The federal government will not make direct payments from Medicare to Vermont, according to state officials, countering campaign season claims that the Shumlin administration wants to take over Medicare as part of single-payer.
Act 48, the 2011 law that sets Vermont on a course toward single-payer, created a framework for Green Mountain Care — as the program is known — to absorb Medicare, but only with federal approval.
Robin Lunge, director of Health Care Reform, said unequivocally Monday that it won’t happen.
“Federal law does not permit us to get the cash,” she said.
Act 48 includes a section outlining a strategic plan for implementing single-payer, which includes a directive to “obtain waivers, exemptions, agreements, legislation, or a combination thereof to ensure that, to the extent possible under federal law, all federal payments provided within the state for health services are paid directly to Green Mountain Care.” (Emphasis added)
That portion of Act 48 is what’s known as session law, or the legislation as passed before it is written into statute.
It provides guidance for writing the statutes, and while it is still law, the portions that don’t make it into statute are often temporary and meant to provide guidance.
“In 2011, we asked the administration to entertain lots of things, but it was in the context of ‘tell us whether you can do this,’” said Rep. Mike Fisher (D-Lincoln), who was on the House Health Care Committee when it drafted Act 48.
In the intervening years, Lunge and the administration have researched their options for implementing single-payer and found that some of the road map laid out by Act 48 isn’t possible.
Gov. Peter Shumlin has said he wants a true single-payer system that covers all Vermonters, including seniors on Medicare, but the framework that would have rolled Medicare into Green Mountain Care is not an option, according to Lunge.
The state also set aside its intention to administer Medicare on the feds’ behalf, meaning it would have handled payments from Medicare to doctors and hospitals. After preliminary discussions with Washington officials, Vermont was told it could not administer Medicare solely within its own borders, Lunge said.
Medicare has split the country into regions and uses third-party contractors as financial intermediaries, which pay claims and audit what health care providers charge the program.
Vermont is in Jurisdiction K, which includes the rest of New England and New York, and to bid for the administrator contract Vermont would have to take over administration for the entire region, which has 4.2 million Medicare beneficiaries.
This year the Legislature repealed the section of Act 48 that directed the state to seek authority to administer Medicare.
It also changed language in the same section of the law to make Green Mountain Care the “payer of last resort” for “any health service that may be covered in whole or in part by any other health benefit plan, including Medicare, private health insurance, retiree health benefits, or federal health benefit plans offered by the military, or to federal employees.”
The purpose of the change was to acknowledge that, while every Vermonter will have Green Mountain Care — and will be paying for it with their taxes — other federal or private insurance will still be available to pay for health services.
Federal law precludes Vermont from changing Medicare benefits or covered services, and Act 48 states, “Nothing in this chapter shall be construed to reduce, diminish, or otherwise infringe upon the benefits provided to eligible individuals under Medicare.”
The administration is seeking what’s known as an all-payer waiver, which would allow the state to set reimbursement rates for Medicare, or how and what doctors and hospitals are paid for treating patients covered by Medicare.
Those payments will still be handled by the regional third-party Medicare administrator.
Vermont already sets the reimbursement rates for Medicaid, and a federal waiver allows it broad flexibility in how that money is spent. Commercial insurance, to the extent it’s still purchased by Vermonters covered through Green Mountain Care, already has its rates set by the Green Mountain Care Board.
The all-payer waiver inclusion of Medicare would allow the board to set reimbursement rates across all payments for the health care delivery system — doctors, hospitals, clinics, etc. — thereby making its payment reforms all encompassing.
The idea is that if Medicare, which in 2012 accounted for 21 percent of overall health care spending in Vermont, remains fee-for-service, or volume driven, then it will undermine efforts to reward better outcomes for patients, officials say.
But Darcie Johnston, director of the anti-single-payer advocacy group Vermonters for Health Care Freedom, says that if the state is allowed to set those rates and determine the type of payments, it will be bad for seniors on Medicare.
“If you’re changing how doctors are paid, that changes how seniors are going to get care,” she said.
The pressure to reduce health care costs in order to sustainably finance Green Mountain Care will force the state to ration care and reduce access, not just for seniors on Medicare, but for all Vermonters, she said.
Such claims by Johnston and other opponents of single-payer are not surprising, especially during election season, said Hamilton Davis, a former journalist and frequent commentator on health care reform.
For people who don’t want to see government’s role in health care increased, the Green Mountain Care Board’s involvement in setting Medicare rates will have negative implications, Davis said.
But one advantage he sees is that the board is likely to move health care reform, or the migration away from fee-for-service, faster than the federal government.
The feds are experimenting with quality or value-driven payment reforms, but the pace at the national level is much slower than what Vermont is doing, he said.
A larger question, and one that can only be speculated upon at the moment, Davis said, is to what extent seniors on Medicare, such as himself, will need supplemental coverage under Green Mountain Care.
That’s a hypothetical because no one yet knows what portion of health services Green Mountain Care will cover because the Shumlin administration has not yet released financing and benefit plans for the program. The more generous the benefit, the more strain it will put on the financing the system, which will be funded in large part through taxes.
But a less generous benefit will require people to pay more out-of-pocket for health services, leading some people to look for supplemental, private coverage.
Most seniors currently buy supplemental insurance, often called Medigap coverage, but a generous Green Mountain Care benefit could wipe out the need for such policies. Conversely, a weak benefit would drive the market for them.
Davis said he is aware of intense discussions within the Shumlin administration about what level of Medigap coverage Green Mountain Care should provide.
The outcome of those discussions isn’t likely to become public until next year, when the administration is expected to release its conception of the program’s benefit.
The Green Mountain Care benefit will then need the Green Mountain Care Board’s approval and the Legislature will have final say when it appropriates the money to pay for the program.
