The Vermont state auditor offered a rebuke of the state’s health care regulators Tuesday, and called for greater transparency and accountability for the state’s all-payer health care system.
A 70-page report released Tuesday by State Auditor Doug Hoffer recommended that the Green Mountain Care Board improve tracking quality metrics and administrative costs for OneCare Vermont, the company that enacts Vermont’s reform efforts.
The Care Board doesn’t have enough data currently to know whether Vermont’s health care experiment is working well, Hoffer said in an interview.
“I’m not saying that the model is bad in and of itself, I’m just not convinced that the monitoring and oversight is as rigorous as it needs to be,” the auditor said.
Hoffer criticized Green Mountain Care Board Chair Kevin Mullin for not responding to his recommendations and said the Care Board is not providing effective oversight.
“I am concerned that the Board in its dual roles as health care reformer and regulator is not taking the latter role as seriously as the former,” Hoffer wrote in his letter.
Mullin defended the work of the Green Mountain Care Board, calling OneCare Vermont “the most highly regulated ACO in the country.”
“The sad part is that this audit took up a lot of time, especially staff time,” Mullin said. “The positives are it helps to better explain to some people what the model is … But the negative is that we can’t, you know, spend all of eternity focusing on a couple of [imperfect] things.”
Secretary of the Agency of Human Services Mike Smith was more amenable to making changes. “We have to correct some of the things that he had mentioned in that report,” he said. “We need to sort of look at how we’re improving our all-payer model, our structure … and the ACO.”
Lt. Gov. David Zuckerman, who’s running for governor, praised Hoffer’s work in a press release Tuesday. “This report demonstrates an unacceptable lack of accountability and oversight and raises a significant number of questions about the viability of the ACO model,” he said.
The auditor’s office describes Vermont’s complicated and bureaucratic all-payer system, which was created in 2016 and aims to change the way hospitals and doctors are paid. Under the ACO, doctors are paid an annual set fee per patient rather than for each treatment or procedure. The payments are meant to incentivize doctors and hospitals to invest in preventive care that will keep patients healthy.
The accountable care organization OneCare Vermont manages the system, bringing together doctors and hospitals that agree to be responsible for the cost and quality of care of their patients. OneCare receives money from Medicaid, Medicare and private insurance companies and funnels the money to hospitals and doctors in monthly payments.
A total of 137 medical facilities — including 13 of the state’s 14 hospitals, primary care doctors, federally funded health centers, mental health and disability agencies, nursing facilities and home health providers are participating in the ACO.
Hoffer detailed two concerns in the board’s oversight of the system.
The OneCare system was pitched as a way to bend the curve on health care spending, but the Care Board “has not developed a methodology to determine whether OneCare’s operating costs will be greater or less than the benefits of the ACO model,” Hoffer said. This year, the administrative costs were $19 million of a total budget of $1.43 billion. Over the past three years, the program has cost $48 million in administrative overhead.
Without that assessment, the state won’t be able to determine whether the benefits outweigh the operating costs of OneCare, according to the report.
For the Care Board to not do that analysis is “disingenuous,” Hoffer said. “We have that data.”
Secondly, the quality metrics set by the state and the federal government don’t make sense, Hoffer wrote. Six out of the 22 metrics have baseline data that are the same or higher than the target number. For instance, in 2017, the state had already met 2022 targets for medication assisted treatment for addiction recovery, primary care access, prescription drug recovery, and asthma treatment, among other measures. The state could perform worse and still meet the target, he wrote.
As the Green Mountain Care Board seeks to evaluate the effort, “critical gaps in the state’s knowledge may exist,” Hoffer wrote.
In response, Mullin said he agreed with Hoffer’s concerns, and had already been aware of the issues raised in the report. The board has been working on a dashboard to present OneCare’s quality and financial data to the public, as part of an effort to increase transparency.
Mullin said the board will consider the administrative costs of OneCare in 2022, after the end of a five-year contract with the Centers for Medicare and Medicaid Services expires. Next year, the Green Mountain Care Board and the state must decide whether to proceed with a second five-year contract for the all-payer system.
The Care Board won’t consider the auditor’s recommendations until after the OneCare budget process is over in October, Mullin said, and he made no promises that the board would take further action.
In spite of Hoffer’s criticisms, Mullin said he “was optimistic” that the state would move forward with another five years.
OneCare CEO Vicki Loner said she hadn’t seen the auditor’s report, but would “certainly be willing partners in the process” if they were asked to reevaluate the quality metrics. The “quality metrics are pretty nationally recognized,” she said. If the state changed its approach, “it would be hard to measure it in the next couple of years,” she said.
Inadequate oversight is costly for taxpayers and for the state, Hoffer said. In terms of total spending in Vermont, “There’s nothing bigger than health care — $6 billion a year,” he said. “So it demands my attention.”
In 2018, the growth rate of Vermont’s health care costs was 4.1%, above the target of 3.5%, Hoffer noted.
Ongoing focus
Meanwhile, Hoffer’s work isn’t over.
He said he plans to release a memo next week that questions a fundamental tenet of all-payer. The system is meant to limit the growth in health care costs to no more than 3.5% a year, in line with the average growth of Vermont’s gross state product from 1995 to 2013. Hoffer said that figure is arbitrary.
Health care costs are already high for Vermonters and that 3.5% would compound over time, he said.
“The system will never serve the people of the state at that level” of expense, Hoffer said. “That’s not acceptable to me as a citizen and as a number cruncher it’s not acceptable to me.”
In July, the auditor’s office plans to release a report on the state’s health care costs. Hoffer’s staff are also starting work on the second part of the health care audit, an evaluation of OneCare’s work so far. That will be completed by the end of the year, he said.
Hoffer questioned the independence of the Green Mountain Care Board, which is charged with both promoting and regulating the all-payer system. OneCare is the only ACO in Vermont — effectively creating a monopoly, he said in an interview. “As with any monopoly in a capitalist society you need a government regulator that’s independent and arm’s length,” he said. That’s not the case with the Green Mountain Care Board, Hoffer added.
Because of his questions, he would keep investigating..
“There are elements of this approach which may very well be appropriate, and pay dividends,” he said, of the all-payer model. “But we’ve got to be able to measure the effectiveness of this thing.”
Covid disruption
The pandemic has disrupted the rollout of the all-payer model, which has a five-year contract that runs through 2022. Hospitals, which have been hit with increased costs and fewer patients, have been unable to devote resources to primary care and community health programs. They have not been able or willing to pay dues to OneCare. The interruption in care has also made OneCare’s data and financial information for this year unreliable as a source for future health care decisions.
The Green Mountain Care Board and the Centers for Medicare and Medicaid Services have made it a “reporting only” year for OneCare, meaning that the ACO will provide data to the federal government, but won’t be held responsible for how it performs. The board has also delayed feedback and data reporting deadlines.
Meanwhile, the ACO has cut dues owed by hospitals by 25%, from about $24 million to $18 million. OneCare has instituted a hiring freeze, reduced salaries for leaders, and slashed community health programs, halting an expansion of community health program RiseVT, pausing growth of DULCE, a health initiative for newborns and their families, pausing some innovation funding to hospitals, and deciding not to move forward on efforts to combat suicides. They’ve also prioritized telemedicine and created a Covid app to help doctors check up on vulnerable Vermonters.
In testimony to regulators and lawmakers, Loner, OneCare’s CEO, repeatedly emphasized the value of providing regular payments to doctors during the financial hardship caused by Covid. “This pandemic has really provided us with a deep insight into all the flaws in our [current system] and how it really has failed our health care system,” Loner told the board last week. The state “really needs to make that transition” to all-payer.
She said the organization was focused on helping to prop up hospitals, and making sure people receive the care they need. Rather than looking long-term toward the future, “right now there’s just a real need to focus on recovery in the pandemic for Vermonters,” she said.
Loner said she was optimistic about the sustainability of OneCare, though the road ahead may be rocky. If unemployed Vermonters lose their health insurance, they will not be able to participate in the model, and OneCare’s numbers could drop. OneCare also spent $17.4 million more than budgeted on Medicaid last year, according to the Department of Vermont Health Access. Loner said she didn’t know why the cost was so much higher than budgeted.
That OneCare is still standing in the midst of a pandemic is evidence of its success, Mullin said. “The fact that we still have a model is testament to the fact that people are of the same belief that we can do better” than the previous system, he said.
