Nearly five years after the state ushered in the all-payer model to change the way health care is paid for, only 2% of Vermonters’ care is funded under the new system.
“It’s abysmal,” said Kevin Mullin, chair of the regulatory Green Mountain Care Board, which is helping to implement the system.
“We need to do better,” said Ena Backus, state director of health care reform.
The state’s efforts at health care reform are anchored by changes in payment. The all-payer model was created in 2016, part of an effort to stress quality over quantity in medical care. The methodology: pay hospitals and health care providers a set monthly fee rather than for each procedure they performed.
Nearly five years later, almost nothing has changed. Progress has been hindered by a combination of technical challenges, bureaucratic quagmire, and reluctance to opt in from hospitals and Vermonters.
What is the 2%?
To offer fixed payments to doctors requires two major steps: Hospitals and doctors must first decide to participate in OneCare Vermont, an accountable care organization that manages the system. Insurance companies must also buy in. Then they must opt in to the system of monthly payments, called fixed prospective payments.
About 13% of Vermont residents’ total health care spending is funneled through OneCare Vermont, according to the Green Mountain Care Board. Only a small portion of that money is delivered in the fixed payments. In 2019, the latest data available, only 13% of that total — less than 2% overall — came in the form of monthly fees. That means that more than 98% of the state’s health care is paid for in other ways, mostly on a procedure-by-procedure basis. (Backus noted that some of that total includes other types of payment that reward doctors for higher quality care.)
That figure has likely increased slightly in 2020, according to OneCare CEO Vicki Loner.
Why has it taken so long?
On Wednesday, Backus told lawmakers about the need to increase the proportion of those set fees but defended the progress the state had already made.
Transformation “doesn’t happen overnight,” she said. “We want to push ourselves further.”
The technical and administrative challenges of making that change are enormous, Loner said. It requires buy-in from every part of the complicated health care system — the state, the federal government, OneCare, insurance companies, and hospitals and doctors.
Medicare, which is run by the federal government, doesn’t yet participate.
Insurance companies and doctors have balked at the difficulty of making the switch.
For instance, a doctor who currently bills an insurance company for a patient’s appointment, diagnosis and blood work has to implement the technical systems to simply receive a single payment, Loner said. The insurance companies also have to make substantial changes in their billing and payment processes.
She called the transition “a heavy lift.”
In 2020, Blue Cross Blue Shield of Vermont offered hospitals the option to participate in a pilot project, a semi-fixed prospective payment through OneCare. All but one turned it down, according to spokesperson Sara Teachout. They were faced with the challenge of transforming computer systems such as Epic.
“Then when we entered the pandemic, this all came to a halt,” she said. As the pandemic ends, interest from hospitals may pick up, Teachout said.
Only Medicaid just jumped on board. Even then, the insurer pays for a portion — about 85% — of its members’ health care costs with fixed payments. That comprises the entire 2% figure, Loner said.
Other insurers have taken some steps to start to pay doctors to keep people healthy, according to Backus. That isn’t included in the 2% figure, but nonetheless represents progress, according to Backus.
What should Vermont have achieved by now?
The federal contract doesn’t have a standard for how much care should be paid for with the new payment model, according to Backus. But she said that “the majority” of health care should ultimately be paid for in the fixed payments.
That means, Mullin said, the state should be at “at least 25%” fixed payments by now.
“We’re way behind,” he said.
What does it mean for the all-payer model?
For now, state officials say they remain committed to the all-payer model and will continue plowing ahead with reform efforts, in spite of its shortcomings.
Vermont’s five-year contract with the federal Centers for Medicare & Medicaid Services expires at the end of 2022. Backus and other state employees have already started conversations about a second five-year deal.
Still, the lack of progress has highlighted the health care system’s resistance to change.
“I think it’s just going to take a lot longer than anyone has anticipated,” Mullin said.
Loner said she was optimistic that the model will succeed. “We’re farther along than many, many other states. We take that for granted,” Loner said. She also said the pandemic has proved to doctors that fixed payments can be valuable in keeping their practices afloat.
Loner said there’s more work to be done. “It’s a journey,” she said. “We have to keep moving forward.”
Clarification: This story has been updated to clarify that Vermont has other types of health care spending, including some “value-based” methods that reward quality care.
