by Hamilton E. Davis
Last week, the Green Mountain Care Board invited Eric Shell, a nationally known expert on rural health care systems, to give the members his views on Vermont’s health care reform project. Shell runs a consultancy called Stroudwater, based in Portland Maine. He has worked with some three-dozen states as well as the federal government on issues involving small hospitals and he has looked closely at the Vermont system.
“I’ll say this straight out,” he said at the outset, “and I’m going to say it again at the end. Vermont is the leading state in the United States around the transformation to value-based care and a true health care system. There’s nobody close to you.”
Shell was particularly complimentary about OneCare Vermont, the state’s sole Accountable Care Organization, which he said had markedly increased the number of attributed lives starting in 2017, thereby connecting the revenue streams of the future to primary care physicians.
“You all in Vermont have really written the book on this through OneCare Vermont.” he said. “I am humbled by what you have done, and what you are going to do in the future.”
Those comments stand in striking contrast to those of Vermont’s state Auditor,
Doug Hoffer, who for the last year or so has mounted a broad-based attack on the state’s health care reform project, arguing that it has cost money rather than saving it for Vermonters and building the case for abandoning the project in 2022, rather than signing up with the federal government for another five years.
Almost every significant point Hoffer makes is simply wrong, politically motivated, or just a plain cheap shot. He knows virtually nothing about health care, and there are serious questions about whether he is overstepping his portfolio as Auditor. Yet Hoffer is getting taken seriously by a credulous press corps (read VTDigger and Seven Days) to the point where he is becoming a significant player in one of the most important policy decisions Vermont will ever have to make. Some dismiss him as just noisy, but he is more than that: He is dangerous because he could undermine a Vermont reform that could deliver the highest quality, most cost-efficient delivery system in the country.
The Hoffer indictment, contained in two major reports and several press interviews, argues as follows:
From 2000 to 2018, the increase in health care costs in Vermont means that Vermont is worse off than it would have been without the All-Payer-Model. To reach this conclusion, Hoffer looks at Vermont spending in that period and compares it to the same trajectory across the country.
If health care spending had increased at the same rate as the U.S. average, we would have spent roughly $1 billion less in 2018. Those savings would have more than covered Vermonters’ personal state income taxes in 2018, and the savings would have equaled $1,576 per person.
Wow, that would be a lot. And in just one year…the obvious problem here is that Hoffer has taken the inflation rate over an 18-year span when the question at hand is whether the inflation rate in the reform period, 2013 to 2018, was equal to, worse than, or better than the inflation rate that prevailed pre-reform, 2000-2009. The graph below presents the real question. And the real answer is that Vermonters under the reform structure avoided a total of $1.9 billion in hospital spending compared to their rate of inflation from 2000 to 2009.
Read my blog post about these numbers here.
There are some caveats on all the numbers bandied about here. Health care spending includes more than just hospital spending, but hospital spending is the engine that drives the broader number. Moreover, there can be some confusion about the time spans involved. We have used two time spans for the relevant analysis, 2000 to 2009 and 2013 to 2019. The missing three years, 2010, 2011 and 2012 were an anomaly because those numbers had nothing to do with any regulatory regime, pre or post reform spending in FY2010 fell dramatically because the Great Recession of 2008 hammered demand. In 2011 and 2012, the spending cap was set by the Legislature at 4.5 and 4.0, well below the historic track. None of these details, however, vitiate the policy issues cited above.
Manipulating the Numbers:
One of the questions thrown up by the figures above is whether the 50 percent cut in the hospital inflation resulted mostly or wholly from national trends, rather than being a result of the Vermont project. Hoffer makes that argument in his report. In fact, the national data shows a dramatic switch in the Vermont versus the national per capita health spending rates, in the opposite direction from that of the Hoffer indictment. See the graph below:
In the pre-reform period 2,000 to 2009, Vermont’s per capita health care spending ran well ahead of the per capita rates for the U.S. as a whole, 85.9 percent to 63.5. In the All Payer Model period, 2013 to 2018, that posture flipped, with Vermont increasing at a rate of 18.0 percent and the U.S faster, 22.1 percent.
A second major thrust of the Hoffer attack is his assertion that OneCare Vermont administrative costs are higher than whatever it has saved the state, a canard that made it right into the headline of the Seven Days story. OneCare is Vermont’s lone Accountable Care Organization, and its function is widely misunderstood. In the broad sense, it is one of four major players in reform, and as such deserves a share of the credit for the $1.9 billion racked up by the All-Payer model, as shown above.
OneCare’s specific job is to assemble the spending estimates from multiple hospitals into a single fixed price to a payer to cover a cohort of patients. Example: In 2017, OneCare midwifed a contract between Vermont’s Medicaid agency and four northwestern Vermont hospitals to provide all necessary care to 31,000 recipients for $93 million. The latest figure for Medicaid fixed price contracts is about $185 million across the state, and while that number should be higher, it has already stabilized Medicaid spending. The Vermont Medicaid Agency is the only such body in the U.S. to have a grip on Medicaid spending.
Finally, the value of OneCare lies not just in the benefits it has already delivered: The big payoff will come when Vermont Blue Cross and federal Medicare bureaucrats seek fixed price contracts for their patients, all of whom are much more expensive.
In the light of these realities, OneCare’s annual $19.3 million cost is mouse meat.
Okay, but you’re unhappy about the scale issue—we’re not getting Vermonters into fixed price contracts, fast enough. Well, that’s true, but it isn’t the fault of OneCare, which can’t construct such a contract unless a payer wants to do it. And the major payers—the federal Medicare officials, and private insurers like Vermont Blue Cross—don’t want to. Moreover, even if they did, the small hospitals in Vermont don’t want to either because rationalizing the smalls network would mean they would have to step down from full service hospitals to clinics: The small hospital business model is dead in Vermont, just like it is in the rest of the country. OneCare has a bureaucracy which serves as a convenient punching bag for reform opponents; but at root, OneCare is actually just the 14 Vermont hospitals, and if the process of reform threatens them they can simply drop out of the ACO or restrict their participation to Medicaid.
One of the most troubling aspects of the Hoffer campaign is that he indulges himself in some nasty, personal comments. For example, he routinely denigrates Kevin Mullin, the chairman of the Green Mountain Care Board, contending that he isn’t doing his job. Another case in point is his suit against OneCare Vermont to force the CEO Vicki Loner to turn over to him the salaries of all her lower level bureaucrats. Publishing salaries can have some benefits, but for the most part they are just ploys to damage an opponent in the eyes of the public. In this case, however, Loner had already provided both the Green Mountain Care Board and her contract partner, the state Agency of Human Services, with the 12 top salaries of OneCare employees. Loner’s paychecks total $408,000 per year. And the people with whom OneCare actually had a contract, the Medicaid Agency, were perfectly happy with that level of disclosure. As was the Green Mountain Care Board, the government agency actually assigned to deal with the issue.
It’s perfectly reasonable for public officials to argue about this stuff, but it seemed a long reach when Hoffer suggested Loner is acting like she is “above the law.” There’s a disturbing Trumpian air about that. Hoffer’s language is getting close to “Lock Her Up.”
The irony is that there is a serious question whether Hoffer himself is outreaching his legal portfolio. In a column published last February, Seven Days columnist Dave Gram raised that very issue. Gram cited two particular critics, Republican Sen. Randy Brock of Franklin County who served as Auditor from 2005 to 2007; and Oliver Olsen, an Independent from Londonderry.
“With some portion of the population, you lose your credibility, and that relates to the perception of how independent you are, and the value one assigns (to) your opinion and the work that you do,” Brock said of Hoffer. Brock added that an auditor’s work should be something another auditor could replicate to reach the same conclusions, which he said does not always appear to be the case with Hoffer’s…
Olsen, who served three terms in the Vermont House, asserted that Hoffer “got his math wrong” and that the “data and analysis” Hoffer used in his audits was “not readily available for public review…which makes it impossible to verify the accuracy of your analysis against source data.”
Hoffer mounted a point by point defense against these charges, which readers can review in the Gram column. However, politics and government ain’t bean bag as Mr. Dooley has informed us and you can make too much of the above kind of give and take.
The very serious issue underlying it, however, is the whole matter of health care reform, and in particular the extent to which Hoffer is trying to seize control of the very complex process involved.
In the service of that proposition, I offer my tiny corps of brilliant readers the following two observations:
1. In a remarkable twist, Washington County Superior Court will get to rule on Hoffer’s effort. Attorney General T.J. Donovan has filed suit in that court to force OneCare Vermont to comply with the Auditor’s demand that OneCare deliver up the salaries of its lower level employees. The decision will support or eviscerate the Hoffer effort to control the reform process. Interesting.
2. In a thoroughly non-legal sense, I offer A Vermont Journal’s take on the whole kerfuffle. My first observation is that the major reform players in Vermont have assembled a very extensive and expensive array of health policy technicians to support the effort.
The Green Mountain Board, which has the central responsibility for reform, conferred Act 48, has at least a dozen. So does the Scott Administration and its Agency of Human Services, which deploys the Director of Health Care reform and staff; the Blueprint for Health staff, and the staff of the Commissioner of the Department of Vermont Health Access, which directs the Vermont Medicaid program and which operates the only fixed price contracts in the United States.
The Auditor’s office has, as far as I can tell, no credentialed health policy expertise at all. As far as Hoffer himself is concerned, I offer this: Beginning in 1980, I have talked to health policy experts from one side of the country to the other, in Maine, Massachusetts, Iowa, Wisconsin, California, Oregon and California…a few months ago, I talked to Hoffer on the phone at some length, and I was astonished to discover that he knows virtually nothing about health policy, in Vermont or anywhere else.
Hoffer is quite simply a health policy ignoramus, and if players like Kevin Mullin, the chair of the Green Mountain Care Board, and Mike Smith, the Secretary of the Agency of Human Services, want to maintain their own credibility, not to mention their sanity, they should just ignore him. The auditor can always find the ear of a gullible press corps, but Mullin and Smith should just stand up and get on with it.
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N.B. In my last post, I misspelled the last name of Paul Heintz, the Managing Editor of VTDigger. The spelling here is correct. The blame is mine. Apologies.