House passes consumer protections for all-payer model

[T]he Vermont House of Representatives passed a bill Thursday that expands oversight of the Shumlin administration’s health care reform plans.

The 14-page bill, H.812, tells state officials that they can only enter into an agreement with the federal government to set up a so-called all-payer model if the current Medicare system is protected. The legislation also includes dozens of consumer protection provisions.

The bill directs the Green Mountain Care Board, which regulates hospital budgets and commercial health insurance rates, to also oversee accountable care organizations (for-profit companies that serve as intermediaries between doctors and insurance companies to promote health care reform).

What is all-payer?

The goal of the all-payer has been to get permission from the federal government to set up a giant organization of health care providers and try to get every doctor and hospital in the state to sign up for it. The Green Mountain Care Board would then regulate that organization, called an accountable care organization, or ACO.

Doctors have voluntarily signed up for the ACOs, which serve as intermediaries between insurers and providers. ACOs promote health care reform and offer doctors incentives if they can lower health care costs.

The Green Mountain Care Board and the Shumlin administration have been working with the federal government for more than a year to create a new payment model for the ACO after a similar version that Medicare has been using for years. The state wants to use incentives to get doctors and hospitals to sign up for the ACO.

The model is called all-payer because the ACO has the potential to absorb all the payments made for health care in Vermont. The ACO would receive payments from insurance companies and government programs — including Blue Cross Blue Shield, Medicare and Medicaid — in a uniform, integrated system.

State regulators continue to negotiate with the federal government over what that uniform, integrated system would look like. Under the deal, the federal government would allow Vermont to change some of the payment procedures for Medicare, which is currently solely controlled by the federal government.

The regulators want the ACO to use a payment structure that encourages keeping people healthy, rather than a fee-for-service system that ties payment to treatments by doctors and hospitals. It remains unclear whether the state or the ACO would set payment rates for doctors and hospitals.

The Shumlin administration and the Green Mountain Care Board have been working for more than a year to transform Vermont’s health care system into an “all-payer model” that would encourage every doctor and hospital in the state to work under the same giant accountable care organization.

An accountable care organization called OneCare, owned by UVM Medical Center and Dartmouth-Hitchcock Medical Center in New Hampshire, has been building capacity to become Vermont’s regulated monopoly for health care.

Two smaller organizations, run by smaller doctors’ offices and community health organizations, reached a preliminary agreement with OneCare to unify and create something called the Vermont Care Organization, but their agreement included several caveats.

The House voted 124-2 to pass the 14-page bill. The House approved 139-2 an amendment from Rep. Anne Donahue, R-Northfield, the top Republican on the House Health Care Committee. H.812 now moves to the Senate.

Donahue’s amendment requires accountable care organizations to make the prices of health care services more transparent for consumers. She described the rest of her amendment as a way to make certain provisions of the bill explicit rather than implied.

Rep. Bill Lippert, D-Hinesburg, the chair of the House Health Care Committee, said the amendment is a “belts and suspenders” provision that improves transparency and largely codifies federal law.

Al Gobeille, the chair of the Green Mountain Care Board, called the proposed law “productive.” He said most other states have already set up regulatory procedures for accountable care organizations, and H.812 would give his staff guidance.

The top section of the bill explicitly changes Vermont law to say that, just like under federal law, the all-payer model cannot reduce Medicare benefits for Vermonters in any way. The bill also reiterates that Vermont can neither take any Medicare money for itself or funnel Medicare money into a pool with other insurers’ payments.

Rep. Cynthia Browning, D-Arlington, offered an amendment with Rep. Doug Gage, R-Rutland City, but they withdrew the amendment on the House floor. Browning said the fact that the House Health Care Committee wrote the bill is a sign they have doubts about the status of the agreement with the federal government to set up an all-payer model.

“I feel that as we go to this centralized, regulated monopoly structure, we may be losing providers who could provide services at lower costs, and as they are bought, we will actually have upward cost pressure because those services will be provided by the higher-cost firms,” Browning said. “Vermont is on a risky and uncertain path.”

“In our anxiety to be first, we sometimes do things without really understanding what we’re doing,” she said. “I think your House Health Care Committee actually knows this because this bill is full of criteria to try to make sure that this is going to work, and that the Green Mountain Care Board is going to properly regulate that monopoly.”

Lippert said in an interview that there is no way of knowing that the state will be able to reach an agreement with the federal government. “It’s an ongoing negotiation between (the federal government) and the state of Vermont,” he said.

“It’s a conversation negotiation, and as they’ve said from the beginning, unless the terms of the waiver that’s required for the Medicare part is seen as advantageous for the state, the state won’t enter the agreement,” Lippert added.

Donahue said: “Al Gobeille has been very clear that it may not happen. You know, it’s in negotiation.”