OneCare gets federal approval: Accountable care organization will serve Medicare patients in Vermont

Aerial view of the Fletcher Allen Health Care campus. Photo courtesy of FAHC.

Aerial view of the Fletcher Allen Health Care campus. Photo courtesy of FAHC.

Updated at 9:30 a.m. on Jan. 21, 2013 with statements from Gov. Peter Shumlin and Rep. Peter Welch.

The federal Centers for Medicare and Medicaid Services (CMS) has approved the application of OneCare Vermont, LLC, to administer care to roughly 42,000 Medicare patients in the Green Mountain State.

OneCare is an Accountable Care Organization, and it represents an unprecedented collaboration between Fletcher Allen Health Care and Dartmouth-Hitchcock Medical Center. The massive organization includes 13 of Vermont’s 14 community hospitals, two Federally Qualified Health Centers, five rural health centers and 58 private practices.

It is the second such organization in the state to obtain this federal status. The first Accountable Care Organization, or ACO, was created by a group of private practices under the banner of Health First, Inc., and it is called Green Mountain State, LLC.

Both ACOs were approved under the Medicare Shared Savings Program. This program places providers in an ACO under one federal funding umbrella.

CMS requires Shared Savings ACOs like OneCare to provide care at a cost equal to or less than a certain target. If the organization provides care at a cost below that target, the savings are split between the organization and the federal government. OneCare plans to divvy up any savings among participating practices, and hold 10 percent for operating and administering the organization.

For the first three years of operation, the organization will not be penalized for exceeding the federal cost target, which is calculated at the end of each calendar year. After the first three years, however, the organization will be fined for providing care at costs above that mark.

The shared savings program aims to reduce health care costs by improving provider efficiency. To try to obviate or mitigate corner cutting, CMS has laid out 33 quality measures, which range from providing access to specialists to regular screenings for cancer and other illnesses.

OneCare doctors will also have access to their patients’ Medicare records for the first time, which Fletcher Allen executives say will ease oversight of patient care.

The reason OneCare was set up as a for-profit entity is because it could not meet federal regulations as a nonprofit, according to J. Churchill Hindes, Fletcher Allen vice president of accountable care, who penned an op-ed on the subject in October.

Medical professionals have sometimes compared ACOs to Health Maintenance Organizations (HMOs), but Anya Rader Wallack, chair of the Green Mountain Care Board, drew some major distinctions.

“With an HMO, you’re actually affirmatively enrolled in a restricted network,” she said. “You can’t go outside of that network, or if you did, you’d pay more. With the ACO model there’s total freedom of choice.”

Dartmouth-Hitchcock

Dartmouth-Hitchcock Medical Center. Photo by Sage Ross.

In other words, Medicare beneficiaries who are treated by OneCare providers are free to receive care from providers outside of the organization without penalty.

The other difference Wallack highlighted is that ACOs do not take on the level of risk that HMOs do.

“An HMO (takes) a full financial risk and (operates) like an insurance company,” she said. “This (ACO) is doctors creating a network where they have a little bit of an incentive to improve care and better coordinate things to stay under a cost trend because they can realize some savings.”

Fletcher Allen CEO Dr. John Brumsted said that while paying a fee for given health services does not create an ideal finance system, neither does capitation, which is associated with HMOs. Capitation is a health finance structure that pays providers a set amount for each patient, regardless of whether that patient receives care.

“What we’re really all about is trying to find the sweet spot between total capitation and fee for service that provides … the highest quality, most efficient care possible,” said Brumsted. “To really achieve what we’re trying to achieve in health care reform, the delivery system itself has to structurally change.”

OneCare members aren’t the only ones excited about the ACO’s approval; leading Vermont pols are also singing the organization’s praises.

Gov. Peter Shumlin said OneCare should play an integral role in reforming Vermont’s health care system

“I am glad that the federal government continues to support Vermont’s efforts at statewide, comprehensive health care reform,” he said in a public statement.  “The success of health care reform depends on transforming into a more effective, efficient health care system.  We need our health care providers to lead this effort.  The OneCare ACO is a great example of how health care providers can step up to the challenge, and government can support them.

Vermont Rep. Peter Welch said he wants to encourage the nationwide proliferation of ACOs.

“Accountable Care Organizations, like OneCare Vermont, will transform the health care payment system by rewarding providers for improvements in a patient’s health rather than the number of procedures they perform,” he said. “It is a common sense approach that I will be working to expand nationwide.”

For more on Accountable Care Organizations and OneCare’s corporate structure, read this VTDigger article.

Andrew Stein

Comments

  1. rosemarie jackowski :

    Medical Care for profit…what else is new. Reminds me of the salaries of CEOs of hospitals, insurance companies, etc…

    It doesn’t look like Vermont will ever get Single Payer.

  2. Luci Stephens :

    Like all other social change, healthcare access, provision and payment are long and sometimes painful change processes. We are in for a very long change process on this – a process has been going on for as many centuries as there have been care providers and persons profiting financially from care provision. The technical, financial, and administrative/ logistical changes in healthcare treatment/ provision have increased at an exponentially stunning rate since WWII; the social change part has been slower, but nonetheless, also stunning. We are on a very long journey, and there really is no final destination – just laudable goals and benchmarks along the way.

    Speaking of laudable goals/ benchmarks, it would be heartwarming to see that good minds are finding ways to provide access to the kinds of healthcare/ functional life services provided (until now) by PACE/ VT. The organization provided health and functional daycare services that allowed people with health challenges to remain in their homes and functioning/ connected in their communities. PACE has to close its VT doors soon. I believe that the number of people impacted is not huge, and there may not be a huge dollar cost/ savings difference, but how very sad for those who will lose the service provider who has made it possible for them to remain and function in their homes and communities.

  3. As President of Button Systems, a Castleton, VT company that specializes in healthcare systems development, it would be refreshing to see the State spend its dollars within its own borders again.

    We developed the Vermont Health Record, a chronic disease registry for diabetic and cardiovascular disease patients. It was used by several State practices for years – still is in a few locations. We also have Medical Home software which would fit the needs of the new ACO perfectly. And our software is affordable. If anyone from OneCare wants to talk, give me a call.

  4. Is it possible that accountable care organizations (ACOs) will create an uptick in medical malpractice claims? http://www.healthcaretownhall.com/?p=6245

  5. Lee Stirling :

    I believe the most challenging obstacle here is to provide meaningful incentives for keeping people healthy and keeping them that way. I say this because medicine, the teaching of it, seeking out of it, and the reimbursement of it are all based on the premise that something has to be fixed once it breaks. As on many occasions people get all the credit and profit for riding to the rescue after something is broken, not for working to prevent it from breaking to begin with.

  6. Bob Zeliff :

    The concept of ACOs have been applauded as a way to improve coordinate health care outcomes. Less clear is how they will save money for the individual. why One care must be a “for Profit” still escapes me, the answer so far is vt law makes it necessary?!.
    Having read their web site i see a lot of well written banalities but essentially no specifics.
    A better understanding of their financial models, management models and specific health improvement tasks and metrics would make this new Giant for VT health care organization more understandable.
    I would also like to see how this organization plans to expand from medicare only issues to broader health care under the exchange and more importantly health care under single payer.
    I would like to see from the state dept of regulations (bischa) a white paper how they will be addressing this new spider organization stretching over much of the health care in this state.

  7. Ann Raynolds :

    Ditto Bob Zeliff’s unanswered questions. Ans a health care provider I do not want to work for profit from limiting services; I do not want more administrative hoops to jump through; I do not want for-profit companies administering our health care probably for their own high administrative salaries. I want a single payer system which provides health care; I want providers paids for the many coordination and consultation things many are still doing; I want to see mental health services valued and parity with medical services pay clearly agreed to in rate schedules.

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