Editor’s note: Hamilton E. Davis is a health care columnist for VTDigger. This piece also appears on his blog, A Vermont Journal. Davis is an author, journalist and health care expert. He has served as a state representative, ran the Vermont Hospital Data Council in the 1980s and worked for Fletcher Allen Health Care, now UVM Medical Center.
As I said in my last column, the key to health care reform in Vermont is the shift from fee-for-service financing for doctors and hospitals to capitation, where a group of providers deliver care to a block of patients for an annual per person fee.
This method of financing is considered in the health policy biz to be the only route to sustainable costs in Vermont, as well as in the rest of the United States.
The theory is both clear and simple, but actually moving toward that goal is proving in Vermont to be torturously difficult. The devil, it turns out, is not so much in the details as in the politics.
The central question for the Vermont project today is how to fit primary care doctors into a system restructured so that doctors and hospitals can offer capitated care to blocks of patients across the state. The reason is that primary care has been placed at the center of the capitation issue by the provisions of the federal law known as Obamacare.
A critical section of that law establishes a delivery structure known as an accountable care organization (ACO). An ACO is simply a group of providers who can provide medical care to a block of patients for a single price, without running afoul of federal anti-trust laws.
A second critical section provides that a patient can only be accounted for in an ACO is if he or she is entered there by a primary care physician. Such patients are called “attributed lives” and they are the keystone to the whole process.
The attributed lives provision has turned the constellation of financial and political forces on its head. As I’ve noted before, primary care doctors are the menial workers of the health care delivery system; specialists are the princes of the medical realm. In the new world of ACOs, primary doctors are moving to the forefront: no primary care doctors, no attributed lives; no attributed lives, no ACO.
An immediate consequence of that reality is that primary care doctors are going to get paid more, quite a bit more. That is a good thing in Vermont particularly, because those doctors don’t get paid enough to keep them in the state reliably. They are also overburdened with administrative paper work. The whole primary care network, in other words, is fragile.
The political consequences of the shift, however, are more far-reaching. For the primary care doctors in Vermont are using their new clout to try to seize as much management control of the whole hospital system as they can. That is a bold strike, given that the hospital system contains more than 90 percent of the total assets in the system, and disposes of at least that much of the $3.5 billion or so spent on acute care each year.
As I said earlier, they had plenty to work with, particularly the central role provided for primary care docs. But they didn’t rely on that. They also formed an alliance with the so-called “designated agencies” (see my last column), who badly need more revenue; they also got support from the leadership of some of the smaller community hospitals in the state.
Moreover, as part of their strategy, the coalition of smaller players launched a powerful lobbying campaign to persuade the public, and especially the Legislature, that UVM’s medical system is a malignant player in Vermont’s political landscape. Too big, too rich, too dominant over the struggling smaller hospitals and independent physicians.
In my last column, I described John Michael Hall’s anti-UVM Medical Center sally before the Senate Health and Welfare Committee.
To get a more direct flavor consider the letter that Paul Reiss, a Chittenden County physician, submitted to the Green Mountain Care Board in late March. Reiss said the letter represented just his views, but he has been a leader of the HealthFirst coalition. I quote a sizeable chunk of it because it is the point of the spear of the anti-UVM Medical Center campaign.
There are small hospitals watching every cent, and private practices going out of business because the largest hospital consumes too much from the commercial payer, and meanwhile is woefully inefficient.
There is a general sense among the medical delivery system, outside of (UVM) that the hospital is cozy with the (Green Mountain Care Board), and seems to get what it wants. Were there repercussions when FAHC/UVMMC conducted a massive multimillion dollar rebranding? And the ongoing PR and marketing efforts…are they just intended to counteract bad care experiences?…The only independent orthopedic practices in northern Vermont are going to be gobbled up next month…costing the health care system considerably more overnight.
How effective then, has the GMCB been in lowering the cost of health care?
You get the idea, woeful inefficiency, bad care, hugely wasteful costs. Wow, given that UVM Medical Center is, by orders of magnitude, the provider of the largest share of health care in the state, the Reiss letter says that the Vermont system is a total train wreck. Not to mention giving the back of his hand to the Green Mountain Care Board, which has cut the inflation rate in the Vermont by more than half.
Actually, the Reiss ploy is ridiculous; there is no evidence to justify it. The most remarkable thing about it, however, is how successful it’s been. Witness the John Michael Hall testimony and Sen. Claire Ayer’s endorsement of it. And it isn’t just Hall and Reiss.
Other major players include Patrick Flood, the CEO of Northern Counties Health Care, an FQHC based in St. Johnsbury, and Sharon Winn of Bi-State Primary Care, part of the CHAC structure. And they get help from small hospital presidents like Joe Woodin, the out-going president of Gifford Medical Center in Randolph.
The campaign, it seems to me, has persuaded most, if not all, of the Legislature. I haven’t done a formal survey, but I have talked many people in the Legislature over the last several months and to a person, they have fallen into the anti-camp.
“I just don’t think I we can trust UVM” is comment I heard from every person I talked to.
It is not yet clear whether they will succeed, but their effort to do so has tied the whole reform movement in knots for more than a year. The evidence for that statement can be found on the Green Mountain Care Board’s website, under the heading “Framework.”
The going-in situation at the beginning of 2015 looked like this: The University of Vermont medical system and Dartmouth-Hitchcock Medical Center, along with the remainder of the 13 community hospitals in Vermont formed an ACO called OneCare Vermont in 2012. Subsequently, two other ACOs were established.
One is called Community Health Accountable Care (CHAC), a coalition of primary care practices called FQHCs, which get some federal financing help. The second, smaller ACO is called HealthFirst; it has some primary care practices and some free-standing specialists.
The total number of primary docs in the state runs to around 700. Roughly half of those are employed by the state’s hospitals. CHAC has a sizeable number of primaries, around 40 percent of the total, and HealthFirst has about 10 percent. All three participated in an early federal ACO program called “shared savings programs,” which let ACOs get used to the ACO idea, but which otherwise didn’t accomplish much.
In shared savings programs, an ACO would simply total its costs in a previous year, and commit to a target for the coming year. If they came in far enough under the target, they could get some of the savings back from the payer, which could be Medicare, Medicaid or a commercial insurer. If they went over the target, there were no consequences.
Most shared savings programs ran from 2013 to 2016. Everyone understands, however, that the real world of cost containment begins with the next generation of ACO programs, in which the provider group commits to a spending target with real financial risk: if the ACO comes in under the target, it still keeps a piece of the savings; but if it goes over, it has to eat a percentage of the loss.
The only ACO that can function on a risk-basis in the future is OneCare Vermont. Neither CHAC nor HealthFirst can take risk. Still for the last year, in a process supervised by the Green Mountain Care Board, all three ACOs have been meeting every Monday morning to discuss how to move into the new world of cost containment. The central question there was — would the small ACOs join OneCare, or not.
For Todd Moore, the CEO of OneCare, persuading CHAC and HealthFirst took a very high priority. He believed that he had to have virtually all the primary care docs in the state in the OneCare fold in order to begin writing risk contracts with big blocks of people — think state employees, for example, or an industrial anchor like Global Foundries in northwest Vermont.
And he was prepared to pay a very steep price to do that. The most striking success of the campaign is a hugely inflated role for the smaller players in the governance of OneCare, or whatever they would call it if CHAC and HealthFirst came in. Throughout 2015, the players met every Monday morning to discuss the terms and in early January of this year the Green Mountain Care Board posted the structure that would result in the event of a merger.
The board would have 21 members. If you have wasted enough of your life following the back and forth on this it would be no problem to break the board into pro-UVM Medical Center and anti-UVM Medical Center blocks.
On the pro side, UVM Medical Center and Dartmouth Hitchcock, both academic medical centers, and their respective faculties would get four votes. On the anti-UVM Medical Center side: one for a community hospital, one for a critical access hospital, one for designated agencies, two for FQHCs (CHAC), two for independent primary care docs (essentially HealthFirst), one for free-standing specialists (also HealthFirst), one for a special service provider. That is a total of eight.
A two-to-one margin in favor of the smaller players wasn’t good enough for the anti-UVM Medical Center coalition. OneCare also signed on to a provision in the Framework that “a two-thirds supermajority should be required for major policy-setting votes, including budgets, service network configuration, provider payment policies and internal quality performance measurement and accountability policies, and any other topics agreed upon by the governance body.”
A corollary provides that:
“An FQHC (CHAC) representative, an independent primary care practice representative, a non-tertiary hospital representative, and both tertiary hospital representatives must support the two-thirds majority in all super-majority votes.”
In other words, the anti-UVM Medical Center group and most of smaller players individually, would have an absolute veto power over virtually every substantive action that the ACO would take. The integration and rationalization of Vermont’s currently inefficient system inevitably will create winners and losers, and the board structure agreed upon would function as a strait jacket that could wreck the whole effort.
There is a caveat that could protect UVM Medical Center, which is the understanding that the amount of board representation would be contingent on how many doctors and hospitals now outside the ACO structure would come in and agree to be part of a risk-based contract system.
Still, if CHAC and HealthFirst just say, “We’re in,” that would trigger the board agreement.
The problem with this is not just that it badly skews the reality of a very complex industry, it gives very small players an absolute veto over any important step that the ACO might want to take in the future. If the medical judgment of the ACO is that a community hospital, or all the community hospitals, need to do something different, those hospitals can block it. The same is true of the academic medical centers.
The reality: if the ACO is going to get costs truly under control and ensure quality across the system, there are going to be winners and losers, and if every loser can veto any important action, then the outlook for success dims appreciably.
Personal disclosure: I have talked about this issue to players on all sides of this issue — OneCare, UVM Medical Center, the Green Mountain Care Board and others, and they all disagree with me.
Don’t worry about it. If everybody is at the table, they will do the right thing.
I’ll believe it when I see it.
The Mysterious Thing
Given that CHAC, HealthFirst and the designated agencies have wrung every possible concession out of OneCare, the mystery is why they haven’t simply signed on. The deal has been sitting on the table since the first of the year, and the whole process has gone dark since then. They could sign up, activate a governance structure, and then bail out in the fall, with no repercussions.
One reason could simply be hubris. CHAC and HealthFirst may just like being in the driver’s seat. They may also, however, be overreaching. UVM Medical Center could get sick of having sand kicked in their face and they could simply refuse to put their extensive resources into the ACO under those conditions. Moreover, UVM Medical Center and OneCare and their committed partners, who include Rutland Regional Medical Center and Southwest Medical Center in Bennington, as well as some of the smaller hospitals in the western part of the state, could simply launch OneCare in January without either CHAC or HealthFirst.
There are some 700 primary care doctors in the state and roughly half of them are already in OneCare. And OneCare already has all of the tertiary, or the most sophisticated services in the state. That strategy has always been available as a Plan B to UVM Medical Center. An advantage would be that OneCare would be able to avoid the loaded governance structure that is just sitting in cyber space.
It is interesting to note that federal Medicare officials just a couple of weeks ago suggested to the Green Mountain Care Board that Vermont start small, rather than trying to integrate the state medical system in one shot.
Still, no answer on movement by the primary care doctors. They can’t wait much longer, however, because OneCare will have to tell federal Medicare officials by June 3 how many participating providers it in its organization. The in-or-out issue should be settled by then.
What is certain to linger, however, is the damage from the anti-UVM Medical Center component of the political debate that has surged back and forth over the last 15 months.
I’ll discuss that in a future column.
