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.”
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.”