OneCare Vermont has had a challenging fall.
The group, which manages the state’s health care reform efforts, is nearly three years into a five-year effort to shift the way that medical care is funded. OneCare collects money from private insurance companies, Medicaid, and Medicare, and funnels it to hospitals in monthly per-patient payments.
The approach is meant to save money by focusing on primary care and by making it more lucrative for hospitals and doctors to focus on quality, rather than quantity, of care.
In the last several months, the group has faced pushback from doctors, hospitals, the federal government, and the public.
During budget hearings, several hospital officials criticized the effort as administratively burdensome and too costly. In September, the federal Centers for Medicare & Medicaid Services sent a letter warning the state that it was behind on its targets. Fewer people than expected have participated in the system; OneCare needs the vast majority of the state’s population to opt in for the approach to be successful.
Some groups have protested against the system, saying the administrative costs should be spent to help low-income patients get the care they need.
The accountable care organization is nearing a turning point; in 2022, the five-year agreement with the federal government expires and the state must decide whether to renew for another five years. Initial discussions of a new contract will begin later this year.
That has left detractors thinking about alternatives.
“While a laudable goal, the all-payer ACO model is costing Vermonters about $20 million in bureaucratic costs and we are not seeing the benefits,” said Lt. Gov. David Zuckerman at a press conference Tuesday where he discussed health care priorities for his gubernatorial campaign.
Lawmakers should consider the long-term future of the state’s health care, said Rep. Anne Donahue, R-Northfield. “If we don’t do this, if this does not start showing more progress, what are we going to do next?”
Here are five future possibilities for Vermont’s health care system. Some, like global hospital budgets, could be layered on top of the existing system. Others, like single-payer, would require a full reconstruction of the state’s health care.
1. Universal primary care — insure more people.
Zuckerman is proposing universal primary care, a publicly funded plan for Vermonters to receive annual checkups and preventative care at no upfront cost. “We need a health care system that addresses affordability and access,” he said Tuesday.
That proposal would be directed toward Vermonters ages 18 to 65; children can already receive low-cost or free care through Dr. Dynasaur, and older residents are eligible for Medicare.
Universal primary care is seen by some as a first step toward single-payer, a government-run health insurance plan — though Zuckerman has not yet endorsed a state-run plan. Vermont tried, and failed, to implement single-payer in 2014.
According to proponents, investing more money in primary care will reduce costs long term by preventing chronic illness and costly emergency room visits.
Uninsured people are often the most expensive patients, said Allan Ramsay, a doctor and former Green Mountain Care Board member who has advocated for universal primary care. “You can’t have increasing numbers of people without health care access because of a pandemic, or loss of employment. You can’t have that and control the growth in health care costs,” Ramsay said.
Initially, at least, universal primary care would be pricey. A 2015 study by the state showed that the program would cost more than $200 million a year, assuming doctors are paid at their current rate.
It would also be complicated to enact on top of the all-payer system, said Donahue, who researched the possibility when the House health care committee considered such a proposal in 2017. The bill ultimately foundered due to concerns over how to pay for it.
Zuckerman said he didn’t know how he would pay for a universal primary care plan if he was elected governor — though he would allocate the $19 million spent in administrative OneCare costs to the proposal. He also couldn’t say how or whether universal primary care would replace the all-payer model, or what an alternative system would look like.
2. Global budgets — reduce hospital spending
Sen. Ginny Lyons, D-Chittenden, has floated the idea of global budgets for hospitals. The proposal would cap a hospital’s budget, perhaps on a per-patient basis, and then allow the facility to spend the money however it wants. The idea? A capped total budget allows the hospital to innovate and find ways to spend money more efficiently.
Under the current system, hospital costs and income, as well as specific line items, are regulated by the Green Mountain Care Board.
The concept for global budgets is based on Maryland’s model, which was launched in 2010 and caps growth in per-person spending on hospital care to a certain percentage each year. Vermont considered a similar proposal in 2014, which was halted to make way for single-payer, said Richard Slusky, who was director of payment reform for the Green Mountain Care Board at the time.
Lyons has proposed discussions and research, but hasn’t fully committed to the idea. But, she said, “I have seen that it’s been highly effective in other states, so there may be some attributes of the process that we can use in Vermont.”
The proposal isn’t necessarily a replacement for all-payer. In fact, global budgets would likely work best within the existing all-payer model, said Dr. Josh Sharfstein, who teaches at the Johns Hopkins Bloomberg School of Public Health and previously consulted for UVM Health Network about Vermont’s system.
Vermont’s model includes more of the system — hospitals, primary care practices, and community health organizations — and “is more evolved” than Maryland’s, Sharfstein said. Replacing such a system with global budgets alone would be a step backward. But if nearly all Vermonters participated in the existing system, it could improve the system if OneCare enacted global budgets for hospitals, he said.
OneCare “gives you more resources for the kind of things that help keep people healthy,” the same goal as global hospital budgets, Sharfstein said. It’s worth doing the two in tandem. Then “you’re basically using the entire health care budget to keep people healthy.”
3. Save money, incentivize cost-cutting — combining the state’s largest hospital and the state’s largest insurance company
Some large medical systems such as Kaiser Permanente in California and Geisinger Health in Pennsylvania offer their own health insurance. Hospitals figure they can provide care at a lower cost than other facilities, saving money.
Former Gov. Howard Dean, who is also a doctor, has suggested that model for Vermont. Under that system, Blue Cross Blue Shield of Vermont would merge with the University of Vermont Health Network, creating a vertical integrated model. The new mega-health provider would offer insurance and care at lower cost. Like the current all-payer model, it would pay doctors per patient rather than per procedure.
Without eliminating fee-for-service medicine, “none of the other changes are worth much,” he said.
That system would require an aggressive regulator to drive down costs — a board with more authority than the existing Green Mountain Care Board, Dean said.
The state could increase coverage by passing universal primary care and creating cheap insurance options with the new merged hospital-insurer. Vermont could also streamline small hospitals and cut unnecessary services. In essence, it would create a single-payer model that is not run by the government or funded with taxes, he said.
Rebecca Holcombe, who lost the Democratic gubernatorial primary to David Zuckerman, was also a proponent of such a model.
There would be detractors. “If people are concerned about corporate structures running systems, that’d be an interesting model,” Slusky said, echoing a frequent criticism of OneCare.
Pushback would “come from every institution that’s bureaucratic. The hospital won’t like it, Blue Cross won’t like it,” Dean agreed. “People hate change.”
But UVM Medical Center already has a lot of control over the market, Dean said. He contended his proposal would offer the state the best chance of moving toward a system similar to single-payer, with widespread health coverage and lower costs. It would be cheaper, allow people to retain choice over their insurance, and take the burden off the state to enact and run the system.
4. Cut OneCare Vermont — repeal, but don’t replace
Getting rid of OneCare Vermont and going back to paying for each procedure is a possible solution — that no one is vocally advocating for.
Before Vermont adopted the all-payer model, insurers paid doctors and hospitals for each doctor’s visit or operation, a structure that incentivizes more care and, ultimately, higher costs for Vermonters. Most of the state’s health care is still paid for that way, but theoretically, more and more of the health care costs will be paid on a per-patient basis.
Abolishing OneCare would set the state back on any strides it has made in the last five years — with, potentially, no replacement, according to Sharfstein.
It’s easy to overlook the fact that Vermont has negotiated a “pretty remarkable deal” with the Centers for Medicare & Medicaid Services, he said. In Maryland, any Medicare savings go back to the federal government; in Vermont, “we can prevent disease and keep the difference,” he said. That’s worth preserving, he added.
Slusky compared the situation to those who oppose the Affordable Care Act, or Obamacare. “You have people who don’t like [OneCare], but they don’t have an alternative,” he said.
5. Continue with all-payer
Nearly all of the alternatives that opponents have suggested — except single-payer — can be added on to improve the existing system, Slusky pointed out.
Moving forward with additional reforms, such as expanded health care coverage or more stringent oversight of the system, might, ironically, be key to the model’s success. “Rather than everybody going back to their own camps, I think it’d be useful to bring everyone together to see how it’s resolved and what it needs to be done to make it work,” Slusky said.
Without that collaboration, he offered a grim prognosis: “I don’t think the all-payer model is going to survive.”
Besides, Vermont officials can’t embrace a new proposal without agreement from the federal government. Those constraints might change, depending on who is elected in November, said Donahue, the Northfield rep. If a candidate proposes an alternative to the Affordable Care Act or expands Medicaid, it may change the outlook for OneCare, she said.
“We’re in a holding pattern,” she said.
Sharstein urged patience. A successful all-payer model “opens up a lot of opportunities,” he said. One foot is in the old system, and one in the new, and the pandemic has put increased strain on the system. “You’re one foot in two canoes and now you’re hitting the rocks,” he said.
“The best thing for Vermont would be to jump into the value-based payment canoe,” he said of all-payer. “It’s a more resilient place over there. It’s sturdier.”
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