the surface, the problem now is that OneCare is being made a scapegoat for all the pressures and cross currents belaboring the reform project. OneCare is a for-profit company, so obviously it can’t be trusted. OneCare is losing money. OneCare is wasting too much money. OneCare is cutting support for primary care doctors. OneCare is getting scolded by the federal government for not enrolling enough Vermonters. Opposition is coming from some elements in the Legislature, the state’s Health Care Advocate, the State Auditor…The Secretary of the Agency of Human Services says he is going to “reboot the system.”
This whole cacophony is amplified by wide spread ignorance of what OneCare Vermont actually is. It is characterized as some alien growth that has attached itself to the Vermont delivery system. In fact, OneCare Vermont is nothing more and nothing less than the Vermont hospitals, along with a big chunk of independent doctors. That doesn’t mean that OneCare doesn’t have any problems—it does. But its problems are the same problems that bedevil the entire reform effort. And solving them will require the concerted effort of all the major players: the Scott administration, which has provided no real politic leadership at all; the Vermont Legislature, which has been almost entirely an intellectual desert when it comes to reform; the Green Mountain Care Board, which is struggling to manage the restructuring of the hospital system; the business community, the single biggest beneficiary of reform, which has been missing in action on that vital issue and more.
The misapprehension around OneCare Vermont arises from three sources. The first is that its nature and function have never been adequately explained by the reformers themselves. The second is that anti-reformers have chosen to use OneCare as a club to beat the UVM Network, and they have succeeded to a large extent. That effort has been centered in the Progressive community in Chittenden County, which appears to dislike the UVM system because of its size and dominance. The third is that while the ACO is a shell that holds nearly all the hospitals and most of the doctors, the interests of the large hospitals diverge from those of the small hospitals, so that trying to find a single “provider” message is difficult. Trying to accurately unravel all of these deep forces is impossible in a single post. But it is critical to at least not fog the environment with stuff that simply isn’t true.
Expunging the Myths
The idea behind OneCare is pretty simple. For the 50 years leading up to the launch of reform in 2013, people moved in wandering paths through the delivery system, starting with primary care doctors and rising up the complexity scale to secondary and tertiary care, the former delivered in small and medium sized hospitals and stand-alone specialists and the latter in much bigger tertiary centers, many of which are also medical colleges. At each step along the way, the patient or his insurer paid for each episode of care. The system was both insanely expensive and marked by very patchy quality. The remedy long agreed upon by the policy community is to shift to block financing, which shifts the risks of medical care from the public to the doctors and hospitals. If a person needs to get her left leg amputated, and the doctors cut off the right leg by mistake, we (the public) pays once for cutting off the wrong leg, and once again for cutting off the correct leg. Bad medical care makes more money for providers than good.
That doesn’t mean doctors try to make mistakes—they don’t. But they still make many mistakes, and until it costs them money, rather than cost us money, those mistakes will continue to drive overall health care costs into the stratosphere.
None of this is to suggest that there are no problems inside OneCare. There are. The interests of the small hospitals differ from the interests of the big players, the UVM system and Dartmouth -Hitchcock. But the most tenacious stresses inside OneCare arise among the hospitals themselves, not with the OneCare bureaucracy. The workers there don’t make a trip to the water cooler that isn’t approved by the OneCare board, which is led by UVM and includes representatives from all the provider sectors—big hospitals, little hospitals and primary care providers. Moreover, the gargantuan job of recasting the culture and financing of the delivery system can’t possibly be carried out by one player or another: it will depend on the concerted efforts of the players. (OneCare Vermont), the regulators (Green Mountain Care Board), the state’s political leadership (the Scott administration and the legislature), the private insurance industry (mostly Vermont Blue Cross) and, the single biggest beneficiary (large employers).
The performance of every one of those players has been problematic to a greater or lesser extent. That B minus effort hasn’t killed the reform, but it has very significantly retarded its progress, and it could kill it yet. No one can tell yet whether reform will fully mature, or drift away into irrelevance. We could easily return to the 1995-2010 era, with a sizable bureaucracy invested with serious regulatory powers accomplishing, basically, nothing at all. At the very least, however, we should at least get the fact situation roughly correct. We don’t have that now, especially in regards to OneCare, which is currently a scapegoat for various failures and blundering around that essentially affects the entire system. For example:
When the subject of OneCare arises, commenters seldom get far into the first sentence before they note that OneCare is a “for-profit” company, the obvious implication being that it can’t be trusted. The for-profit trope is a red herring, which doesn’t mean that it isn’t effective. When Mike Smith, the newly-minted Secretary of the Agency of Human Services made his first appearance before a legislative committee last year he said it was necessary to convert OneCare to a not-for-profit company. Actually, it isn’t necessary.
For-profit status is a requirement under federal law. OneCare was incorporated in 2012 by the University of Vermont medical system and Dartmouth-Hitchcock Medical Center, and during its eight-year life it hasn’t had a penny of profit, or a penny of loss. The underlying reason for the for-profit status is a kink in the federal law that limits participation in the management of non-profits; and OneCare is committed to giving all elements in the medical community a voice in its operations. So, its Board includes representatives of big hospitals, medium hospitals and little hospitals, along with independent groups of physicians such as Federally Qualified Health Centers, a key element in the primary care physician community. Putting all those potential beneficiaries on the OCV board forecloses the option of making the company nonprofit. Imagine the howl that would go up if UVM and Dartmouth kept the smaller guys off the Board.
A major chord in the anti-OneCare chorus is the claim that its performance on costs and quality is terrible. OneCare is losing money for the system, money that would be better spent on the delivery of care.
The essential problem with all of this is that scarcely any of it is caused by OneCare itself. OneCare itself doesn’t deliver a scintilla of health care. OneCare can’t provide an aspirin or put a bandage on your knee. Every single piece of medical service in the State of Vermont is delivered by doctors, hospitals and their technical support. If there is a problem with medical quality, that problem lies with doctors or hospitals. OneCare can collect quality data from providers, but the content of that data depends 100 percent on providers. If the cost performance under the fixed price contracts is subpar, the problem lies with the providers, 100 percent.
A major challenge for OneCare is the so-called scale problem. Vermont has agreed in its contract with the federal government to enroll 70 percent of its 550,000 eligible residents in fixed price contracts by 2022.
We are running behind schedule on that, which many of the players are pleased to blame on OneCare. The reality, however, is that the number of Vermonters attributed to OneCare is entirely up to the payers—Medicaid, Medicare and private insurers like Blue Cross and MVP. Plus, large self-insured employers. In that cohort, Medicaid is basically all in, but the rest are coming in much more slowly. Still, the progress has been steady. In 2017, the first full reform year, OneCare had 31,000 attributed lives for 31,000 people. The number of attributed lives went to 112,000 in 2018, to 172,000 in 2019, and to 250,000 in 2020. The number of lives actually covered by fixed price contracts, and the ones required by Medicare, is lower than that (the actual figures are a little squishy) but they have grown each year. And none of that should obscure the key facts. The first is that Vermont is leading the country in the direction it needs to go on health care reform. There are some 850 ACOs in the United States, and just two—Vermont and one in northern California—are actually moving steadily toward block financing that places the financial and quality risk where it belongs, with the doctors and hospitals who deliver the care. The second is that OneCare has no power to force payers to enter into the payer side of a fixed price contract and likewise no power to force hospitals to enter the execution side of such an agreement.
One of the most difficult questions in the OneCare issue is its relation to and effect on primary care. The single essential function of OneCare is to enable the shift from fee-for-service reimbursement to block financing. The second most critical function, however, is the support for primary care in Vermont. OCV doesn’t have to do it; primary care has to a significant degree stood on its own for 100 years or more. And it can continue to do so. Still, once you get past the overall costs in the system, halting the steady, decades long erosion of primary care should be your next priority. And for OneCare Vermont, it is the next priority. Which has not insulated it from the environment described in the first sentence of this post—ignorance, misinformation, bias and political manipulation. Consider the current situation:
In 2017, OneCare developed a program to shift about $20 million a year to support primary care providers who would attribute their patients to OneCare. There are about 700 primary care docs in the state, and if the $20 million were split up evenly it would send just under $30,000 to each one. Since nowhere near all 700 are willing to fully participate in reform the amount going to each eligible doc would run somewhere between $50 and $75,000. The basic formula, obtained from 2018-2020, called for OneCare, using hospital money, to pay primaries $3.25 per member per month (PMPM). The subsidy program was very popular, especially during the Covid crisis because the doctors got the money even when the patients didn’t show up.
A few months ago, however, OneCare announced that it would inject a quality requirement into the subsidy program for 2021. Instead of the straight $3.25 PMPM, the doctors would get paid on a sliding scale from $1.75 to $4.25 PMPM, based on their performance meeting a 13-unit quality performance test. Pandemonium ensued. OneCare was cutting primary care reimbursement when those docs needed it most, the Legislature huffed. A group of 14 independent practices announced that they would leave the program. Five advocacy groups said that OneCare Vermont should be shut down, and the state should dump the reform effort. In response, the Green Mountain Care Board urged OneCare and the independent docs to find a compromise, which they did, essentially pushing the whole issue off for a year. Ultimately, however, the primary care docs will have to decide whether they want to participate in reform as it has been constructed in Vermont. They don’t have to. But in considering that, they might recall the comment by Kevin Mullin, chair of the Green Mountain Care Board to the effect that there is another PMPM number possible. That number could be zero—no subsidy at all.
However, there is no gainsaying the seething virulence toward OneCare in the reform environment. Like many of the incremental steps taken over the last couple of years, the compromise didn’t really solve anything. The self-defeating objections of the primary physicians to the proposed subsidy revisions are emblematic of the widespread misunderstanding of OneCare Vermont, and what the organization actually is. OneCare has plenty of problems, but most of them are the same problems that bedevil the entire reform effort. And solving them will require the concerted efforts of all the players. To demonize and ultimately abandon OneCare means destroying the reform effort itself. Which will return Vermont’s medical care system to the bad old days of increasingly unaffordable prices, poor quality medicine and unequal care for Vermonters. And it would remove Vermont from the rolls of the handful of pioneers capable of reshaping medical care for the nation as a whole.