Robin Lunge, center, talks with Sens. Randy Brock, left, and Peter Galbraith. VTD file photo/Josh Larkin

The Shumlin administration plans to reveal legislation and multiple reports on Tuesday making suggestions for how the state should proceed to create a Health Benefits Exchange.

The new bill will answer two longstanding questions: which employers will be in the exchange and whether insurance will be available outside the exchange for the small-group market.

The exchange, mandated by the federal health care reform law, will put insurance plans for individuals and the small group market in one place. The oversimplified analogy is a travel Web site only for health insurance.

What this means for individual states is still up in the air. Each state must have an exchange by 2014, or the feds will create one for them. Act 48, the state health care reform law requires the state director of health care reform to address both the insurance issues by Jan. 15.

Robin Lunge, Vermont Director of Health Care Reform, told lawmakers this week, the proposal would recommend that insurance only be sold inside the exchange for individuals and small groups.

“The biggie that most people will be clamoring for is how we move forward with the insurance market,” Lunge said.

Questions also remain about what employers will be drawn into the exchange. The federal law allows states in 2014 and 2015 to define “small employers” as those with 50 or fewer employees or those with 100 or fewer. Because the administration has stated publicly its intention to bring as many people as possible into the exchange, the rumor around the state house is that the proposal will include the larger businesses.

Lunge said she could not divulge the administration’s decision until next week.

The 50 or 100 question has been a lingering issue throughout the health care reform effort.

Sens. Hinda Miller, D-Chittenden, and Vince Illuzzi, R-Essex-Orleans, proposed an amendment to last session’s health care bill to only include employers with 50 employees or fewer. It failed, and they are trying again this year.

“We don’t want to disrupt our businesses,” Miller said.

Miller, who owns her own business, said only bringing in the smaller employers would allow the state to provide health care coverage for those who need it most without disrupting the businesses that already have systems in place.

The bill has garnered support from the business community.

Betsy Bishop, president of the Vermont Chamber of Commerce, said keeping the smaller employers in the exchange will allow the state to work out the kinks in a brand new system, without dismantling the current insurance market — a theme in the Illuzzi/Miller bill.

“Let’s build a system we know that works and add to it,” Bishop said.

She emphasized that businesses want a good exchange, and started with a smaller market will be a better bet.

Jeanne Keller, a health policy analyst and lobbyist, wrote a post this week on the blog “Toward Evidence-Based Healthcare Reform,” outlining arguments for smaller rather than larger employers in the exchange. Keller argues that bringing the larger employers into the exchange will require them to subsidize the smaller ones, whose costs tend to be higher. Bringing in the larger businesses would also remove flexibility for those employers and threaten the exchange’s chance of success.

If plans are allowed outside the exchange, Fuller said, people can have better plan designs.

The one-size fits all approach does not work, she said.

Regardless of the administration’s proposal Tuesday, it will certainly not be the end of the matter. The administration still needs to determine what to do about insurance brokers, who larger employers hire to coordinate employee health plans.

“We’re still drilling down on the broker issues, because the feds have been a little cagey about what’s allowable,” Lunge said.

Under the federal law, brokers could not receive a commission selling plans in the exchange — a big money maker. One option, Lunge said, would be allowing them to be “navigators” in the market who contract to help people find insurance plans.

The state is also in the process of defining “essential health benefits,” which insurance companies must cover for policyholders. Under federal guidelines issued in December, states will develop these benefits instead of the feds. The federal deadline is this fall, but Lunge said she hopes to get a plan out sooner.

Clarification: This story states that insurance brokers will not be able to receive a commission selling policies in a health benefits exchange. The federal Affordable Care Act permits the Secretary of Health and Human Services to establish rate schedules for broker commissions in the exchange. A proposed rule by the secretary, however, does not address how brokers in the exchange would be paid. Under federal regulations, states may allow brokers to help people enroll in insurance plans in an exchange. How they will be paid is still unclear.

VTDigger

As Vermont moves toward a single-payer health care system, a crucial step in changing the way we pay for services is through small-scale trial programs.

The State of Vermont and the Vermont Association of Hospitals and Health Systems recently submitted a letter of intent to the Center for Medicare and Medicaid Innovation to try different pilot programs that involve “bundling” payments. All hospitals throughout the state are involved in this measure in some way or another, although the specifics of which hospital will do which type of program are still up in the air.

The state and hospital association applied to operate programs that would include bundled payments rather than a traditional fee-for-service payment where patients pay for each operation, test or visit individually. Through bundling, a patient could, for example, make one prospective payment for all services received during an inpatient stay.

This pilot program is one of many different initiatives that states are tackling as a means to implement health care reform at the federal level.

The federal Affordable Care Act, which was signed into law in 2010, created the Center for Medicare and Medicaid Innovation. The federal law gave the center $10 billion in funding for fiscal year 2011 to 2019. One of the things the center works on is studying pilot programs like the ones Vermont wants to try to determine which ones make sense.

At a special meeting of the Green Mountain Care Board Friday, Jim Hester, acting director for the Population Health Models Group for the center, presented different options for programs the state can apply to participate in.

Hester said payment reform at a national and state level requires drastic shifts in the way we pay for health care along with large enough pilot programs so that the center can really study how effective they are at reducing costs.

“To really deal with the issues requires a transformational change in the system,” Hester said.

One of the pilots the center has focused on involves what are called accountable care organizations. The idea is that a group of health care providers takes responsibility for the quality, cost and overall care of patients. In turn, the group shares in savings that in theory emerge from a reduced rate of growth in health care spending.

The center is currently working with 30 groups around the country to develop another level of program that includes a population-based payment system — moving close to a single-payer system and paying a single price for all of the health care services needed by a group of people for a fixed period of time.

Testing out these pilot programs will provide the state with more information to determine what is the best way to reform how people pay for health care. Under Act 48, Vermont’s health care reform law, the Green Mountain Care Board is charged with setting the overall policy goals for pilot projects.

The state is already participating in one payment reform model, the Blueprint for Health, which is one of eight advanced primary care practice models throughout the country. The idea is to focus a group of caregivers around one patient. Practices are paid on a per-member basis rather than on a fee-for-service for each visit or other service.

One of the proposals the state may try, says Green Mountain Care Board Chair Anya Rader Wallack, is expanding the existing Blueprint projects to include specialists in the group of health care providers that care for a patient and therefore receives the payment.

Michael Del Trecco, vice president of finance for the Vermont Association of Hospitals and Health Systems, said every hospital in the state is currently working with Richard Slusky, Director of Payment Reform for the Department of Vermont Health Access on varying degrees of payment reform.

Del Trecco said he could not say at this point what specific hospitals would be taking which measures.

“We are all actively at the table trying to figure out the best way to meet the health care goals in Vermont as well as hospitals meeting their goals of providing care in their communities,” he said.

While pilot reform projects could be in the works next year, a comprehensive overhaul of Vermont’s health care system is still years away. In 2014, the state is required under federal law to implement a health benefit exchange that will assist residents in choosing insurance plans from those that qualify under federal standards. In 2017, the state can receive a waiver from the federal government to operate its own single-payer system.

VTDigger

Susan Gretkowski, an attorney with the government and public relations firm Maclean, Meehan & Rice, briefs employers on the impacts of health care reform Wednesday in Montpelier. VTD/Josh Larkin

At the federal and state level, businesses have lobbied to ensure new health care laws don’t force them to bear more than their fair share of the burden for expanded insurance coverage to more Americans.

But as new federal rules are implemented for the Affordable Care Act, and the state embarks on plans for a single-payer health care system that would provide universal coverage for all Vermonters, businesses worry about restrictions that could drive up their costs for medical benefits for workers.

In the second of five briefings on health care reform, Susan Gretkowski, an attorney with the government and public relations firm MacLean, Meehan & Rice, provided an overview of health care reform in Vermont and what it means for employers in Montpelier on Wednesday. The Associated Industries of Vermont is sponsoring similar events at locations around the state.

Several prominent business people who attended were apprehensive about the changes. George Malek, executive vice president of the Central Vermont Chamber of Commerce, said companies would like to be able to reasonably predict what their costs will be for the next five years. Uncertainty about health care expenditures make that impossible, he said.

“Expense and predictability, those are the two huge components out there,” Malek said. “What’s it going to cost, and when will I know what it’s going to cost? And then out in the longer term is how much is it going to cost me over time?”

At the federal level, the Affordable Care Act, which was signed into law in 2010, includes an individual mandate that nearly all Americans buy health insurance or pay a penalty. The U.S. Supreme Court decided this month to take up a constitutional challenge on the issue.

The mandate, according to proponents, brings both sick and healthy people into the insurance system and premiums paid by the healthy offset the cost of covering the sick. Otherwise, healthy people wait until they are ill to buy insurance, which leads to what policy analysts call a “death spiral” — premiums skyrocketing out of control. The exchange also serves as a vehicle for consumers and businesses purchasing qualifying health insurance. States must have an exchange in place by the beginning of 2014.

Vermont plans to use the exchange as a platform for a single-payer system by 2017. The logic goes like this: the fewer the number of insurers and the larger the number of patients in the pool, the more administrative costs the state can save, and the more the exchange will mimic the “single-pipe” payment system.

Vermont’s health care reform law, Act 48, requires the state to make an effort to include at least two insurers in the exchange. The implicit goal of Gov. Peter Shumlin’s single-payer initiative, however, is to narrow the field to one “single-pipe” payment system for medical reimbursements. The state currently has three main health insurers — MVP, BlueCross BlueShield of Vermont and Cigna. The federally mandated health benefit exchange will likely limit the number of insurers and plans employers can choose from, and it’s this squeeze on the variety of available options and associated costs that Vermont companies are worried about.

In 2016, the “small employer” qualification for the exchange includes employers with 100 employees or fewer. Before that time, states can choose to qualify small employers as those with 50 employees or fewer. Large employers will be included in state exchanges in 2017.

David Sichel, deputy director of risk management services for the Vermont League of Cities and Towns, said the vast majority of towns in the state fall under the 50 employees or fewer group and will be impacted by the exchange.

“Our primary concerns are to minimize any disruption that might happen,” Sichel said.

Sichel said a lot of towns offer high-deductible plans where the employer and the employee share the costs of premiums and deductibles. Certain plans that are offered now he said could be a better option for workers, but may not qualify as part of the exchange. For example, a plan with a high deductible where the employer foots the bill for the entire premium and contributes to a health savings account, which is not subject to federal income tax, could be a better deal than a plan offered through the exchange.

Sichel said keeping the 51-100 employee group out of the exchange would give employers more flexibility to choose from a wider array of plans and insurers and take advantage of benefits like the health savings account tax incentive.

Malek agreed with that assessment. “Choice is critical, and right now the people from 50 to 100 have a lot more choices than they will if they are in the exchange,” he said.

William Driscoll, vice president of Associated Industries of Vermont, summed up employer worries: “There’s been concern about how many choices are there going to be in the exchange and will plan designs increase cost?”

A report by Harvard economist William Hsiao recommended a payroll-tax funding mechanism that could result in employers paying about 11 percent of total payroll in 2019. Driscoll says most employers who offer insurance are paying about 4 percent to 7 percent of payroll now for health care. The governor has not endorsed a payroll tax to pay for a single-payer plan; the Shumlin administration, charged with developing financing for the universal medical system, will make recommendations to the Legislature in 2012, after Election Day.

Driscoll said multi-state corporations could be required to offer different benefits in Vermont than in other states. Furthermore, providing universal care would increase utilization of health care services, by severing the connection between individual choices to utilize health care services and costs.

Another potential cost issue for businesses, he said, is that they may have to offer supplemental insurance if, for example, a union contract offers better benefits than that offered in an exchange. In this case, businesses could be subject not only to the payroll tax, but they would also have to buy supplemental insurance to make up the difference between what employers receive under reform and what they received under the contract.

Robin Lunge, director of health care reform for the State of Vermont, said the governor’s office and the Department of Banking, Insurance, Securities and Health Care Administration are working on actuarial models to develop a recommendation for the legislature regarding the 50 or 100-employee level in the exchange.

As for buying insurance on or off the exchange, Lunge said there will probably not be much difference as far as flexibility in plans.

“One common misconception is that folks think buying insurance outside the exchange is more flexible and a different risk pool,” Lunge said. This is not necessarily true, she said, since the exchange is a mechanism for buying insurance rather than a completely separate market.

The amount of flexibility in a benefit package will depend on how the feds design different levels (i.e. gold, silver or platinum). That flexibility will be the same inside and outside the exchange, Lunge said. There are also five criteria that apply for plans within the exchange, Lunge said. Aside from the restriction on advertising designed to eliminate fraud, the other criteria are similar to current Vermont law.

If the Affordable Care Act was determined to be unconstitutional, she said, Vermont could still enact its own individual mandate or provide coverage without a mandate as it has done for children with the Dr. Dynasaur program.

For now, the fate of the individual mandate is in the hands of the Supreme Court. Vermont received an $18 million federal grant to fund the exchange, and it should be up and running by 2014. A plan for which employers will be in the exchange will reach the legislature in January. For more details, individuals and businesses will have to wait and see.

VTDigger

As Gov. Peter Shumlin and the Democratic leadership of the Vermont Legislature continue their efforts to transform our state’s health care system into a centrally-planned and government-managed system, it has become clear that they would like us to focus exclusively on the potential upsides of their new system while ignoring the downsides.

We all agree that health care costs are unsustainable and that something needs to be done to bend the cost curve. Bending that curve will require government to make smart and rational decisions, and be cognizant of the impacts those decisions will have on health care consumers and providers and Vermont’s employers.

In response to a 2011 legislative mandate, the Legislature’s Joint Fiscal Office and the Department of Banking, Insurance, Securities and Health Care Administration recently issued a report that focused on the cost of Vermont’s health care system, and the potential savings that might accrue from the proposed system. The report estimates that under a single-payer system, Vermont could reduce health care expenditures by nearly $2 billion by 2020.

The most stunning aspect of the report, however, is what it ignores: There is no mention of how to fund such a system, and there is no discussion of how this system will affect Vermonters, Vermont businesses, and Vermont’s network of health care providers.

Curiously, the report also includes savings that the state was already hoping to achieve from the Blueprint for Health Chronic Care Initiative. Those “Blueprint savings” should be in our health care spending baseline, and not counted as “single payer savings.”

Furthermore, no information is provided regarding coverage: That is, what medical and pharmaceutical benefits will be covered under the system, and what benefits will not be covered. For example, will there be limits on the quantity of services Vermonters receive, such as an annual maximum number of visits to a physical therapist?

What portion of the cost of care must be paid by the patient? How will Vermonters access care from providers whose services are not covered under the new system, and how will we access care at out-of-state health care facilities?

Don’t we need to know the answers to these questions? Don’t we need to know where the revenues are coming from, what the benefits package will be and how much it will cost each of us? Right now we only have a “plan to plan” with few details – other than an incomplete financial model. A financing proposal is due to be reported by the Secretary of Administration in January 2013 – but that is more than a year away.

Another question which needs to be asked: Why aren’t we working to maintain and build on those best practices already in place? For example, Vermont has a strong fully-insured large group market, a strong and large self-insured (ERISA) group market, a strong state employee health care plan, and a unique “Choices for Care” waiver that stands out nationally and puts home health care and institutional care on an even footing with individuals needing long-term care. We also have the Medicaid “Global Commitment” waiver that has given Vermont the opportunity to use federal dollars more flexibly to help improve health care quality and outcomes for Vermonters.

Professor William Hsiao cautioned that there will be winners and losers with the implementation of a single-payer system – it’s important for us to know who they are. It’s important that we talk about solutions, consider all viable choices and build on what is good in Vermont’s health care system – with as much transparency as possible.

We need to ensure that we do not lose ground on Vermont’s legitimate advances to date in the public and private health care sectors. We need to broaden our thinking and not simply focus on a one-size-fits-all system to the benefit of all Vermonters.

VTDigger

Darcie Johnston. Courtesy photo.

The Green Mountain Care Board is revamping the health care system in Vermont, and conservative groups want to know how they are going to pay for it.

More importantly, they want to know before the 2012 election.

The conservative advocacy group Vermonters for Health Care Freedom and the National Federation of Independent Businesses are petitioning the Vermont Legislature to introduce a law that will require the board to release the financing mechanism for a single-payer style plan by Sept. 15, 2012.

“We’re not going to support a system that puts further demands on the pocketbooks of Vermonters and Vermont businesses, large and small,” said Darcie Johnston, founder of Vermonters for Health Care Freedom, the 501(c)(4) non-profit organization that announced the petition.

Johnston, a GOP fund-raiser, said small businesses and individuals want to know how much health care is going to cost and whether a universal health care program will be paid for through new taxes.

Under Act 48, which Gov. Peter Shumlin signed into law in May, the newly-appointed Green Mountain Care Board is responsible for creating a system that will provide universal health care to all Vermont residents. The act states that every Vermonter should be eligible for care through a single payment system. The act mandates that the Green Mountain Care Board develop a benefit package for health care recipients and an expenditure analysis for the state.

Proponents of the plan claim it will save administrative costs and be cheaper than the current array of insurance companies. Opponents, like Vermonters for Health Care Freedom, fear the plan will increase taxes and result in lower quality health care outcomes.

Once the board completes its research, the state secretary of administration, Jeb Spaulding, will submit financing plans to the House committees on health care and ways and means and the Senate committees on health and welfare and finance. The deadline for these plans is Jan. 15, 2013.

That date, however, is not soon enough for Republicans.

Vermont GOP Chair Pat McDonald said Republicans are interested in doing exactly what the Vermonters for Health Care Freedom petitions says: move up the financing plan deadline four months, just in time for election season.

“We want people to go to the polls with the right information,” McDonald said. “The more information you give voters, the more informed they are to make the right decision.”

On a more fundamental level, McDonald said her party is concerned that a single-payer system will not work in the state. She said it is a complicated issue, and the GOP wants to see more information about specific facts like: who will be covered, what will be covered, who will pay for the system and how costs will be contained.

Rep. Michael Fisher, D-Lincoln, disagrees that a single-payer system will cause a hardship for small businesses. Fisher is the chair of the House Committee on Health Care, and he says the status quo is “bankrupting us on every level.”

“We can’t afford not to reform health care,” Fisher said.

Fisher said a large segment of the business community cannot afford to plan for health care costs the way they are.

According to a report by the Vermont Department of Banking, Insurance, Securities and Health Care Administration, health care spending for Vermonters rose 7.6 percent in 2009, compared to 5.7 percent nationwide. For that same time period, private payers (including worker’s compensation, self-insured individuals and private commercial plans) paid for 37 percent of those costs—slightly less than the national average.

Fisher said a lot of what the Green Mountain Care Board will be doing is reducing health care costs overall and doing away with a lot of waste. He said he hopes the process will be able to engage people from all perspectives as the Green Mountain Care Board works out the details of the new system.

Anya Rader Wallack, chair of the Green Mountain Care Board, said the plan is to reduce costs. She said she will be conducting a full vetting of the financing plan submitted by the secretary of administration, and there will not be any surprises.

Wallack said one of the board’s goals is to make health care more affordable for small businesses that pay for the health care of their employees. She said right now small businesses have an amount of certainty that insurance rates will increase between 6 percent and 8 percent each year.

“The certainty that they have is an unsustainable health care cost picture,” Wallack said. “Our job is to come up with a plan to improve that picture.”

Rep. George Till, D-Jericho, a practicing physician, also expressed some concerns about the process for creating the new universal health care system in the Vermont Medical Society’s newsletter. Till, an advocate for universal coverage, explained in the newsletter that he would prefer a method of first developing a sound financial model, then testing it to make sure it works. He noted that medical providers would prefer knowing how much they would be reimbursed at the beginning of the process rather than in 2013. Till was unavailable to comment for this story.

As part of the financing plan, the secretary of administration also must consult with health care professionals, employers and the public to determine impacts on businesses and the state economy in general. The deadline for this research is February 2012.

VTDigger

The five members of the recently appointed Green Mountain Care Board have their work cut out for them. Anya Rader Wallack, the board’s chair, reeled off a daunting to-do list for each of the new members at the board’s first official meeting on Tuesday.

Dr. Allan Ramsay, a primary care physician at Fletcher Allen Health Care, will take the lead on payment reform, workforce development and outreach. Dr. Karen Hein, a pediatrician from Jacksonville, will focus on developing a benefits package and concept framework. Con Hogan, former secretary of the Vermont Agency of Human Services, will address hospital budget rules, data and evaluation. Al Gobeille, who owns several restaurants in Chittenden County, will look at benefit design programs and examine innovative prevention programs currently being implemented by the business community in Vermont and elsewhere.

Wallack said she wanted to focus on fulfilling the principles behind Act 48, the legislation that created the board, and to “engage everybody and craft something that makes sense.”

The Green Mountain Care Board is the product of Act 48, which the Vermont Legislature passed in May. The legislation is designed to set the stage for a universal medical system, which would expand on the state’s existing public health care programs under Green Mountain Care. The act puts Vermont on track to become the first state in the nation to implement a form of “single-payer” health care in which one entity, answerable to the government, collects all health care fees and pays out all health care costs. Green Mountain Care is to “provide, as a public good, comprehensive, affordable, high-quality, publicly financed health care coverage for all Vermont residents in a seamless manner regardless of income, assets, health status, or availability of other health coverage.”

Proponents of the plan say the plan will result in administrative savings and universal coverage. Detractors believe the single payer approach will bankrupt the state and drive businesses out of state.

The members of the Green Mountain Care board were selected by a nominating committee. The final candidates were hand-picked by Gov. Peter Shumlin. Under the act, the board’s primary duties include oversight and implementation of a health care payment plan as well as implementing regulations for payment reform and containing costs. The board will also create rules defining and outlining a benefits package.

The Legislature handed the board a monumental task, and a tentative timeline on the Joint Fiscal Office Web site lists January 2014 as the earliest possible time the Green Mountain Care Program could go into effect. The board begins its work in earnest this month, as it begins to collect data and other information. More deliberative sessions will begin in November, Wallack said.

Ramsay, who will focus on payment reform, said the first step is to “get everybody on board with what we define as value in the health care system.”

He explained that he sees value as an equation of the quality of care provided and patient satisfaction over the costs. The bottom line, Ramsay said, is getting away from disease management and toward an emphasis on overall health.

“If we can shift the paradigm to maintaining better health, that’s the governor’s major goal,” Ramsay said. “That’s what Vermonters want.”

Wallack also said medicine should shift its focus toward preventive care. The current fee-for-service payment model rewards medical providers for conducting more procedures and tests. She wants to develop a payment methodology that rewards providers for being more efficient and offering better service. In order for this to work, Wallack said the board will have to integrate prevention services with the benefits package and overarching targets for controlling the rate of growth in medical spending.

“I want to see a healthcare system that provides access to quality care for everybody and costs are sustainable because we make the right kind of changes in health care delivery and cost containment,” Wallack said.

She said, as a Green Mountain Care program goes into effect, people will first see changes in insurance rates and hospital budgets. Many of the effects, however, will be invisible to the average consumer other than the fact that they will hopefully be gaining more access to health care.

For now, the Green Mountain Care Board’s future is somewhat vague, and it may take six to eight months to file rules. Appeals of board decisions would go straight to the Vermont Supreme Court, said Special Assistant Attorney General Clifford Peterson, who is acting as the board’s legal counsel.

The board will hold meetings Oct. 11 and 12 from 10 a.m. to noon and 1 p.m. to 3 p.m. respectively. These early meetings will focus on data and the hospital budget process. The board should have a website by the end of October; in the meantime,meeting dates will be posted on the Vermont Secretary of Administration website.

VTDigger

During the past three years, approximately 20 Rutland physicians have given up their private practices and moved to employed positionsin hospitals or Federally Qualified Health Clinics (FQHCs). This isnot just a local phenomenon, as it has been happening throughoutVermont, and the country.

This trend has been caused by actions of our federal government that serve to marginalize private practice medicine, by paying private practice physicians less than what they would earn as employees of hospitals or FQHCs. For example, in 2009, Medicare cut private practice payments for certain heart studies by 40 percent, while increasing reimbursement to hospitals by 5 percent. So the payment for the same service in a hospital setting is now 45 percent higher than if done in a private office. This is a major reason why virtually all of the cardiologists in Vermont are now hospital employees. Our local obstetrician-gynecologists and general surgeons have become employees of the hospital due to similar financial incentives.

Primary care physicians are joining the FQHCs due to financial incentives as well. For example, Vermont Medicaid pays privatep ractice physicians at about 79 Percent of the low Medicare rates, while paying FQHC employed physicians 125 percent of the Medicare rates. This means that FQHCs receive payments that are approximately 58 percent higher than what private practice clinics receive. In addition, FQHCs are “nonprofits,” so they have tax-saving advantages over private practice, and some physicians employed by the FQHCs have special malpractice
protections. So there is little wonder as to why physicians are abandoning private practice.

Hospitals are not to blame for this change. It is a result of federal government health care policies and payment schemes.

In this time of ever-escalating health care costs, one should wonder why the government is encouraging the death of private practice, where in fact health care is being delivered in a less costly fashion. The reason is that these higher payments to hospitals and FQHCs serve as the carrots to get physicians in employed positions where they will be more easily controlled by governmental administrators. Dr. Donald Berwick, the head of the federal Medicare and Medicaid system stated:

“The primary function of regulation in health care…is to constrain decentralized, individualized decision making…. The traditional medical ethics, based on the doctor-patient dyad, must be reformulated to fit the new mold of delivery of health care.” He is saying that we must end the traditional doctor-patient relationship and turn the power of decision making over to bureaucrats for “top-down” control,
so that they can better do what is best for the system and the population at large, rather than wasting resources by focusing on the needs of individual patients.

By strengthening the government’s control of health care, doctors will be more easily forced to follow the orders of their bureaucratic masters who control the purse-strings, even if it goes against doing what is best for their patients. Vermont’s single-payer Green Mountain Care system and the national PPACA health care law, also known as “Obamacare,” will facilitate this new vision of tighter
government control over our health care system.

There are examples of how patients’ needs are placed second to the government’s needs, when physicians become beholden to the government health care administrators. For example, in 2008, there was a scandal in Great Britain when the public became aware that the government-run healthcare system paid bonuses to family physicians who limited the number of patients they referred to specialists and for hospital care.

There were examples where patients’ cancers went undiagnosed after they were denied specialist care under this bonus scheme.

There is no question that change is needed to make our health care system more affordable. However, we should seek reform measures that preserve the partnership and trust in the doctor-patient relationship.

Medical decision making is best left to the patient and the doctor, and in some cases the patient’s family, but not government administrators. Unfortunately, our current health care reform laws will be giving government bureaucrats great power over the decision-making process. This power will interfere with physicians’ ability to do what is best for each and every patient, and weaken the trust in the doctor-patient relationship.

VTDigger

Steve Kimbell. VTD/Josh Larkin

Budgets totaling $2.059 billion for Vermont’s 14 hospitals were approved Thursday by Steve Kimbell, commissioner of the Department of Banking, Insurance, Securities and Health Care Administration (BISHCA). That figure amounted to a 4.6 percent increase over the 2011 budgets, but the increase dropped to 3.8 percent if you didn’t count the roughly $16 million in provider taxes assessed against the hospitals.

The system cost thereby came in just under the 4.0 percent figure mandated by the Legislature in 2010; the 2010 law containing the 4.0 percent cap allowed for several deductions, the so-called off-ramps, including the provider tax, the cost to hospitals for buying nearby physician practices and other assets such as modern information systems that the Legislature wanted to encourage.

Figures provided by BISHCA showed that the cost to the system from buying physician practices came to $22.3 million. If that off-ramp is also deducted from the total, the system increase would total 2.7 percent. BISHCA did not break out the other off-ramps, such as the cost of preparing for health care reform, but if it had, the 2.7 percent would have dropped a bit more.

The 2012 budgets represent a dramatic decrease in the long-term trajectory of hospital costs in Vermont. In the decade from 2000 to 2009, the budgets increased by 8.4 percent — every hospital budget more than doubled over that period. The increase over the past five years was 7.2 percent.

Kimbell welcomed the hospital performance on costs, saying that they were “moving in the right direction.”

He also stated that the rate of increase in the cost shift of medical care costs to private payers because of shortfalls in federal and state reimbursements would drop because of the movement of independent physicians into the corporate structure of hospitals. The cost shift grew by $37.8 million between 2010 and 2011. The increase in the cost shift from 2011 to 2012 will fall to $28.9 million, according to BISHCA.

As far as individual hospitals were concerned, only Grace Cottage and Copley hospitals exceeded the Legislature’s 4.0 cap. The cap was a system guideline, not an individual mandate, but it is noteworthy how broadly-based the cost discipline was. Grace Cottage, at 7.1 percent, is a tiny hospital, so that its numbers are not as significant as the rest of the system. The Copley increase after stripping out the provider tax and the physician purchases was 4.8 percent, and might have been slightly lower if it had other allowables.

The most important piece of the picture was the Fletcher Allen Health Care system in Burlington, whose budget increase, after the provider tax and physician purchases are taken out, was 3.2 percent. FAHC is the major driver of the system because it delivers roughly half the total care in the state. The increases at Central Vermont, Springfield, Rutland, Porter in Middlebury, Northeast in St. Johnsbury, Gifford in Randolph, Brattleboro and Mt. Ascutney were all under 3.0 percent.

An important footnote in the BISHCA documents states that none of the physician purchases allowed as deductions to the budget implied that new levels of services would be delivered in that hospital service area. All such deductions involved physicians already operating independently in the vicinity of the local hospital. Bringing in new doctors to deliver more sophisticated levels of service could increase costs in the system.

The budgets and the discipline they exhibit are unusually important because they set the stage for the health care reform effort initiated early this year by the administration of Gov. Peter Shumlin. Control of the hospital budgets has rested with BISHCA since the mid-1990s but will shift after Oct. 1 to the newly-appointed Green Mountain Board. The Legislature’s role will also expire on Oct. 1 of this year. The Legislature set system caps only for the 2011 and 2012 fiscal years.

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Contact
Tom Cheney
(802) 828-2245

Speaker Shap Smith today announced the appointment of Rep. Michael Fisher as the chair of the House Committee on Health Care. Rep. Fisher, the current vice chair of the committee, replaces former Rep. Mark Larson who resigned from the legislature in August to become the Commissioner of the Department of Vermont Health Access. Rep. Sarah Copeland-Hanzas will become the committee’s vice chair.

“Mike has been a leader in the House for over a decade. His expertise in the field of health and human services is vast, and his enthusiasm to tackle the barriers to the access of quality affordable health care for Vermonters is unparalleled,” said Speaker Smith. “The legislature made great strides last year and Mike’s leadership was crucial to those efforts. His leadership will be needed as we continue to move forward with health care reform.”

Rep. Fisher has been a member of the legislature since 2001, representing the towns of Bristol, Lincoln, Monkton and Starksboro. He served as the vice chair of the House Committee on Human Services from 2007-2010 and as vice chair of the House Committee on Health Care during the 2011 session. Rep. Fisher works as a social worker in Addison County, having earned a masters degree in social work from the University of Vermont.

“I am excited to continue to advance our state’s health care reform efforts,” said Rep. Fisher. “Reducing health care costs and improving access to quality care is vital to the health and economic wellbeing of the state, and I am confident in the ability of the committee to dig into that work.”

Rep. Copeland-Hanzas has represented the towns of Bradford, Fairlee, and West Fairlee since 2005. She has been a member of the House Committee on Health Care for the past five years, and has served as Deputy Assistant Majority Leader since 2009. Rep. Copeland-Hanzas is a small business owner, operating The Local Buzz Cafe in Bradford.

“The House Health Care Committee has led the way in health care reform over the past two years,” said Speaker Smith. “I am confident that Mike and Sarah will be a strong leadership team and look forward to seeing the progress of the committee.”

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CONTACT
Susan Allen
802-828-3333

MONTPELIER – Gov. Peter Shumlin today announced the appointment of Mark Larson to head the Department of Vermont Health Access (DVHA). Larson, who serves in the Vermont House, replaces Susan Besio as commissioner.

“I am proud to add Mark Larson to my administration and look forward to his leadership at DVHA,” said Gov. Shumlin. “Mark has a deep understanding of health policy in Vermont, including complex systems like Medicaid, which is central to health planning. Mark has also demonstrated his commitment to the principles behind Act 48, and will be a valuable member of my health care policy team.”

As commissioner, Larson will oversee management of Vermont’s publicly funded health insurance programs.  He will also play a key role in moving forward Vermont’s health care reform efforts, including the new Vermont Health Benefit Exchange and Green Mountain Care. Larson will officially begin the position on Aug. 17.

The mission of DVHA includes improving access, quality and cost effectiveness in health care reform; assisting Medicaid beneficiaries in accessing services; and collaborating with other health care entities in bringing proven practices to Vermont Medicaid beneficiaries.

Larson, who lives in Burlington, will be a critical player in implementing the Governor’s health reforms, and work closely with the newly created Green Mountain Care Board. He has been a member of the Vermont House since 2000, where he has served as the Chair of the House Health Care Committee, Vice Chair of the House Appropriations Committee and Co-Chair of the Vermont Commission on Health Care Reform.

“I am excited to join Gov. Shumlin’s health care team,” said Larson.  “Under his leadership, Vermont has a historic opportunity to provide all Vermonters with affordable access to health care.  I look forward to working with Vermonters to take advantage of the opportunity presented by the reforms outlined in Act 48.”

DVHA is located in the Agency of Human Services.

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