by Hamilton E. Davis
Vermont’s health care reform project, now in its 11th year, has been dead in the water for months, still well short of maturity. The barriers to progress have been simmering opposition in portions of the primary care community, small hospitals, and the Democratic-Progressive left in Chittenden County, not to mention the Health Care Advocate and the press. The focus of that hostility has been the University of Vermont’s Medical Center Hospital’s dominant role in the delivery system and OneCare Vermont, which is owned by the UVM Network and serves as the proxy-scapegoat for all the shortcomings of the reform effort.
Reform of course has moved off stage under the lash of the COVID-19 virus, but its machinery has been grinding along nonetheless, without much notice. All that changed last week when Attorney General T.J. Donovan announced that he would sue OneCare on behalf of the State Auditor, Douglas Hoffer. Hoffer is demanding that OneCare Vermont disclose the salaries of all its 60 or so employees. OneCare responded that it had disclosed most of the relevant salaries, that it had complied with terms of their contracts with payers, and that it would fight the suit.
In substance, the suit is of little to no importance—it’s a characteristic political ploy by the auditor, who specializes in them, and it will not drive any significant change in the operation of the health care delivery system or the process of reform, no matter which way a court decides. It’s also intriguing why T.J. Donovan has chosen to participate in this farce, about which more below. Why farce? Because we already know the salaries of the top dozen executives at the top of OneCare and those are the ones matter. And even if OneCare laid out every dime of salary it disperses to its entire staff, that information wouldn’t tell Hoffer or anyone else anything about the way OneCare operates, or what it does well or poorly. The suit, in short, is just harassment by opponents of reform.
The evidence for that is just a computer click away. The salaries of the top dozen executives at OneCare have been available since last spring to anyone who cares to access the Green Mountain Care Board website. A selection: Vicki Loner, the CEO, got paid $408,774 in 2019, around the average compensation for the president of one of Vermont’s small hospitals. Sara Barry, her top lieutenant got $253,056. Tom Borys, the finance guy, got $162, 614. Norm Ward, the sole doctor on the staff, drew $382,367 See for yourself:
At Governor Phil Scott’s last press conference, I asked Mike Smith, his secretary of the agency of human services, how he viewed the suit and what he considered its relevance to the reform project. Smith dismissed the whole thing as a “squabble” between a couple of other players, and said that he didn’t consider it relevant to the progress of reform. To the extent that the suit throws into question OneCare’s openness to inquiry, Smith said he was entirely satisfied with OneCare’s “transparency.” He added:
About a year ago I pushed for release of the salaries of those in the higher levels of OneCare. I asked them a 990-like disclosure; as you know, they aren’t a nonprofit now, but I want them to act like a non-profit so that you list the salaries of the agency. I didn’t ask for the salary of the receptionist, or maybe an executive assistant and others—I asked for the top salaries of individuals. OneCare did submit that information.
I also asked OneCare to file with the IRS as a non-profit; the IRS hasn’t done that yet…but, from my point of view, the execution of the contract we have with the ACO we have enough look-see into their financials to feel comfortable. We have a lot going on with Covid and other things so we are going to leave this between the Auditor and OneCare.
Smith’s view is particularly apt here because his Medicaid agency is the only payer that negotiates prospective payment, fixed price contracts with OneCare. Those arrangements are the closest in the United States to full replacement of fee-for-service reimbursement by block financing, or capitation. That shift is the essence of the Vermont reform project, and the grail for reform in the country.
If the Suit is a Farce, Why Does it Matter?
The fact of the suit, however, serves to illuminate the hugely troubled political and social landscape that the reform effort has to traverse. Some key elements:
The most basic problem is that almost no one who is not a specialist knows what OneCare does, or why it does it, or how it does it. OneCare is basically just a middleman or conduit for the flow of money into the delivery system. OneCare doesn’t spend a penny on health care: the north-of-a-billion dollars a year that flow through go directly to hospitals and doctors and it is those doctors and hospitals who spend the money to deliver care.
The reason OneCare exists at all is that federal law has decreed that the Accountable Care Organizations are the proper vehicle to enable stand-alone hospitals and docs to offer a single price for delivering care to large cohorts of patients. The size of those payments, however, is negotiated by the payers and OneCare, but how the money is spent is entirely up to the individual hospitals and doctor groups. The ACOs are also tasked with gathering quality data and encouraging things like better coordination between providers to improve both quality and cost containment. However, OneCare has zero effect on the quality of care delivered by either hospitals or doctors.
Beginning in the mid-teens, some Chittenden Country Progressives and left- Democrats have carried out a vendetta against the UVM Medical Center, and the UVM Health Network. The lead player in that band was then Senate Pro Tem Tim Ashe. Ashe, now gone from office, contended repeatedly that UVM was a monopoly that was gobbling up all the smaller medical players and was forcing independent doctors to leave the state. UVM had to be stopped, he argued, if Vermont is to control its costs. His lieutenants in that campaign included Chittenden County Senators Michael Sirotkin and Chris Pearson; and the thesis was picked up at various times by a range of other players, including the state Auditor.
An intriguing element in the suit is that the Attorney General, T.J. Donovan, is throwing his hat into the anti-UVM campaign. T.J. has never weighed in on reform itself in any substantial way. A couple of years ago, he assembled all the state’s reform players in a meeting in Contois Auditorium in Burlington, and they spent more than two hours laying it all out for him. Then silence.
Any member of my tiny corps of brilliant readers is hereby permitted to speculate whether T.J’s foray into the weeds of health care reform might be driven by a desire to position himself for campaign for a seat in the Washington delegation, if a seat opens there, or for Governor, if Scott opts not to run in 2022.
By far the most significant arena for speculation inspired by the suit is whether the Scott Administration, in the person of Mike Smith, the AHS chief, decides to take full ownership of the overall reform project; and give it the political leadership it will need to succeed. When the Scotties assumed office in 2016, they treated the reform project like a live hand grenade. By the end of their first term, they had moved into a position of support, but without any perceptible effort to actually make things happen.
That began to change last fall when federal Medicare officials criticized the slow pace at which the Vermont project was ramping up. Smith, who was just concluding his first year as Secretary, stepped in immediately to say that he would “reboot” the OneCare operation, and get its shortcomings remedied. That initiative made practical political sense at the time, but the reality is that Smith will not be able to “reboot” anything, short of taking charge of whole project. The reason is that OneCare itself is severely limited in what it can do. It gets its day-to-day marching orders from the UVM Network headquarters—the Network CEO is chairman of the OneCare board. And OneCare isn’t really a separate player: the ACO is simply a consortium of the state’s hospitals, and, based on the written record, the state’s hospitals want no part of reform. They fear, with good reason, that if the small hospital network is forced to justify their very expensive but low volume service lines, they will be diminished to the point that several won’t continue to function as hospitals—they’ll be forced to downgrade to clinics, and some might not survive at all.
Two other confounding issues. One of the most important is how the Scott administration, once it gets right into the engine room, meshes with the Green Mountain Care Board. Act 48, the foundation statute for reform, confers a huge array of powers and responsibilities on the board and it isn’t clear yet whether it can function both as regulator and designer of the final form of a delivery system recast to flourish in the 21st century. The second confounder is the fact that the Legislature is under new leadership in both the House and Senate and there is no telling how they will react to anything that will affect community hospitals.
This whole mess has to be sugared off in the next six weeks or so because the financial course for the FY 2022, which begins Oct. 1, will begin to form in the next several weeks—the hospitals are putting their budgets together now for submission by July 1; and the GMCB will have to deliver their budget guidance for that process soon.
Moreover, the Vermont reformers will have to determine the form in which they will petition federal Medicare officials for another five-year reform waiver. The reform project encompasses all the payers, but the critical payer is fully federally financed Medicare, since no hospital can survive without it.
The first wave of reform is running from 2017 (a trial year) to 2022, and the new one will run form 2023 to 2028. Will we need any mid-course corrections? And will the structure of reform—including the GMCB, the Scott administration, OneCare Vermont, Blue Cross and other insurers, the UVM network, and the smaller community hospitals—have to change somehow? Who knows?
And if you are inclined toward metaphysics: how will the Legislature react to the whole thing?
Pretty hard questions. And consider that the reform players will be massively tied up for several more months with COVID.