Vermont is projected to exceed targets for health care spending in 2020, indicating the state’s reform efforts may not be working as planned.
The estimates for spending next year go above the 3.5% growth rate target. Higher than expected costs in the Medicare program are partly to blame, officials said at a meeting of the Green Mountain Care Board Wednesday.
The state has projected a 4.3% growth rate in the total health care costs next year for Vermonters, according to Sarah Lindberg, a researcher for the Green Mountain Care Board, the state regulatory entity that oversees health care spending.
While the goal is 3.5%, any growth above 4.3% could trigger “corrective action” from the federal government.
“We need to get the numbers right or we’re placing the reform efforts in jeopardy,” said Green Mountain Care Board chair Kevin Mullin. “It’s something that’s keeping us up at night.”
Vermonters will feel the impact on their wallets, said Mike Fisher, the state’s health care advocate.
“We have multiple data points showing us that the cost of health care is growing at a rate that’s higher than we want it to — whether we look at hospital budgets or rate review or people’s ability to pay,” he said.
Fisher said the failure to rein in spending is systemic, and “the pressure’s on” for the Green Mountain Care Board to cut costs in the future.
The state and federal government signed an agreement with the Centers for Medicare and Medicaid Services in 2016 stating that Vermont must keep the growth of health care spending, which includes most medical services and procedures, under 3.5% a year. The goal of the all-payer waiver agreement is to keep increases in line with the projected overall growth of the economy.
According to Lindberg, much of the projected 2020 increase for care across the health system comes from Medicare, publicly funded insurance for disabled patients and people over age 65. That portion of the population, which is often the sickest and requires costly end of life care, is the most expensive. Medicare patients represent 22% of the population, but account for 40% percent of Vermont’s costs, Lindberg said.
“If we’re not meeting the target, it’s an important time to ask why,” Lindberg said. “Is it because the target wasn’t reasonable? Is it because the [accountable care organization OneCare Vermont] isn’t doing its job? There’s a lot of factors that go into that analysis.”
The all-payer system is managed by OneCare Vermont, which collects money from Medicaid, Medicare, and insurance companies and then disburses payments to doctors and hospitals on a flat per patient basis. The largest portion of funding comes from Medicare.
OneCare now only covers about 30% of the state’s population, and so far, significant savings have been elusive. In 2022, the accountable care organization will serve most Vermont patients.
The system is supposed to decrease costs by eliminating the fee for service system of payment for providers and by supporting preventive care for high risk patients with conditions like diabetes and high blood pressure. In addition, OneCare is charged with more generally improving access to primary care and mental health and substance abuse treatment.
Lindberg said the Centers for Medicare and Medicaid Services can step in if the total cost of care in Vermont grows by more than 4.3%. That threshold, she said, “is an ambitious target.”
Green Mountain Care Board officials could not provide the underlying data for the increase. The 4.3% is an estimate, Lindberg emphasized: Growth could range between 3.1% and 4.9%, according to the analysis, which was based on extrapolations from 2017 and 2018 data.
The care board approved double digit rate increases for the state’s two major health insurers this year, and a 4.3% increase for hospitals.
If the state exceeds the overall spending target, state health care officials will have to submit a corrective action plan and describe how they will get the state on track to keep growth under 3.5% in the future.
In response, federal regulators would either set new targets, or create a plan for the state to meet the existing goals.
In the near future, Lindberg must submit a Medicare benchmark report, which includes the goals for Medicare. If the feds reject the report, Vermont would have to reevaluate its plans, she said.
Board member Robin Lunge, who helped to create the all-payer system as director of health care reform for the Shumlin administration, downplayed the potential impact of a corrective action plan.
“I wouldn’t characterize the 4.3 [%] as being trouble,” Lunge said. “It basically triggers a negotiation and a review.” In short, she said, the federal government could change the financial targets to make them more achievable.