• New reforms seek savings in Medicaid
     | November 11,2013

    MONTPELIER — Vermont is weeks away from embarking on a high-stakes experiment to curb health care spending on some of the state’s poorest, and most expensive, patients.

    But lawmakers, advocates and some of the providers set to take part in the initiative say uncertainty about how the new program will work has provoked anxiety over a plan that seeks to transform the delivery of care to people on Medicaid.

    The so-called “Medicaid ACO” — short for “accountable care organization” — aims to unite a network of providers with the common goal of reducing the cost of care for Vermonters covered by the federal subsidy.

    Funded by a three-year, $45 million federal grant, the Medicaid ACO represents just one of the many payment-reform initiatives now underway in Vermont. Mark Larson, commissioner of the Department of Vermont Health Access, said the efforts are part of a “payment and delivery system reform” that is “fundamental to both controlling costs as well as improving outcomes for Vermonters.”

    The goal of the Medicaid ACO specifically, and of payment reform generally, is to move away from the “fee for service” model that Larson says is largely to blame for rising health care costs that now account for about one-fifth of the state’s gross domestic product.

    Instead of compensating health care providers for the sheer volume of procedures performed, Larson says, Vermont wants to reward them instead for helping patients hit well-defined health benchmarks.

    Accomplishing that task, however, will require a massive reorganization of the health care system.

    “In order to pay differently, there has to be some mechanism to have providers organize in units where they can be responsible for delivering integrated services, and they can receive payments for integrated services,” Larson says.

    The Medicaid ACO, Larson says, will be one of the catalysts for that change. The “shared savings program” lures providers into the program by offering them a slice of whatever cost reductions the initiative yields. Day-to-day operations among participating providers, state officials say, won’t change all that much.

    But the organization overseeing the Medicaid ACO will track total cost of care for Medicaid patients enrolled in the accountable care organization. And if costs end up coming in lower than current spending trends project, the providers split half the savings amongst themselves. The federal government gets the rest.

    “This is a new layer of financial incentive that allows providers to come together to offer something of value to a payer, whether it’s public or private … for delivering something of value to individuals who are being served,” Larson says.

    Other ACOs in Vermont will use an almost identical system of incentives to squeeze savings from people covered by Medicare, as well as people covered through conventional commercial health insurance.

    Rep. Chris Pearson, a Burlington Progressive, a member of the House Committee on Health Care, and a longtime proponent of medical system reform, says he recognizes the imperative for payment reform. But he says the pace at which the state is moving ahead with the Medicaid ACO, and the lack of understanding among lawmakers and providers of its implications, make him nervous.

    “Medicaid is a big part of the state budget, and it impacts tens of thousands of Vermonters,” Pearson says. “So then the questions are, what is it going to mean for patients? And what does it mean, given what sounds like overlap between other payment reform initiatives?”

    Trinka Kerr, with the Office of Health Care Ombudsman, says the Medicaid ACO has induced anxiety among the advocates who monitor state health care programs for poor and vulnerable Vermonters.

    “I think that we have some general anxiety about whether ACOs generally, and the Medicaid ACO in particular, is actually going to mean better care for patients.” Kerr says. “It feels like a lot of the focus is on saving money for the system, and maintaining revenue for the providers.”

    Kara Suter, director of payment reform and reimbursement at the Department of Vermont Health Access, says providers won’t be judged solely on their ability to reduce costs. She says the state will, in empirical ways, monitor and measure the quality of care delivered to Medicaid patients. Failure to meet or exceed pre-established quality benchmarks, Suter says, will prevent providers from being able to collect a portion of the savings.

    Kerr, however, says providers played a significant role in determining the quality measurements by which they’ll be judged. Providers were able to minimize the number of quality-assurance variables being tracked, Kerr says, by raising concerns about the administrative burdens that would come with monitoring too many metrics.

    Kerr says her office has had a seat at the table during those negotiations, but that “we still have overall concerns.”

    “We know they’re going to be measuring,” Kerr says. “We just don’t know if they’re going to be measuring enough.”

    Mike Del Trecco, vice-president of finance at the Vermont Association of Hospitals and Health Systems, an organization that represents nearly every hospital in the state, says providers also have some concerns. Del Trecco says hospitals are on board with the concept — OneCare, an ACO made up of Fletcher Allen Health Care, Dartmouth-Hitchcock Medical Center and every community hospital in Vermont, is bidding for the right to administer the Medicaid ACO.

    Del Trecco said hospitals’ interest in the program lies in “delivering higher quality patient care, yet at the same time preparing for a transition in payment methodologies away from fee for service to what is largely unknown at this point.”

    But Del Trecco says a “major hurdle” in the Medicaid ACO is that it’s still “largely unknown how things will actually work.”

    “The financial aspects of a Medicaid ACO — how it’s funded and supported — we’re all going to be feeling our way through this,” Del Trecco says. “And there are unknowns, and those unknowns can make things tenuous at times.”

    Pearson says he suspects the hospitals will ultimately win the contract to oversee the Medicaid ACO — only one other group submitted a bid — and he has concerns about what it will mean to have OneCare steering the ship.

    “And one question is why are we handing control of this stuff over to the hospitals, when our interests in payment reform may not always be in line with the financial interests of hospitals,” Pearson says.

    Suter says the rollout of the Medicaid ACO, and other aspects of payment reform, will be gradual, so as not to alienate the providers, payers, patients or advocates, all of whom will be key to the success of the venture. She says policymakers will gauge the impact of the incremental reforms, for good or bad, and make adjustments along the way.

    Also, Suter says the payment reform programs are entirely voluntary. And she says providers who do choose to participate won’t have to assume any downside financial risk.

    “Certainly it is true that any uncertainty naturally breeds some amount of fear,” Suter says. “And we have seen that.”



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