by Hamilton E. Davis
In the 50 or so years that Vermont has been in the vanguard of a half dozen other states in seeking a solution to the national cancer of out-of-control costs and dodgy quality that afflict health care doctor and hospital care in the United States, no issue has been so badly misunderstood, unfairly vilified, and flat-out lied about as the state’s Accountable Care Organization, OneCare Vermont.
OCV has performed better than any other such organization in country, yet it has been totally trashed by the Green Mountain Care Board. The Board has performed even worse on its oversight of OneCare than it has in regulating Vermont hospitals, which is a high bar indeed.
There is a large body of evidence for every aspect of the summary above, but it will be impossible to understand without a basic description of what OneCare is and how it works. The best way to do that is to describe a specific situation to which any ACO could apply.
The purpose of an ACO is to permit buyers of health care like federal and state governments on one hand and employers and insurance companies on the other to buy health care for sizeable blocks of patients at a fixed, per capita price. That reimbursement system is called “capitation” and it proposes to replace fee-for-service, in which doctors and hospitals get paid if they do something, and get paid nothing if they do nothing. Fee-for-service is the engine that has driven costs in the acute care system in Vermont and across the country into the stratosphere, a full third more than anywhere else.
It looks like this: Take a reasonably coherent region like northwest Vermont, say Chittenden, Grand Isle, Addison, and Franklin counties, and count the number of Medicaid recipients there. Let’s agree that number is about 30,000. Okay, in that area are three hospitals—UVM’s Medical Center Hospital in Burlington, Northwest in St. Albans, and Porter in Middlebury.
The Medical Center and Middlebury are connected, but Northwest is a separate company, as are the primary care groups. Under federal law, individual companies are debarred from collaborating on prices. In 2010, however, Congress enacted the law known as Obamacare, which established a workaround of anti-trust laws. Under Obamacare, separate medical companies could collaborate to permit separate health care firms to group their various services and get a single price for all the care a patient might need.
The key element in this picture is that with fixed price contracts, when health care providers provide more than was agreed upon, there’s no more money. So, there’s no financial incentive to do unnecessary testing, or any other services. That is why capitation has been adopted by the federal government as the ultimate step toward a financially sustainable system. And also why it has been adopted as a goal by state government in Vermont in its agreements with the feds.
The piece necessary to make the machinery work is called an Accountable Care Organization. That’s what OneCare is. An ACO’s job is to take the money from the various payers, and then distribute it to the medical providers according to the agreement reached by the payers and the various providers. That’s basically it.
The ACO doesn’t negotiate the contracts between the payers and doctors and hospitals. It can’t tell Medicare or Medicaid bureaucrats what to pay, or tell its member hospitals what to charge. It has a role to play, but it is minor. A couple of metaphors:
A car is a complex piece of machinery. It has to have an engine, that now requires a computer to keep it running. It has to have a transmission, a wonder of modern engineering. It also has to be painted, have windshield wipers, tires, and a heating system. Those functions are important—you couldn’t sell the car without them—but they are minor. It will be a rare customer that selects a car on the basis of its windshield wipers.
Stage plays have major and minor roles. In a performance of Shakespeare’s Hamlet, a brilliant Yorick will not rescue bumbling performances by Ophelia, Hamlet, Claudius, or the First Gravedigger….
Newspapers have, or used to have, people called copy editors. They would read stories and fix misspellings, butchered grammar, and obvious errors of facts, then write the headlines. They are essential players in the game, but the real heavy lifting is done by reporters who gather the facts and write the stories, and editors who deploy the reporters and evaluate their performances. No copy editor ever won a Pulitzer Prize.
OneCare, the ACO, can carry out other functions if the players in the system want them. It can collect money from the hospitals and funnel it to primary care providers, many of whom can barely stay in business. It can collect quality data from the various hospitals. It can coordinate efforts to smooth the delivery of services among separate units…but its essence is to be the money link in a capitated delivery system.
Vermont law confers authority to regulate ACOs on the Green Mountain Care Board, and that has become a huge problem, which does not exist in the rest of the country.
It took 12 years of pushing, 1983-1995, to get legislative authority to “establish” or cap, hospital budgets in Vermont. And another 18 before a regulatory body, the Green Mountain Care Board, summoned up the stomach to actually start using it. Thirty years. And now the Green Mountain Care Board is not using it, but abusing it. So, call it 40 years…
To assess that process, we have to go back to the OneCare budget hearings before the GMCB last fall. Those sessions were the maiden voyage of the new Board chair Owen Foster, as well as a second new member, Dr. David Murman. Here’s what happened in the budget review process:
The driver of the interrogation of Vicki Loner, the CEO of OneCare was Foster himself, and in less than a minute on the Orca Media’s video he was headed into the weeds. His first point was that OneCare was responsible for the money that it took in from the payers and distributed to the participating hospitals and doctors. “Since 2018, OneCare has had a full accountability budget of over $5 billion and with this year’s budget nearly $6.5 billion.”
That statement alone was jaw-droppingly ridiculous because the $6.5 billion covers all sorts of stuff that is real, but tangential to the cost of acute medical care, like nursing homes and visiting nurses’ associations, and state government spending on so-called Designated Agencies, which deliver mostly-social services. They don’t lie within the purview of either OneCare or the Green Mountain Care Board. The actual cost of acute care—doctors and hospitals—runs to about $3 billion, less than half.
It became clear to everyone listening, very much including Vicki Loner, that not just OneCare, but health care management in Vermont, had entered new territory. The OneCare he was addressing is a group of 60 or 70 technocrats and includes just one doctor, and that one is a primary care physician.
The idea that this group could somehow guide or manage or even have a measurable impact on the medical care delivered in 14 full-service facilities isn’t even conceivable. Nevertheless, Foster was just getting started.
His next sortie was a line of questioning aimed at showing that OneCare is a “mission-driven organization”, that the cost of health care in Vermont is too high, that OneCare’s mission is to get it down and it is not succeeding…
“In your point of view, does OneCare have a role or responsibility to assist or curb health care costs in Vermont and improve quality in outcomes, and if so what do you see that role is?
Loner tried to explain that OneCare has a role to play in health care delivery, but its actual powers are very limited; that yes, it is a factor in cost containment, but not a major factor, and that the actual power to force movement in that direction lay elsewhere, but the responses of Loner and occasionally of her staff were complicated and completely inadequate to cope with a prosecutorial assault. Loner was clearly crumbling and it kept getting worse.
Foster: “In your view, is OneCare accountable for curbing health care costs in Vermont…And, in your view are healthcare costs in Vermont too high…So would you or would you not characterize health care costs in Vermont…Your website says health care costs are too high, Do you disagree with that?...How do you think OneCare Vermont is doing at achieving a goal of curbing health care costs in Vermont?” And he caps his performance by attacking Loner personally.
“...do you think you are adequately compensated? Do you think that if you were compensated more generously you would be greater incentivized to achieve outcomes for Vermonters, or would it not make any difference?” Loner didn’t answer that, so he asked it again. It continued on like that.
Here is the amazing part. Vermont costs may be too high, but they are the lowest in the United States, as we saw in yesterday’s article. Whatever they are, the responsibility for getting them down belongs not to OneCare, but to the Green Mountain Care Board. Which the Board members over the last six months wouldn’t even talk about, let alone act on.
OneCare Vermont functions perfectly well doing the job it has to do—providing a platform to get fixed-price contracts between payers and providers. But if a payer or a provider is not interested there is nothing OneCare can do about it. Federal law permits any provider to leave an ACO if it so chooses. If OneCare leans on a hospital to change some aspect of its business model the hospital is free to leave.
The ultimate affirmation of these realities lay in the outcome of the Board hearings on OneCare’s 2023 budget. Forget all that talk about OneCare being responsible for $6.5 billion in health care spending for a year. The Board cut OneCare’s actual operating budget by just over $300,000, from $15.2 million to $14.9 million.
That’s not the most serious threat to reform, however. OneCare is owned by the UVM Health Network, and it could simply shut down OneCare, which would cripple primary care in the state, and beyond that crater the reform movement itself. OneCare Vermont is the only tool available to the Green Mountain Care Board to rationalize the small hospital network in Vermont.
We’ll look at those issues in a later article. Coming up tomorrow: How are the Scotties doing on reform?