(Editor’s note: Hamilton E. Davis is a health care columnist for VTDigger. He is an author, journalist and health care expert. He has served as a state representative, ran the Vermont Hospital Data Council in the 1980s and worked for Fletcher Allen Health Care, now UVM Medical Center.)
After working for nearly a year and a half as part of a cooperative effort to build an integrated system of health care in Vermont, a group of primary care physicians in the state broke away last week and joined with a national for-profit health insurance company, a move that is likely to throw the Vermont reform effort into disarray.
The breakaway group consists of 250 to 300 primary care doctors gathered into an organization called Community Health Accountable Care. The doctors are all members of federally qualified health centers, which are primary care clinics, most but not all in rural areas, that get some federal financial support.
The move became evident Wednesday when the state’s Medicaid agency opened the bids for a cost control contract to deliver health care to the state’s Medicaid population. There were two bids.
The first came from OneCare Vermont, a consortium of 10 of the state’s hospitals, along with Dartmouth-Hitchcock Medical Center, which is just over the border in New Hampshire and delivers a significant amount of care to eastern Vermont. OneCare is organized as an accountable care organization under federal law (meaning it can provide medical care to a block of patients for a single price, without running afoul of federal antitrust laws) and includes well over 90 percent of all the medical assets in Vermont.
The second bid came from Community Health Accountable Care (which is also an ACO, albeit much smaller) but allied for the first time with Optum, a health care arm of United Healthcare.
United Healthcare is a huge for-profit player in the health care industry. Fortune magazine ranks it the 14th-largest company in the U.S. and the third-largest health care business in the country. Fortune lists its 2014 revenues at $130 billion.
CHAC, which has virtually no resources of its own, would apparently be able to tap the very deep pockets of United Healthcare, deeper in fact than any in the Vermont health care arena, not to mention Vermont itself.
As of Friday, it was impossible to get a fully clear picture of the CHAC move. The contracts were opened Wednesday, but under the state’s bid process the contents of the bids do not get released immediately. Nevertheless, several of the players had observers at the opening, so rumors began to fly. And by the end of the day, Lawrence Miller, the Shumlin administration’s health care reform chief, confirmed that Optum, an arm of United Healthcare, was part of the CHAC bid.
The move clearly stunned the Vermont group. The three provider groups in the state — OneCare, CHAC and HealthFirst, a small group of primary care doctors and a few specialists — signed a memorandum of understanding several months ago agreeing that the state needs a single accountable care organization and pledging to work toward that goal among themselves.
And just three weeks ago, CHAC told the group members that it would submit a joint bid with OneCare on the Medicaid contract.
Todd Moore, the CEO of OneCare, after noting that his organization has been working for nearly a year and a half on a unified delivery system, said: “OneCare still believes this model is the right one for Vermont. If true, this news deals a major blow to those efforts.”
Richard Slusky, who retired June 1 from the Green Mountain Care Board, coordinated the discussions over the hundreds of hours that the three main parties spent trying to find common ground on a single organization to integrate care in the state.
“I was surprised to hear that CHAC submitted a response on its own, with another party,” Slusky said when asked about the CHAC move. “I’m not sure what the motivation was, but it is disappointing they are going this way. …”
“To be honest,” he continued, “in the course of these discussions OneCare went further than I expected, or even hoped, of accommodating CHAC, in the areas of governance, an increase in pay for primary care doctors, and its willingness to adopt CHAC’s principles on the role of primary care.”
The reason the CHAC posture is so important is the provision in the federal law known as Obamacare that the only way patients can be included in an ACO, an integrated system, is by being referred there by a primary care doctor. There are about 700 primary care doctors in the state; OneCare employs roughly 300, CHAC slightly under that, and HealthFirst has about 60.
The question under consideration for the last 18 months is whether the CHAC primary care doctors would function as gatekeepers for OneCare. The apparent consequence of the Medicaid bid is that they want to function as gatekeepers to United Healthcare.
The CHAC maneuver raised a host of questions that fall into two broad categories: its effect on the relationship between the players in the state, and what the health care delivery system in the state would look like if a player like United-Optum actually gains a foothold here.
It is too early to speculate on the second question. For one thing, the details of the CHAC Medicaid proposal are not yet available, and even once they are the whole sortie could go glimmering if the Department of Vermont Health Access rejects the CHAC proposal.
Moreover, it is unclear just how the CHAC/Optum/United entity would deliver care, because all complex tertiary care providers (UVM and Dartmouth-Hitchcock) are part of OneCare. So are more than 90 percent of the community hospital assets. The only hospitals not part of OneCare are Northeastern Vermont Regional Hospital in St. Johnsbury, Gifford Medical Center in Randolph, Springfield Hospital, and Grace Cottage in Townshend.
The effect on the relationships among the state’s players, other than CHAC, is much clearer. It could be very damaging, as Slusky’s comments make clear. The meetings of the small group involved in the integration effort are not open to the press, but the comments that drift out are uniformly negative about the CHAC bid itself, as well as the way CHAC went about it.
I called Joyce Gallimore, director of CHAC, but my call has not yet been returned.
Irrespective of what Gallimore might say, the whole issue will be much clearer after the group’s regular meeting Monday. At every step of the way over the last year and a half, when CHAC has upped its demands on OneCare, OneCare has conceded the point.
I illustrated that process in a column several weeks ago on the issue of how a joint organization for OneCare, CHAC and HealthFirst would be governed. In return for CHAC and HealthFirst’s willingness to join a single integrated system, OneCare agreed to give both smaller players a hugely disproportionate role in the governance of that system, including veto power over all significant action by an integrated group.
I suggested then that CHAC, and HealthFirst, might be overreaching, but I obviously suffered from a serious want of imagination. It never occurred to me that CHAC might try to bring a monster like United Healthcare into the state. (There is no indication at this point that HealthFirst is a party to the CHAC effort. I tried but failed to reach Amy Cooper, the lead negotiator for HealthFirst.)
In any event, stay tuned. Let’s see what comes out of the meeting Monday morning.
