Health Care

Small health reform company struggles to get Medicaid contract

Kate Simmons
Kate Simmons, center, the director of Community Health Accountable Care, speaks​ at a Green Mountain Care Board meeting Thursday. Photo by Erin Mansfield/VTDigger


A small health reform company that has pushed back against joining Vermont’s largest network of hospitals is struggling to continue doing business with the state’s Medicaid program and the state’s largest health insurance company.

The company, Community Health Accountable Care, or CHAC, is an accountable care organization that seeks to enter into contracts with insurers in which the doctors get bonuses from insurance companies at the end of the year if they can save money on treating patients.

CHAC’s network of doctors and other providers includes almost all of the state’s community health centers, seven of the state’s 14 hospitals, plus a handful of rural health clinics, nursing homes, and private doctors’ offices.

However, CHAC’s business model is substantially different from what the largest health reform company, OneCare Vermont, has been trying to do  use the balance sheets of the state’s largest hospitals to take on financial risks for the outcomes of their patients, thereby unloading the risk from insurance companies, including Vermont Medicaid.

Over the past several years, CHAC has largely stayed independent, despite pressure from regulators to join OneCare Vermont, which is jointly owned by the University of Vermont Medical Center and Dartmouth-Hitchcock Medical Center.

On Thursday, Representatives for CHAC told regulators at the Green Mountain Care Board that the company has not yet been able to complete a contract with Vermont Medicaid to treat patients in 2018. The state says that’s because of CHAC’s business model.  

“We know in 2018 that we will continue to have our Medicare” contract, said Kate Simmons, the director of CHAC. “It is to be determined what relationship we will have with Medicaid and Blue Cross Blue Shield for 2018.”

The company’s consultant, Andrew Principe, told the board that CHAC needs a contract with Medicaid. Without one, he said CHAC would be unable to justify its administrative costs, and the company’s financial viability would in doubt.

On Friday, Simmons said the state has known for a long time that CHAC is interested in getting Medicaid bonuses, because CHAC’s community health centers treat one in three Medicaid patients in the state.

“We are very much beginning conversations with Medicaid,” Simmons said. “We have been meeting with folks at Medicaid this week, and we have more meetings scheduled over the coming weeks.”

She said: “Our Medicaid population and moving that contract forward has been the highest priority.”

But Cory Gustafson, the commissioner of the Department of Vermont Health Access, said the state is interested in a specific type of health care reform: paying doctors for how well they take care of patients, and requiring health reform companies to take on financial risk tied to patient outcomes.

And CHAC, which has fewer assets than OneCare, has never taken on that actuarial risk.

“We’re trying to get to a place where the majority of the money that we pay for health care on behalf of our beneficiaries (is) not in a fee-for-service model,” Gustafson said. “Part of it is having providers have risk,” Gustafson said. “If you are at risk for the cost of the care, you’re more interested in how much you’re spending.”

Simmons said Friday that the structure of receiving bonuses for saving money is already working for her network.

“This value-based model is familiar to our participants and one that we believe we can continue to be successful with,” she said. She said the company “does not have the reserves to bear actuarial risk at the levels that larger or hospital-based (accountable care organizations) might accept.”

Principe told the board Thursday that CHAC could only take on risk if they partnered with someone, such as a large insurance company.

Meanwhile, Todd Moore, the CEO of OneCare, said Friday that his company already knows its future for calendar year 2018: it will renew a current contract it has with Medicaid it started in January, and will also have a contract with Blue Cross Blue Shield of Vermont to take on actuarial risk.

CHAC attempted to take on risk in 2016 when the group partnered with a major national insurance company and submitted a bid for the same Medicaid contract that OneCare ended up receiving. CHAC dropped the bid after being pressured by state officials and other health care groups.

Instead of competing, CHAC eventually agreed to join an umbrella company to merge their operations with OneCare. As part of that agreement, a health reform company run by independent doctors also agreed to dissolve. However, the umbrella organization decided in May to take a partial hiatus.

Moore said he would “love” to talk to CHAC about merging again. “I am not in any discussions on that, although board members of CHAC and OneCare continue to meet” through the umbrella company’s board of directors.

Gustafson would not say whether the state still wants CHAC to merge with OneCare. “What we’re really looking for is coordination,” he said. He said the current health care system is full of “fragmentation.”

Kevin Mullin, the chair of the Green Mountain Care Board, said Friday that CHAC cannot be successful unless it reaches more agreements with insurance companies to take care of more patients.

Mullin said he could not speak with Blue Cross about their willingness to contract because the board is in the middle of regulating their insurance prices.

“It’s really going to be up to (CHAC) on whether or not they can negotiate that deal,” Mullin said.

Sara Teachout, a spokesperson for Blue Cross, said the company would be interested in talking to CHAC about a 2018 contract.

But Gustafson said Blue Cross, too, is moving toward unloading their risk onto companies and using the payment model OneCare is using.

And Moore, from OneCare, said the ability for CHAC to get a deal might come down to what Medicaid is willing to negotiate.

“The state of Vermont’s got a tough decision coming,” he said.

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Erin Mansfield

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  • Dominic Cotignola

    We seriously need to get past the for profit medical system in this country. To many people see the pot of gold sitting there waiting for the taking.

    • Jay Eshelman

      The common misperception that ‘for profit’ tenants lead to diminished quality and the unfair distribution of goods and services needs to be discussed because history shows just the opposite to be the case.

    • Nachman Avruch

      Most of the health care provided in Vermont is provided by non-profit organizations; the exceptions are small, independent practices such as Northeast Reproductive Medicine.

    • Katharine Hikel MD

      Big revenue-slurping nonprofits (like UVMMC) are known as NINOs: Nonprofits In Name Only. Paying the CEO $1.9 million per year is a key symptom.

  • bob Zeliff

    Excellent Reporting!

  • Louis Meyers

    In the back of every Vermonter’s mind should now be the following question: Is my doctor not prescribing a specific test or medicine because it is not medically necessary – or is it because it means they will get a bigger bonus at the end of the year?

    • Jay Eshelman

      Great question! The antidote is, of course, practice a bit of the consumer responsibility that’s missing in today’s use it or lose it healthcare mentality.

      Get a second opinion!

      Of course, if there’s only one opinion available from the healthcare monopoly, there will be no such thing as a 2nd opinion.

  • Elise Eaton

    Very discouraging and disgusting to see One Care Vermont’s blatant arrogance at play. I’d be mighty surprised if CHAC carries the day. The larger the “network”, the larger the loss to consumers.

  • Jim Manahan

    What’s the time horizon on those outcomes?