The state will give OneCare $93 million, in monthly payments, for the care of the 30,000 Medicaid patients — $3,100 per person. If OneCare spends more than $93 million, the company will absorb the loss. If OneCare spends less than that amount, the company and the state share the savings.
“This tests the concept of a global budget and streamlined payment which incentivizes better care,” says Todd Moore, OneCare’s CEO. “We may be a small state but we are trying a big thing. If it works, many states are likely to stand up and take notice.”
Moore added that patients will be informed they are part of the program and can seek redress with the state’s Department of Human Services if they feel their care is stinted in any way.
In announcing the pilot program, Scott said that if it’s successful the experiment will be expanded in 2018 and beyond to encompass the rest of the Medicaid population, Medicare beneficiaries and people who have insurance through private employers and on their own, including through Vermont Health Connect, the state’s Obamacare insurance exchange. Additional hospitals, doctors and other providers would become involved, likely under the umbrella of OneCare Vermont.
Medicaid covers almost 30 percent of Vermont residents, Medicare covers 21 percent, and the rest have either private insurance, coverage through the VA or Tricare (military) or are uninsured. About 4 percent of Vermonters were uninsured in 2015, one of the lowest rates in the nation.
Under the terms of Vermont’s contract with the Obama administration, the target for the state’s maximum overall cost increase in health spending would be 3.5 percent per year from 2018 to 2022 — that’s two percentage points lower than the annual 5.6 percent average increase in health care spending nationally the federal government projects between this year and 2025.
Success or failure will also be assessed based on population health and quality of care measures. For example, the plan calls for a reduction of substance abuse deaths by at least 10 percent by 2022. Likewise, the plan sets a target for not more than a 1 percent rise statewide in the number of people with chronic diseases such as diabetes, high blood pressure and COPD (chronic obstructive pulmonary disease). The allowance for the slight increase takes account of the state’s aging population.
The number of people with ready access to a primary care physician will also be evaluated, with a target of 90 percent of residents by 2022.
A Shift From ‘Fee For Service’
To make all this work, almost every doctor and hospital would have to join OneCare Vermont or create their own accountable care organizations, or ACOs. In these organizations, providers agree to work together to improve and coordinate care and reduce spending under a set budget.
ACOs are also set up to allow payers to gradually shift to global per-patient payment, or other simplified forms of payment, and abandon traditional “fee-for-service” payment. Fee-for-service payment in medicine is widely viewed as providing incentives for excessive and wasteful care, as well as fraudulent billing. Both the Affordable Care Act and a 2015 law setting up an incentive-payment system in Medicare for doctors take major steps to test whether ACOs and alternative payment systems improve the efficiency and quality of care.
Vermont’s initiative builds on those efforts.
Some in Vermont are skeptical the experiment will work well, however. Paul Reiss is a family doctor in Williston and chief medical officer for HealthFirst, Vermont’s largest independent practice association. HealthFirst represents (but does not own or operate) 66 doctor groups with 250 doctors, physician assistants and nurses. Reiss said the state’s largest hospital system — the University of Vermont Medical Center — dominates health care in parts of state.
“We are fearful that much of a restricted pot of money will still go mostly to that company, baking in the inefficiencies of a bloated hospital budget, and not be deployed equitably to the front lines of patient care across the state,” Reiss said.
The University of Vermont Medical Center vigorously denied that its budget was bloated. Moore, who is affiliated with the hospital as well as being OneCare Vermont’s CEO, said: “Statewide data do not confirm those assertions. The medical center is, in fact, a strong leader in ushering in a value-based system for Vermont.”
Scott, in announcing the launch of the pilot phase this month, said if it does not work this year, the state would consider terminating the experiment early.