The state announced Thursday it will embark on an extensive overhaul to Vermont’s all-payer health care system.
Ena Backus, director of health care reform, proposed changes to the state’s all-payer model that will create more transparency, change funding structures and increase the participation of doctors and hospitals.
The 23-page report offered a “blunt outlook of the faults and the issues that we need to address and what we need to change for the model to be successful in the future,” said Mike Smith, secretary of the Agency of Human Services, in a press briefing on Thursday.
Smith commissioned the report after the Centers for Medicare and Medicaid Services rebuked the state for falling short of targets for patient participation two years in a row. The system, run by the for-profit company OneCare Vermont, creates a structure to pay hospitals in monthly fixed payments, rather than for each patient procedure. The state Medicaid program is participating in OneCare, and state regulators signed off on the all-payer system in 2016.
So far, about 223,000 people are enrolled in the model, about 42% of the eligible population. The state was supposed to reach 58%, or about 322,000, by the end of this year. In 2021, about 238,000 people will participate.
Improving the all-payer model will help Vermonters understand the health care system, reduce unnecessary appointments, and provide ways for patients to navigate between doctors and appointments, Smith said.
As it is, patients don’t understand the all-payer model, Smith said. “I even don’t think hospital employees understand right now,” he said. “I think the pace needs to pick up quite substantially in terms of making sure that we make fundamental changes to how we provide care in our system.”
To get there, Backus proposed changing nearly every part of the bureaucracy that holds up the all-payer system.
“There’s a lot of work to do here,” she said.
In the short term, the Agency of Human Services will negotiate with the federal government to lower the state’s participation targets, making it easier for OneCare to meet goals. The existing targets don’t account for the Vermonters who get their medical care out of state, including snowbirds who have their primary care doctor in Florida or people who schedule a procedure in New York.
Even if everyone wanted to participate, “we still couldn’t meet the targets,” Backus said.
The state is also trying to streamline the process for hospitals. The Agency of Human Services is negotiating to reduce the financial risk that hospitals must take on to participate in the model, and to clarify the financial and quality goals.
Earlier this year, hospitals objected to the dues they had to pay to participate. Primary care doctors also dropped out because they didn’t see how participating in the program would improve patient care.
Doctors need to be able “to say how participation with OneCare is helping them,” Backus said.
The state also proposed changes to OneCare. The company should focus its core programs and cut extraneous services, the report said. OneCare should also do more to share data with doctors, increase transparency, and to find ways to improve its care coordination program.
The report calls on the OneCare leadership to challenge “flawed care protocols and practices and push the system toward improvement.”
“This work requires unwavering attention to tracking progress against goals and building a culture of continuous improvement with a large and diverse network of providers,” the authors of the report wrote.
OneCare must become more responsive to providers and offer “complete transparency with its members, partners and the public.” The company must also respond to requests for information from the Green Mountain Care Board and the Agency of Human Services, according to the report. Certain financial disclosures, including administrative salary information, have not been made publicly available.
OneCare CEO Vicki Loner said she’s willing to make the changes and considers the report an “opportunity for further dialogue and collaboration” with the state. OneCare was already working on some of the steps outlined in the document, including improving care coordination and cutting unnecessary programs.
The Agency of Human Services analysis allows all the participants to “focus and reengage on how best to make improvements in the model,” Loner said.
Even as the report pointed out the shortcomings of the system, Smith doubled down on his commitment to the all-payer model. The same day the overhaul of OneCare was announced, the Scott administration proposed to move 19,000 state employees into the all-payer system. The Vermont State Employees Association, the union for state workers, previously declined to participate. The Vermont NEA, the teachers union, has also been unwilling to participate in the past.
During the first wave of the pandemic, the all-payer approach “allowed us to stabilize the health care system, which was in crisis at the time,” Smith said. “The payment system that we were accustomed to, the fee-for-service system, is perverse in so many ways. It incentivizes you to perform more procedures, incentivizes you to perform more costs, and you get reimbursed for that.”
The state is concluding its third year of a five-year agreement with the federal government to try the new system. Backus said she expects to at least “explore” a second five-year agreement, which would begin in 2023.
The Agency of Human Services has called on the Green Mountain Care Board to revamp its oversight to focus more on quality and to look more closely at the ways that OneCare can curtail health care costs.
The agency will also centralize some operations, taking control of the state health care database, the Vermont Health Information Exchange. It will also take a more active role in encouraging people to participate in OneCare, providing a quarterly report, encouraging businesses with self-funded insurance plans to participate, and ensuring more transparency in the system for patients and doctors alike.
The Agency of Human Services report offers the most comprehensive analysis of the all-payer model since Vermont launched it in 2016. OneCare has come under criticism in the past year from hospitals, doctors and nonprofits.
Widespread participation is key to determining whether the flat payment per patient per month is effective, Backus said.
“We don’t want to get stuck in this middle space where we’re not really at scale and we can’t understand the full impact,” Backus said.
In the next two years, the state will find more ways to incentivize participation, by tying federal and state money to participation in OneCare, Backus said.
There have been success stories in the all-payer model already, she said.
“We’re seeing promising indications,” Backus said. “This is a really an effort to say, comprehensively, here’s what we need to do to improve and to have a greater potential for success.”
Anne Galloway contributed to this report.