Editor’s note: This commentary is by Gerry Silverstein, of South Burlington, who has interests in individual, community and global health.
The Vermont All-Payer Accountable Care Organization Model is a new health care delivery and insurance program whose stated goals are to improve access to and outcomes of health care in Vermont and to reduce the rate of growth of annual health care spending to 3.5 percent or less (nationally health care is growing at an annual rate of 5.6 percent). It is scheduled to begin Jan 1, and will operate for five years (through 2022). Individuals with original Medicare, Medicaid and private insurance will be enrolled. In 2022 the program aims to have 70 percent of all beneficiaries and 90 percent of Vermonters enrolled in Medicare as participants.
Assessing success
In addition to reducing health care spending to a growth rate of 3.5 percent or less, success of the program will be determined by focusing on four areas: suicide, drug overdose, chronic disease, and improving access to primary care. Success of the first two categories will be measured in initial years by no increase in drug overdoses and suicides, while success in later years will require declines in suicides and drug overdoses.
Primary care access will be determined by assessing at the end of five years whether 89 percent of Vermonters have access to a primary care physician or other health care provider.
Chronic diseases that will be used as markers of success (or failure) are hypertension, diabetes and chronic obstructive lung disease. These conditions must not increase by more than 1 percent compared to 2016 levels over the life of the program.
Why significant decreases in hypertension, a readily treatable condition for most individuals, are not required in the program is not explained.
Why hypertension, diabetes and COPD were chosen, and not other costly (in terms of dollars and societal impact) diseases such as heart, liver, bone-joint (such as knee and hip replacement) and kidney disease, is not explained. The danger in limiting success analysis to these three chronic diseases is that the entity responsible for the Vermont all-payer program, the accountable care organization, may invest a significant percentage of its resources to ensure success in controlling those chronic diseases, leaving other important areas to less focused care.
No mention is made as to whether rates of smoking, obesity, excessive alcohol consumption, sedentary lifestyle, and drug abuse in enrolled individuals will be measured to see if there is a decline as a result of program interventions. These aspects of lifestyle are the proximate cause of many illnesses that drive health care spending, and long-term success of any health care program will require significant reductions in these activities and conditions.
With the passage of the Affordable Care Act, 60,000 Vermonters became newly enrolled in Medicaid. According to the Centers for Disease Control and Prevention, 36 percent of those individuals smoke cigarettes, the major behavior that leads to COPD and numerous other health problems. Because it often takes decades for COPD to develop, a far better measure of success of the Vermont all-payer model would involve measuring reductions in rates of smoking in enrolled individuals, as opposed to number of individuals with COPD.
Prepayment, not fee for service
In general the program will work by replacing fee for service care with a program in which the three insurance entities — Medicare, Medicaid and private health insurance — will make regular pre-payments of money to the accountable care organization (comprised of health care workers, practices and hospitals) charged with implementing the program. The prepayments are called attributed, or capitated, payments and enrolled individuals are called attributed patients.
The argument against fee for service is that it allows excessive and inappropriate use of health care services by both providers and patients. This drives unsustainable levels of health care spending. Current health care spending in the U.S. is about $3.4 trillion and represents about 18 percent of the entire U.S. economy.
The exact amount the ACO receives for an attributed beneficiary has not been stated by either the Center for Medicare and Medicaid Services (CMS) or the Green Mountain Care Board. In response to an inquiry submitted to the GMCB with regard to Medicare attributed payments I was told: “Monthly capitated payments for Medicare beneficiaries will be based upon the average cost of providing Medicare Part A and B services to those Medicare beneficiaries who are attributed (aligned with) the model.” In 2016, this amount was about $10,000. (Note: Part A is hospital services, Part B is physician and lab services).
If all 131,000 Vermonters who are enrolled in Medicare were eventually attributed in the ACO, the dollar amount for aggregate attributed payments would be about $1.3 billion.
If the cost of care for an enrolled (attributed) patient for a calendar year is less than the attributed prepayment provided to the ACO (to care for that patient), does the ACO keep the “excess” funds? The answer to that question depends upon which government agency you ask.
In the “Frequently Asked Questions” document provided by the GMCB to educate the public about the all-payer model, the answer to question #9 — Does the ACO get paid if someone does not require care? What if someone requires a lot of care? — is: “The ACO will be paid a set amount for each attributed member, and the ACO is financially responsible for each person. This is true whether that person uses little or no care, or whether they require major surgery.”
In contrast, a reply to an email I sent to CMS’s All-Payer Division inquiring about spending on Medicare attributed patients in Vermont’s all-payer program, said: “At the end of year, CMS will reconcile the total monthly payments the ACO received versus the Medicare fee-for-service claims that providers submitted during the performance year. This reconciliation may result in monies owed from the ACO to CMS, or vice versa.”
These two positions appear to be in conflict regarding ultimate ownership of attributed prepayments made on behalf of enrolled patients who use little or no care. If the ACO in Vermont gets to keep attributed payments that it does not spend on health care services for individual Medicare patients, it provides an incentive to limit appropriate care. Additionally, for an unknown number of enrolled beneficiaries, the ACO is getting paid for doing nothing or very little. In fairness, for attributed patients with complex and chronic medical problems, their care might greatly exceed the attributed payment made on their behalf. According to CMS, the ACO would be compensated by CMS when end-of-year assessments are done comparing dollars allocated and dollars spent.
Coordinated care
If the ACO is given large sums of money on a regular basis in return for improving the health of Vermonters, how will the ACO try to accomplish this objective? To a large extent, health care workers in the ACO will try to better coordinate care of attributed patients, especially those with chronic illnesses.
For instance, a person with type 2 diabetes may work with diverse members of a health care team to address different issues that led to, and contribute to, the illness. The individual may meet with a pharmacist, a nutritionist, a weight counselor if the person is overweight or obese, a physical therapist to see if the person is healthy enough to become more physically active, and maybe a gastric surgeon to see if the individual is a good candidate for surgery that leads to significant weight loss and often remediation of the type 2 diabetes.
The goal of coordinated treatment is to improve overall health, hopefully leading to control of the person’s diabetes. If that is accomplished then the very debilitating and expensive complications of diabetes (limb amputation, heart disease, kidney disease, etc.) may be prevented.
There can be no doubt that reducing negative diabetes health outcomes would be an enormous accomplishment, as diabetes care costs nationally $245 billion per year. Currently about 10 percent of Americans have diabetes, and one in three Americans have pre-diabetes, a condition that often leads to type 2 diabetes.
But let’s be clear, the ACO is not a magician with some major elixir to cure all patients with type 2 diabetes. No amount of money will conquer chronic diseases such as type 2 diabetes unless individuals, who have the physical and mental capacity, commit to leading healthier lifestyles.
Enrollment
Is enrollment in the Vermont all-payer model voluntary? It is for physicians and other health care workers. Indeed, to entice physicians to join they are told they will be rewarded (presumably financially) if they achieve the program’s objectives of positive health outcomes and controlling costs. An interesting question is why physicians have to be rewarded for doing what many people would consider the basic responsibilities of their profession.
Moreover, $14 billion of taxpayer money is provided by federal agencies to teaching hospitals in the U.S. every year for the specific purpose of training intern and resident physicians so that they will have the knowledge and skills to best serve the health care needs of the American public. Why physicians in the program will be rewarded above and beyond their significant base salaries and benefits after taxpayers have made a major investment in their career remains another unanswered question.
For beneficiaries the issue of voluntary enrollment is confusing. The answer to FAQ #8 — How does the ACO know who is in the APM? — is: “Vermonters would be attributed to the ACO if their primary care physician has joined the ACO and the beneficiary has not opted out.” The language in the last part of that sentence appears to state clearly that a beneficiary can opt out, and thus remain on fee for service. Unfortunately, the GMCB does not agree. The opt-out provision, according to the GMCB, refers only to “data sharing,” presumably by CMS with the ACO. If a patient’s physician is part of the ACO, that patient will become an attributed patient.
Even if participation for an insured individual were voluntary, why would an individual whose physician joins the ACO not want to become an attributed beneficiary? The benefits are exactly the same in fee-for-service and the all-payer model. If the GMCB’s position on unspent portions of attributed payments is correct (i.e., the ACO keeps unspent funds), there are a number of ways to answer this question.
Why healthy people might want to opt out
It goes without saying that no one is guaranteed good health, no matter how hard an individual tries to lead a healthy life. But the peer-reviewed medical literature supports the hypothesis that individuals who adopt a healthy lifestyle are far more likely to be healthy (and thus minimize use of health care resources) than individuals who do not adopt a healthy lifestyle.
Consider also that some individuals understand that current trajectories of health care spending are not sustainable, and that includes Medicare. Current Medicare enrollment is at 57 million and, because of the aging of the population, enrollment is projected to reach 90 million in 2042. Current gross Medicare spending is $700 billion per year, and this amount will rise to $1.4 trillion in 2027. The Medicare Hospital Insurance Trust Fund (that covers Part A) will be depleted of reserves in 2029. Between now and 2029, the hospital trust fund will run a deficit of $300 billion.
For a senior who is aware of the ominous trajectory of Medicare spending and enrollment and who has limited utilization of the health care system so that his or her expenses are less than 10 percent of the prepayment CMS makes to the ACO for that individual, such an individual may decide that remaining on fee for service will provide the greatest benefit to the long-term financial stability of the Medicare program.
There is however a major drawback to allowing healthy individuals to remain on fee for service in the the Vermont program. The ACO might be seriously compromised if healthy individuals opt out, leaving primarily individuals who have significant health care expenses and who are expected to make significant demands on providers in the ACO. (If the position of CMS on reconciling attributed dollars versus spent dollars at the end of a program year is correct, the ACO would be compensated for the increased costs of care).
‘Cost-shifting’ might not be legal
The way attributed funds in the Vermont model will be organized confirms that the ACO will not only be able to utilize attributed funds provided on behalf of healthy individuals to cover the expenses of individuals with multiple chronic diseases, but the ACO will also be able to utilize attributed payments from, for example, private health insurance to cover medical expenses of a beneficiary with Medicaid insurance.
I asked Al Gobeille (at the time chair of the GMCB) at a Vermont all-payer informational session at UVM whether attributed funds from the three insurance entities would be kept separate. His answer was no, that would not be possible.
Attributed payments from the three insurance providers will be aggregated into one giant pot of money. Once the ACO begins spending money from the pot, it will not be possible to know whether, for example, Medicare attributed prepayments are being used to care for Medicare beneficiaries.
It is well known that cost-shifting, where Medicaid costs are, in effect, subsidized by other health insurance programs, occurs. It may be acceptable to the state and private health insurance agencies to “allow” cost-shifting of private health insurance dollars to cover Medicaid expenses, but from a legal perspective, the transfer of Medicare funds to care for Medicaid patients is highly suspect, as there is no provision in the amendments to the Social Security Act of 1965 that gave birth to Medicare (and Medicaid) that allows Medicare funds (contributed by seniors over a lifetime and who continue to pay premiums every year for Parts B and D) to be used for Medicaid beneficiaries.
Personal responsibility for health
Even if the collation and distribution of attributed payments is incompatible with federal law, if society benefits why raise an objection to the program?
From a personal perspective, I am more than happy to have my Medicare health insurance premiums help pay for the health care cost of any and all individuals who have done everything possible to live a healthy lifestyle, but who have nonetheless discovered how egregiously and painfully unfair life can be in the arena of personal health.
But my enthusiasm for having my health insurance premiums (and federal and state income tax dollars) pay for “lifestyle illnesses” has diminished greatly over the years. Too many people refuse to accept personal responsibility for leading a healthy lifestyle.
Yes, the social determinants of health, such as poverty and lack of education, make it more difficult for many to lead a healthy lifestyle. And it is true that the federal government, using a reasoning process that can only be described as absurd, adds to the problem of poor health outcomes by consistently refusing to block the use of food stamps for the purchase of sugar-sweetened beverages (the number one item purchased by recipients of SNAP benefits, amounting to $4 billion annually, or 5 percent of all benefits), a major contributor to type 2 diabetes.
Although the social determinants of health are a serious problem, and must be addressed over the long term, it is nonetheless true that the vast majority of individuals know smoking, obesity, excessive drinking and sedentary lifestyle are harmful to personal health. No one benefits if society concludes that personal responsibility is exempt from the equation that balances sustainable health care spending and positive health care outcomes.
The question individuals and society must ask is when to impose restrictions and/or requirements on social welfare benefits (including health care), especially in the state of Vermont where legislators struggle to verbalize the words “no” and “enough,” not to mention the state’s addiction to federal dollars to balance its budget (35 percent of state spending uses federal dollars, coming from a government with an aggregate $20.3 trillion of debt and growing on a daily basis at an unsustainable rate).
There appears to be very few, if any, limitations on many individuals who receive (often free) health care benefits. Indeed, because so much health care is now free, with little or no co-pays for so many, too many recipients are overusing the health care system (they are said to have no skin in the game).
People who will turn 65 in or after 2020 should take note. Federal legislation passed in the last few years will prevent supplemental insurance (Medigap) from covering 100 percent of some expenses (such as co-pays) not picked up by Medicare. This was done because many seniors were overusing the system because they knew no matter how much they cost the system, their supplemental insurance would hold them “harmless” from the cost.
If the government is holding seniors who have paid into Medicare over their entire lifetime (and continue to pay premiums) accountable for their use of the health care system, why not the 40 million adults on Medicaid nationwide (and, yes, the more than 100 million with private health insurance)?
Improving the health of the American citizenry is a complex and challenging endeavor, but it is a task that must be accomplished as current spending trends, combined with the aging of the population, will stress the federal (and state) budget to near collapse over the long term. The question for Vermonters is whether the new health care entity known as Vermont All-Payer Accountable Care Organization Model is a step in the right direction. Only time will tell if we are sailing into calm waters or stormy seas. Caveat emptor.
