Health Care

Fletcher Allen, Dartmouth propose for-profit Medicare program for 13 of Vermont’s hospitals

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.

Fletcher Allen Health Care and Dartmouth-Hitchcock Medical Center have teamed up to propose a for-profit entity for administering Vermont Medicare benefits called OneCare Vermont, LLC.

Earlier this month, the two academic medical centers — in conjunction with almost 80 other Vermont providers — submitted an application to the federal Centers for Medicare and Medicaid Services (CMS) to establish an ACO, or accountable care organization.

The Affordable Care Act established the Center for Medicare and Medicaid Innovation in 2011 with the purpose of testing new payment and provider models. One of those models is the ACO, which brings hospitals, clinics and clinicians under one umbrella to help coordinate care by sharing information and working toward a common cost-savings goal.

Thirteen of Vermont’s 14 community hospitals would participate in OneCare. Porter Medical Center in Middlebury is the only hospital to opt out. Additional participants include the Brattleboro Retreat, two Federally Qualified Health Centers in Springfield and Morrisville, five rural health centers and 58 private practices.

Fletcher Allen and Dartmouth are the leading drivers behind OneCare, and by the end of October their executives hope to know whether the ACO is approved. If it is, executives say, OneCare would likely be up and running by Jan. 1, 2013.

OneCare would serve the vast majority of the state’s roughly 105,000 Medicare beneficiaries.

Anya Rader Wallack, chair of the Green Mountain Care Board, said Medicare beneficiaries shouldn’t notice a big change in their care right away, but over several years they should notice a higher quality of care at similar or lower cost.

“If they don’t see any difference in their care quality then the model isn’t effective,” she said.

The corporate structure

At a Joint Health Care Oversight Committee meeting on Thursday, legislators grilled Fletcher Allen Senior Vice President Todd Moore and Medical Director Norman Ward about the executive structure of the proposed Limited Liability Corporation, or LLC.

Moore would be the CEO of OneCare; Dartmouth-Hitchcock Senior Medical Director Barbara Walters would be the official chief medical officer; and Fletcher Allen Compliance Officer Jennifer Parks would be the chief compliance officer of the new entity. Ward would continue to contribute his management skills.

“None of us are drawing a salary from OneCare at this point just because it’s a theoretical entity,” Moore told the committee. “I’m CEO of exactly nothing until CMS approves it.”

Moore said that the rest of the corporation would take shape after CMS approves the proposal and logistics are ironed out with Dartmouth.

“What we’re working on with our partners at Dartmouth-Hitchcock is how do we want this thing to operate,” added Moore.

Why create a separate corporate entity?

Milner Noble, a spokesman for Fletcher Allen, explained that the two hospitals were meeting CMS requirements for partnership arrangements. “The legal team that put this entity together determined that because it was a partnership, the LLC was the most appropriate as it allows the most flexibility for setting management and government structures,” he said.

Wallack said she doesn’t see a problem with the model. Fletcher Allen executives have been very transparent throughout the ACO application process, she said.

Anya Rader Wallack. VTD/Josh Larkin
Anya Rader Wallack. VTD/Josh Larkin

“If there is some reason that is an impediment to us having what we’d otherwise have in oversight capabilities, that would be concerning to me,” she said. “But there’s nothing of that in what I’ve heard from them so far.”OneCare wouldn’t be the first in Vermont set up as an LLC.

Vermont’s first ACO was established in July by a group of private practices under the banner of Healthfirst, Inc. The ACO is called the Accountable Care Coalition of the Green Mountain State, LLC.

OneCare is seeking CMS approval via the same program through which federal regulators OK’d the Accountable Care Coalition.

The risk and the payoffs

Fletcher Allen and Dartmouth proposed to form OneCare through the Medicare Shared Savings Program. This program enables OneCare and its providers to generate revenue by providing Medicare beneficiaries with more efficient care while meeting the same standards of quality that they currently do.

CMS establishes a target cost point based on the combined per capita Medicare costs of patients from the previous three years.

If OneCare providers can cumulatively provide care to Medicare beneficiaries at a cost below this benchmark, then OneCare and its providers can hold onto half of the savings while CMS takes the other half.

As Wallack explained, this ACO model encourages hospitals to become more efficient.

“Right now you could do something to make a hospital more efficient … but you wouldn’t benefit from it,” she said. “Medicare would just pay you less.”

For the first three years of the program, the OneCare network can exceed this target cost point without punishment or risk. If the providers exceed the mark, they will receive Medicare allocations as usual. They will simply lose out on the extra savings.

The ACO would give health care providers access to Medicare data for the first time.

After three years, if OneCare and its providers want to continue as an ACO, the system faces what’s called a “downside” risk. If the OneCare network exceeds the cost benchmark for a given year, it would have to pay a percentage of that amount.

If there were savings, Fletcher Allen representatives said funds would be divvied up based on a formula, which takes into account providers’ services and the number of beneficiaries they serve. A portion of those savings would also go to OneCare to offset the costs of running the network.

The ACO would also give health care providers access to Medicare data for the first time.

“This is really an access to information revolution as much as it is anything else for us,” Moore told regulators on Thursday. “This gives us access to the full claims set for the first time to Medicare beneficiaries that we treat … to understand how they seek care, how often they go to (the doctor) — whether it be at Fletcher Allen or at Northwestern Medical Center or in Florida.”

Moore said this data set is important because providers can keep better track of a patient’s care and won’t mistakenly duplicate services. Such information, he said, could help providers reshape Vermont health care as the state demands reform.

“We don’t want to fly blind,” Moore told lawmakers.

Another big potential boon that regulators and executives hope would stem from the ACO is a statewide health care system that would encourage provider collaboration.

“The Medicare program is a perfect place for us to start together,” said Moore, “because the federal government sets the rules, they set the reimbursement rates and they set the quality measures. So, we don’t have to argue about that with anybody within the network.”

The physicians and the CEOs

On Saturday, more than 100 physicians and executives from Vermont and nearby states congregated at the University of Vermont Medical School campus for a conference hosted by the Vermont Medical Society, which is Vermont’s physician advocacy group.

The keynote speaker was Tom Lee, Harvard professor and CEO of Partners Community Healthcare Inc. His talk was followed by a panel discussion, which featured, among others, Wallack and the CEOs of Fletcher Allen and Dartmouth-Hitchcock, John Brumsted and James Weinstein.

The panel discussed how to improve the value of health care through provider collaboration.

After Brumsted and Weinstein brought up the OneCare proposal, physicians in the audience asked why their practices weren’t included.

Brumsted explained that the application needed to be submitted under tight time constraints and Fletcher Allen and Dartmouth-Hitchcock tried to include as many Vermont providers in the application as they could. If OneCare comes to fruition, other providers would have an opportunity in the future to join the network.

Paul Harrington, executive vice president of the Vermont Medical Society, fully supports OneCare.

“I think it’s probably one of the most significant steps in the evolution of Vermont’s health care,” he said. “We don’t have a health care system, so this clearly is an attempt to form one — not based on mergers, but rather a statewide partnership platform to better serve Vermont’s seniors. It could be transformational in what Vermont’s health care system looks like in the future.”

Brumsted, who graduated from Dartmouth College and Dartmouth Medical School, said the proposal marks the beginning of a relationship between the two medical facilities that he thinks will stretch long into the future.

“We will continue to come together to meet the needs of the populations we both mutually serve,” he said.

Weinstein downplayed the long-running competition between the facilities. “Our competition is how to best take care of patients together,” he said.

“How do we help the population in this new world of economically challenging times?” he asked, rhetorically. “John and I came together to answer just that.”

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  • Ann Raynolds

    I have only Medicare as my Insurance and I’ve been very satisfied with it. No one has ordered expensive tests which were not warranted and revealed serious problems. I do not want to be cared for by a group of people in these for-profit ACOs, knowing that a medical group caring for me is looking to make personal profits on providing less care. This is a dangerous idea and might sound like cost-saving, but the U.S. Government did a series of studies and not much money was actually saved in those Medicare studies. And, yes, the care was exemplary, but these were closely monitored pilot projects, looking for delivery of quality coordinated services which is a excellent idea.

    As a provider, psychologist, of health care services, I am equally appalled. Yes, we should be reimbursed and incentives to coordinate care should be available and care would be better. I now attempt, on my own time, to provide coordinated care because it is the right way to care for patients, but I would never contemplate being in a group which has the incentive to make bonuses for doing the right thing. The risk is that, knowing human nature, the “quality care” will slip and the prospect for bonuses will encourage not ordering that expensive test or referring for psychological services for example. The “save a buck on service & make a buck” mentality will take over inevitably. Why not encourage and pay for good, coordinated services?

    The following article can be obtained in full at the Washington Post:

    “Experiment to lower Medicare costs did not save much money

    By Amy Goldstein, Published: June 1, 2011The Washington Post

    “A key government experiment that set out to lower costs and coordinate care for Medicare patients — now the blueprint for an innovation the Obama administration is trying to move to a national scale — has failed to save a substantial amount of money.

    The five-year test enlisted 10 leading health systems around the country and offered financial bonuses if they could save enough by treating older patients more efficiently while providing high-quality care. In 2010, the final year, just four of the 10 sites, all long-established groups run by doctors, slowed their Medicare spending enough to qualify for a bonus, according to an official evaluation not yet made public. Two sites saved enough to get bonuses in all five years, the evaluation shows, but three did not succeed even once. The uneven progress is significant because the experiment involves “accountable care organizations,” one of the hottest trends in health policy and an idea included in the year-old federal law intended to overhaul the nation’s health-care system.”

    • Hope Lindsay

      Thank you for your comments. I have a gut instinct you are right. Why? Nowhere is there patient/client input. This is all about the providers getting a toe in the door for the next three years. Unfortunately, the ACA made a bargain with the devil-in-the-details so hospitals et al would give tacit approval to the Act. Come single provider, come!

  • Bob Zeliff

    The devil is in the details. We will have to wait and see!

    Reading only the above, I see the 3 year start up risks/cost overages will be soley borne by Medicare/taxpayer, yet it the hoped for savings are real they will be split with the new ACO owners. Socialize the risk/privatize the profits????

    I remember that Medicare advantage was going to be a big cost saver too. Giving Insurance companies the right to cover people as long as they fully met the basic Medicare requirements…just like the ACO they promised lower costs and better health care. Early on they did cost 97% but now they cost 114 to 120% more than Government run Medicare. Because of this both the ACA and the Ryan budget strips this waste from the future.

    Tell me why this is better! Why this will not be another money making boondogle at the taxpayer expense.

    Open minded but skeptical.

  • Pam Ladds

    Very skeptical! Every time I see “for-profit” and health care in the same sentence! They are not usually compatible!

  • Lisa Carlson

    As “for-profit,” this doesn’t pass the smell test!

  • Christian Noll

    I agree with the others.

    “For Profit” and Health Care in the same sentence?

    Not a good sign.

  • Kathy Callaghan

    I agree with all the above sentiments. Right now we don’t have an effective electronic medical records system to share patient data, even within Vermont! How is OneCare going to know what care I obtain in FLA, for example, to ensure that there is no duplication, as they assume? Good luck with that.

    To wit, not long ago while covered by the state employees’ health plan, I was referred to a specialist at Fletcher Allen by my primary care doc in Montpelier. After waiting several weeks for the appointment, I was frustrated to find out that, not only were none of my records transferred prior to the visit, but they were not even available to this specialist online! He actually tried and couldn’t access anything.

    After going through the whole story all over again, just to get him to Square 1, this became a wasted visit, and a waste of health care dollars. He really couldn’t do much without any background data and of course, we ran out appointment time. If this happened to me, it must have happened to others.

    Lastly, how many Medicare recipients (the actual users) were included in the planning of this huge change that will affect each and every one of them? Were patients actually consulted, or did the corporations decide they knew what was best for the users?

    Sadly, Vermont continues to affirm Mitt Romney’s frequent declaration, “Corporations are people, my friend”. Between GMP, single payer and now OneCare, who is making our critical decisions for us? Citizens United? Really? Where are the voices of the citizens?

    And lastly, as with “single payer”, where is the contingency planning? Every business knows they need a contingency plan in the event of unforseen negative outcomes. Can GMCB describe their contingency plan in the event that “single payer” doesn’t work? Can OneCare? Or are we just to “trust” them, as GMP recommends? “Trust, but verify” makes a lot more sense to me.

  • Katharine Hikel MD

    This is just awful. FAHC is still laboring under a $400M debt load from its ridiculous cosmetic expansion (which left its ancient inpatient wards dark and untouched). Dartmouth has a similarly impressive debt load. Executive compensation at both places is off the charts. FAHC has long pushed the bounds of ‘nonprofit’ beyond the original mission of a hospital. The “for-profit” part of the business is not, and never will be, compatible with a patient-centered approach.

  • Liz Rochefort

    So basically, the only people saving money in this model would be the hospitals, but those savings will not be passed on to the taxpayers or Medicare recipients. Everyone will still be paying the same amount, but the ACO and hospital execs get to split the spoils? Are you freaking kidding me?

  • Bethany Knight

    Since the beginning of time, no matter what the story is about, hospitals have used every opportunity to sing their one song: “We lose money taking care of people. This is a money losing proposition.” NOW, HERE THEY ARE, FIRED UP ABOUT KEEPING HALF THE SAVINGS THEY CAN GENERATE.

    Why didn’t Ms. Wallach seize on this hypocrisy???? What does government oversight mean if the watchdogs are blind and sleeping?

  • I agree with all of the above letters. FOR PROFIT and GOOD PATIENT CARE in the medical profession is is NOT possible- never has been. Even many NOT FOR PROFIT if operated by hospitals is NOT true NOT FOR PROFIT- again never has been. Having been in the profession since 1956, there isn’t much I haven’t seen, but For PROFIT and GOOD HEALTH CARE combination isn’t one of them.

  • Jean Cody

    For profit + fee for service = BAD
    For profit + limiting service = GOOD
    I get it!

  • John Newton

    I’ve received a letter from OneCareVermont telling me that my primary doc has chosen to participate in OneCareVermont, and included is a form to use if I elect to “opt out”. But wait, it reads that if I opt out, “CMS will still need to use your information for some purposes, including certain financial calculations and determining the quality of care provided by ….(my primary doc) … and OneCareVermont”. This is opting out???
    Oh yes, “Having this information will help us and your other health care providers participating in our ACO give you high-quality care, because we’ll have the most up-to-date information about your health”. Do they really expect Medicare to have up to date information?. Dream on. This is the same organization that gets ripped off by scammers and crooks to the tune of millions. Count me as pretty negative on this new model. The goal as described is exactly what I expect from my primary doc – coordinated care.