Health Care

Regulators may tie pay parity to hospital budget process

Green Mountain Care Board
Green Mountain Care Board members Jessica Holmes, left, and Maure​en Usifer. File photo by Erin Mansfield/VTDigger

Health care regulators say they want to use the ongoing hospital budget review process to narrow the reimbursement differences between independent doctors and hospital-employed doctors.

Members of the Green Mountain Care Board made the comments at a meeting held Monday to discuss how to reduce the disparities, which independent doctors have been seeking to do for years.

In 2015, commercial insurance companies reimbursed independent doctors about $100 for a typical primary care visit and paid academic medical centers $168 for that same service, according to data the Green Mountain Care Board’s staff presented at the meeting.

The majority of independent practices are in Chittenden County, according to a trade organization, where many are either closing or selling to the state’s largest hospital, the University of Vermont Medical Center. The hospital enjoys higher reimbursements than independent doctors for many services.

Blue Cross Blue Shield of Vermont, which covers 70 percent of the commercial insurance market, has said it has two separate ways of paying for services in Vermont: a community fee schedule, which applies to independent practices and small hospitals, and an academic medical center fee schedule, which applies to the UVM Medical Center.

HealthFirst, the trade organization for independent physicians, has said doctors are often paid 250 percent to 350 percent more when they work for academic medical centers. The organization says the disparity is pushing doctors to sell or close their practices.

The Legislature has been passing laws for about three years in hopes of narrowing the gap, but lawmakers complained in April that the board has not done enough to implement changes. The Legislature then passed another law this year requiring the board to issue a report by Oct. 1 detailing how it plans to reduce the disparity.

Jessica Holmes, an economist who sits on the board, organized a working group to tackle the issue that included hospital officials, representatives of independent doctors, and health insurance executives. The group met twice this summer.

Holmes said the board could use the hospital budget process — which started in July and must be completed by Sept. 15 — to reduce pay disparities. Holmes said the board has room to lower reimbursements to hospitals because the state’s regulated hospitals proposed an average 3.6 increase in revenue, slightly over the 3.4 percent the board is seeking.

Con Hogan, another board member, saw risks in taking action on reimbursements now.

Hogan said the charge from the Legislature aims to change how much hospitals are paid for each individual service, even though the board is trying to require hospitals to be paid in lump sums to take care of large populations.

That new payment system is the basis for the all-payer model deal that then-Gov. Peter Shumlin signed with the federal government last fall. That model encourages all doctors and hospitals in the state to join OneCare Vermont, a health reform company that is jointly owned by the UVM Medical Center and Dartmouth-Hitchcock Medical Center.

Hogan said the “real action” to reduce pay disparity will come as the all-payer model, and OneCare, get moving on lump-sum payments. He said he is worried about changing the basis for that model while it’s still in progress.

Kevin Mullin, the board chair, replied: “I’m not sure just saying, ‘We’re in a transitioning and transformational world’ is going to cut it.”

Hogan replied: “I hear you. No matter what we do, it’s not going to be liked.”

Robin Lunge, another board member, said she agrees with Hogan in principle.

“Fee-for-service is a house of cards, where you pull one card out and you don’t know what you’re doing with the rest of the reimbursement,” she said. “In a perfect world we would let the all-payer model solve this problem … or we would do a full-blown fee-for-service rate-setting process.”

However, Lunge said the board doesn’t have the resources to do a comprehensive rate-setting process to regulate how much doctors and hospitals are paid for each individual procedure, as the state of Maryland does.

Lunge suggested the board make changes to reimbursement policies for doctors and hospitals that choose to stay outside the all-payer model, but not change reimbursements for doctors and hospitals participating in all-payer.

“We have a clear directive from the Legislature to do something on this specific issue, so I feel compelled that we need to do something,” Lunge said.

Hogan and Maureen Usifer, another board member, agreed with Lunge.

Mullin said after the meeting that the board would need to make a decision “in the next couple of weeks” if members intend to make changes during the hospital budget process.

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Erin Mansfield

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