All-payer deal signed
Gov. Peter Shumlin signed a deal with the federal government to set up a unified health care system that eliminates payments to providers based on fees for services. Instead, doctors and hospitals will be paid a lump sum per patient. The all-payer system is designed to encourage preventive care.
The deal is the first of its kind in the nation. Gov. Peter Shumlin signed an agreement with the federal government in October. The so-called all-payer waiver runs from Jan. 1 to the end of 2022.
The main negotiators of that deal were promoted to more powerful posts in state government. Robin Lunge became a regulator for the Green Mountain Care Board, and Al Gobeille, who chaired that board, was picked to run the Agency of Human Services.
New prescription drug laws
Vermont was the first state to pass a law requiring pharmaceutical companies to explain why their prices keep going up. Lobbyists opposed the bill, but ultimately drug companies agreed to comply with the law.
Vermont also became one of 22 states to put limits on opioid painkillers. Doctors will be able to prescribe no more than seven days’ worth of painkillers at a time for adult patients. The Vermont Department of Health says the state’s law is the strongest in the country because it marries prescribing guidance with patient education.
Vermont Health Connect
Vermont lawmakers were caught off guard in January when they learned there were still underlying problems with the state’s health insurance exchange, an online marketplace for consumers. The website still does not work properly, and residents complain they have not been able to get insurance coverage through the program. A consultant testified that the state should let the system “limp along” until a long-term solution is found. In response, the Legislature hired an independent firm to recommend a long-term solution.
It was de ja vu all over again when the backlog of requests from Vermonters seeking to update their insurance policies reached 5,700 at the beginning of this year. It started falling gradually again before the administration announced in September it was down to 1,200.
Two related information technology projects — a Medicaid claims technology system and integrated eligibility—were postponed indefinitely after the state canceled the bidding process for both. Additionally, the state worker who managed health care technology projects was replaced.
Gov.-elect Phil Scott said he would abandon the health exchange during the 2016 campaign, but his idea to share risk with Connecticut was debunked by experts. The prospect of moving to the federal exchange is unclear because of President-elect Donald Trump’s promise to repeal the Affordable Care Act.
It cost the state more than $200 million to build Vermont Health Connect and most of the funding came from the federal government. The inspector general for the U.S. Department of Health and Human Services says the federal government overpaid for some expenses and is recommending that the state be required to refund $10.5 million.
Hospital budget overages
Also reeling from a recent financial crisis and layoffs, Porter Medical Center’s board of directors voted to join the University of Vermont Health Network. The network now has three hospitals in Vermont and three in New York.
UVM Medical Center announced that it would build a $187 million patient facility that will feature private rooms and private bathrooms. The plan is modeled after the University Medical Center of Princeton.
Meanwhile, five Vermont hospitals did not reach revenue targets, while nine had excess revenues from patient payments in fiscal year 2015. Another eight hospitals predicted they would exceed revenue targets for patient payments in fiscal year 2016.
In response to the budget overages, the Green Mountain Care Board allowed the Rutland Regional Medical Center to cut prices, pressed Copley Hospital to cut expenses, and allowed the UVM Medical Center to give away $12 million in excess revenue for community housing and other programs.
Hospital CEO turnover
Vermont’s hospital system also saw dramatic leadership turnover. Porter Medical Center in Middlebury, Copley Hospital in Morrisville, Mt. Ascutney Hospital and Health System in Windsor, and Gifford Medical Center in Randolph all got new chief executive officers this year.
Dartmouth-Hitchcock CEO Jim Weinstein announced in December that he would retire June 30. Judy Tarr Tartaglia, who runs the Central Vermont Medical Center in Berlin, announced in October that she would retire March 31.
There was one thing that didn’t change for hospital leadership: Administrative pay keeps trending up.
Medicaid spending explained
In response to continuing structural budget problems because of Vermont’s Medicaid program, VTDigger published a series called “Medicaid by the Numbers” that helped lawmakers and the public understand Medicaid’s cost drivers.
The Medicaid budget has grown from $1.1 billion to $1.7 billion since 2008. More than 200,000 people, or about a third of the state’s population, relies on Medicaid in some form for medical care. Hospitals and pharmaceutical companies receive the largest share of Medicaid dollars.
The most expensive Medicaid patients to take care of are senior citizens and people with disabilities because they have the highest health needs. Vermont’s hospitals have continued to receive charity care compensation, even though more people have health insurance through Medicaid.
The state has used Medicaid money to fund state government programs over the past five years. The federal government recently decided to put an end to funding for certain psychiatric hospitals, substance abuse centers, information technology projects and education programs.
Correction: An earlier version of this story noted that Dartmouth-Hitchcock CEO Jim Weinstein was resigning, when, in fact, he is retiring.