Editor’s note: This commentary is by Richard Slusky of South Burlington. He is a retired CEO of 28 years of Mt. Ascutney Hospital and Health Center, retired director of payment reform for the Green Mountain Care Board. Slusky has served on boards and committees of the Vermont Hospital Association and the American Hospital Association. He currently serves on the Vermont Information Technology board of directors, and is a lifetime fellow in the American College of Health Care Executives.
[I] recently read the VTDigger article regarding the Green Mountain Care Board’s decision to reduce Blue Cross Blue Shield of Vermont’s rate increase for “large group” plans from 11.2 percent to 9.8 percent. As one might expect, BCBSVT is not happy with the board’s decision and has filed a motion for reconsideration claiming that the rate reduction could have an impact on the “insurer’s solvency.”
As I have noted in previous commentaries, Vermont has chosen to implement some very progressive health care reform initiatives by choosing a path that encourages collaboration among payers and providers within the framework of a strong regulatory environment, overseen by the Green Mountain Care Board.
In this regard, the state has negotiated an agreement with CMS/Medicare (the all-payer model) that puts an annualized cap on per-capita health care cost growth for all payers (including Medicare, Medicaid and commercial payers) at 3.5 percent per year for five years through 2022. The agreement also supports the formation and certification of an accountable care organization, OneCare Vermont, that includes the voluntary participation of most of the hospitals in the state, and a significant number of other health care providers and community-based organizations.
The state committed, through this all-payer model agreement, that 70 percent of all Vermont insured residents and 90 percent of Medicare beneficiaries will be covered under the all-payer model agreement by 2022. As of Jan. 1, the ACO was responsible for the cost and quality of health care services provided to over 113,000 Vermont residents. This amounts to approximately 18 percent of the population, with a total cost of care of $580 million.
The intent of this approach is to create a collaborative environment in which payers, providers and community-based organizations work together to improve the health of our population, improve access to health care and community-based services, reduce the growth of health care costs, and agree to be held accountable for the quality and outcomes of health care services they provide. This can only be accomplished if payers move away from fee-for-service payments and toward multi-year, fixed payment arrangements that are consistent with the state’s health care reform initiatives and the all-payer model. The Green Mountain Care Board will need to exercise its regulatory authority to ensure that these goals are met.
While the enrollment of Medicaid and Medicare beneficiaries has been promising, only 10 percent of the 260,000 Vermonters who are insured through commercial plans or through self-insured employer plans are currently enrolled in the all-payer model. The rest continue to be enrolled in traditional fee-for-service plans with ever-increasing premium costs.
Which brings me to the Green Mountain Care Board decision regarding the BCBSVT 2019 rate increase request. The board’s decision to reduce the increase to 9.8 percent applied only to the approximately 19,500 Vermonters who are in the large employer groups that purchase insurance through the health care marketplace. Self-insured employer plans, which cover over 168,000 Vermonters, are exempt from state oversight by a federal regulation known as ERISA and the amounts they pay for health care coverage are not subject to review by the board.
However, logic would dictate that these large self-insured employer groups may be experiencing similar increases in health care costs and might be interested in multi-year contractual relationships with providers that could provide more certainty related to the annual growth in health care costs. These groups are free to voluntarily participate in state health care reform initiatives if they think participation would save them money and would improve the health of their employees. But they need to understand what these plans would look like and how much it would cost them to participate compared to their current experience.
Enrollment of these groups into Vermont’s health care reform model would go a long way toward meeting the state’s commitment under the all-payer model agreement. BCBSVT is the “third party administrator” for many of these self-insured plans. Yet, to my knowledge, they have done little to reach out to this population in an effort to encourage them to move away from fee-for-service payments and to enter into fixed payment multi-year provider contracts with inflation factors tied to economic indicators and utilization targets. This would be similar to the contractual agreements the ACO and its participating providers have entered into with Vermont Medicaid and Medicare. I don’t understand why the state’s largest insurer is not providing these groups with the information they need to make these decisions. In my opinion, it is their responsibility to do so.
As I noted above, Vermont Medicaid and Medicare have negotiated agreements with the ACO that limits the growth of risk-adjusted per-capita health care costs to 3.5 percent annually for the next five years. On the other hand, BCBSVT appears to remain committed to continue fee-for-service payment agreements with substantial increases that are becoming unaffordable for Vermonters and Vermont businesses. The result is their most recent request for an 11.2 percent rate increase for its large group plans in 2019. I think it’s time for BCBSVT to get on board with Vermont’s health care reform initiatives and look at the Medicare and Medicaid contracts as a framework for building new multi-year contracts that put pressure on the providers to better manage costs and utilization and to improve quality.
The state has a plan, which I believe can work and is being implemented. The hospitals are on board, a majority of the state’s providers are on board, and community-based providers are beginning to believe this approach could make a difference. It’s time for BCBSVT to stop complaining that a 9.8 percent increase in rates is not enough and get on board for real change by promoting Vermont’s health care reform initiatives to its customers. If they are unable or unwilling to do that, maybe there are other insurers who would.
