[T]he Green Mountain Care Board anticipates greater detail from the federal government on what a so-called all-payer model could look like by the end of the month. Health care providers are scrambling to best position themselves for the changes such a system will bring.
This fall is widely expected to mark a transitional moment for health care reform in Vermont. Medical providers are bracing for the unknown and looking for safe harbor.
The health care-regulating Green Mountain Care Board anticipates the federal Centers for Medicare and Medicaid Services will outline the parameters of an all-payer model by the end of the month, according to Al Gobeille, the board’s chair.
An all-payer model would eventually be used to put the state’s health care providers on a fixed income, and allow the board to set payment rates for all of the payers. “Payer” is a health policy term that refers to entities that make payments for health services on behalf of individuals: Medicare, Medicaid and commercial insurers.
Such a model is diametrically opposed to how medical care has been compensated historically in the U.S., under the fee-for-service model. Fee-for-service medicine works by paying providers separate amounts for each treatment, drug or office visit.
The transition, underway nationally and encouraged by incentives in the Affordable Care Act, is aimed at reducing the growth in medical spending while improving people’s health. To that end, medical providers in Vermont and across the U.S. are organizing into networks known as accountable care organizations or ACOs. The networks are meant to increase coordination, ease the sharing of patient health data and develop best practices.
In an all-payer model, it’s likely that the fixed payments set by the Green Mountain Care Board would be made to ACOs, which have their own administrative staffs and governing structures. ACOs are developing reimbursement models for their member organizations that will determine how bulk payments are distributed among their health providers.
ACOs have operated in Vermont for several years. In addition to fostering collaboration among their members, they participate in state and federal shared-savings programs.
The shared-savings programs to this point are multi-year pilots wherein an ACO agrees to set payments from payers, to care for their patients (i.e., all of an ACO member providers’ patients on Medicare or Medicaid as well as some patients with Blue Cross insurance). If ACOs, as a network, care for those patients for less than the agreed-upon amount, while meeting prearranged quality measures, they split the savings with the payer.
Vermont’s health care system has fully embraced the model under the leadership of the Green Mountain Care Board and has buy-in from providers.
But all of that is going to be upended in the coming months, and nobody is exactly sure where the chips will fall.
That’s partly because OneCare Vermont, the state’s largest ACO, was accepted into a new Medicare program called Next Generation ACO Model, or NextGen.
Preparing for the next big thing
NextGen is a three-year program that builds on earlier pilots experimenting with the capitated, value-based payments to ACOs. The Obama administration has pledged to make half of Medicare’s payments through similar arrangements by 2018.
Unlike previous iterations, NextGen will include downside risk, meaning that if OneCare goes over its budget for treating Medicare patients it must absorb those costs.
Only 15 to 20 ACOs from around the country will be asked to participate. OneCare has until Sept. 14 to decide if it will join the program starting in 2016. It could also defer a decision until 2017.
OneCare is anchored by the University of Vermont Medical Center and Dartmouth-Hitchcock Medical Center in New Hampshire. Together they’ve poured $15 million into the venture, according to UVM Medical Center officials.
In recent weeks, six medical provider organizations have left OneCare for the second-largest ACO, Community Health Accountable Care (CHAC). Two announced their departure Monday. Three organizations leaving OneCare had split their business between OneCare and CHAC, and will now work exclusively through CHAC.
Those organizations are Springfield Hospital, Northeastern Vermont Regional Hospital in St. Johnsbury, the Community Health Centers of the Rutland Region, Grace Cottage Hospital in Townshend and Battenkill Valley Health Center in Arlington.
Community Health Centers of the Rutland Region and Battenkill Valley Health Center are federally qualified health centers (FQHCs), a designation that offers community health centers enhanced payments from Medicare and Medicaid as well as access to grant programs. The designation is intended to help them serve a greater proportion of low-income patients.
Both Gifford and Springfield hospitals have recently shifted a portion of their organization into FQHCs.
Together those organizations are moving 13,700 “attributed lives” from OneCare to CHAC. Attributed lives is a term that refers to the number of patients an ACO is responsible for treating.
That will leave OneCare with 93,100 attributed lives, or just less than one-sixth of the state’s population, according to OneCare CEO Todd Moore.
In a letter to Moore explaining the decision to leave, Roger Albee, CEO of Grace Cottage, explains, the new ACO “gives us more flexibility, real involvement in decisions, a lower expense of no fees, lower risk and the ability to focus on the primary care model.”
Those sentiments were echoed by leaders of other organizations transitioning to CHAC. Grant Whitmer, CEO of Community Health Centers of the Rutland Region, said his decision was based on CHAC’s “primary care-centric” model and membership (most of the state’s FQHCs are part of CHAC).
Organizations leaving OneCare say the ACO is orientated toward hospital and specialty care instead of preventive care.
Primary care encompasses the majority of people’s interactions with the health care system. It’s undervalued in a fee-for-service model, because its purpose is to keep people healthy, which reduces the need for expensive hospital inpatient care. In a model that pays a set amount for keeping a population healthy, it has taken on renewed significance.
Moore said it’s a misconception that OneCare isn’t focused on primary care. “You can’t be an ACO and not focus on primary care, because it’s so key to lowering cost and improving health,” he said.
Many of the quality measures in shared-savings programs are specific to patient interactions that happen in primary care offices, he added.
“OneCare isn’t the ‘hospital ACO,’ it’s a full continuum of care ACO,” he added.
Grace Cottage also faced $123,000 in membership fees to be part of OneCare. CHAC is not participating in NextGen, and its current shared-savings contracts — which carry no downside risk — end in December 2016. The new members will participate in the final year of those contracts.
Providers may also see CHAC as a safe place to weather the storm until there is more clarity about whether Vermont will pursue an all-payer model, and how payments might work in such a system.
Racing towards the unknown
Nowhere is there certainty about the future. For instance, it’s not obvious what would happen with OneCare’s involvement in NextGen if Vermont is granted the necessary federal waivers to pursue an all-payer model.
“We’re keeping lots of scenarios alive concurrently, which is really difficult,” Moore said.
Gobeille, chair of the Green Mountain Care Board, said he’s not surprised by the movement between OneCare and CHAC. For Vermont’s smaller community hospitals, health care reform is especially challenging, he said.
Small community hospitals have similar fixed costs to their larger counterparts, such as maintaining a 24-hour emergency department and surgical operating rooms – only with less patient volume and revenue to support them. Over the years it’s taken creativity to keep the doors open. Now they’re facing a fixed-income model, Gobeille said.
“Some of the smaller hospitals are trying to figure out what health reform means for them. If you look at the numbers, they have some of the highest costs in the system,” Gobeille said. That’s left small hospitals “justifiably nervous and concerned” about the path that reform is taking, he added.
“The critical question is, ‘How do you fund the asset?’ No one is saying they have to go away, but how do you fund them?” Gobeille said. Part of the answer is greater integration, which is already happening, he said.
Porter Medical Center in Middlebury, Copley Hospital in Morrisville, North Country Hospital in Newport, and Northwestern Medical Center in St. Albans all have physicians from UVM Medical Center working in their hospitals.
Southwestern Vermont Medical Center in Bennington and Mt. Ascutney Hospital in Windsor have affiliated with Dartmouth-Hitchcock. That integration will improve care and reduce costs over time, according to Gobeille.
The movement between ACOs isn’t a concern, he said. The state’s providers are still “in the reform circle,” he said, meaning they’ve expressed interest in participating in an all-payer model.
Vermont’s three ACOs are currently in negotiations to enter a memorandum of understanding. The purpose is to create standards for information sharing, care coordination and, ultimately, payments.
The idea is that, as a small rural state, a shared infrastructure is the best way to reduce costs and improve people’s health, said Bea Grause, CEO of the Vermont Association of Hospitals and Health Systems.
The challenge, as Grause puts it, is there are “no Cliff Notes” for what Vermont is trying to do. And as Gobeille notes “it’s all happening at lightning speed.”