Public Payers News

Vermont’s All-payer Model May Curb Rising Healthcare Costs

Vermont’s all-payer model will ensure greater regulation over Medicare, Medicaid, commercial payers, and self-insured health plans.

By Vera Gruessner

- While healthcare reform has been taking place on a national level over the last several years, the state of Vermont is in the process of undergoing its own transformation within the medical industry through a new statewide all-payer model.

Single-Payer System

The only other state that has something remotely resembling Vermont’s all-payer model is Maryland where an agreement with the federal government was reached to control how much hospitals bill insurers and government programs. Vermont’s all-payer model will ensure greater regulation over Medicare, Medicaid, commercial payers, and self-insured health plans.

A report from Vermont Legal Aid mentions the reasons for adopting an all-payer model such as the unstable, rising costs of healthcare throughout the state. In fact, recent studies show that Vermont residents gathered $5.1 billion in healthcare costs in 2012 alone.

“It is long past time for healthcare providers across the nation to center everything we do on achieving optimal health for our patients and provide them with an efficient and pleasant experience,” John R. Brumsted, MD, CEO of the University of Vermont Medical Center, told the publication vermontbiz. “It is simply the right thing to do, and the best way to reform our expensive and underperforming health care system.”

A single-payer system involves the federal government instead of private insurers to cover the entirety of healthcare costs. This differs from the all-payer model, which consists of setting the same prices for given services among all third parties and all payers at a particular hospital. This offers more regulation for state governments without having an actual universal healthcare system.

Previously, Vermont Governor Peter Shumlin had considered switching the state to a single-payer system when rising healthcare costs needed to be diminished, but changed his stance last year. Today, the governor is looking toward other healthcare reforms to bring healthcare reimbursement within the state toward value-based payments.

The Centers for Medicare & Medicaid Services (CMS) can provide a waiver that would allow Vermont to pursue an all-payer model. If the waiver is given, then the state can restrict healthcare spending growth among a certain amount of services offered by health insurers including Medicaid and Medicare.

Another major issue that the state is looking to address is to create payment parity when it comes to mental health and substance abuse coverage. Representative Kiah Morris, D-Bennington, and Representative Chris Pearson, P-Burlington, have mentioned to state agencies how underfunded mental health and substance abuse treatment are and why these issues need reform. In particular, there is uncertainty as to whether the all-payer model will provide fair coverage to mental health.

“I think they [mental health and physical health] should be integrated,” Pearson told the news source. “I think they deserve an equal seat at the table. We have long tried to build parity between mental health and physical health, and that principle needs to be honored here with payment reform as well.”

Before addressing mental health coverage, CMS will be working with the state of Vermont to develop methods for creating global hospital budgets and population-based reimbursement among certain providers. The current plan is to have three individual Accountable Care Organizations (ACOs) within the state to join and become one ACO responsible for the cost of care and healthcare delivery for the population within the all-payer model.

The Green Mountain Care Board would work toward ensuring that the state Accountable Care Organization would have incentives and favorable options for providers to join its network.

“There are currently well documented access issues for numerous services in Vermont, including mental health care, treatment for substance abuse, dental care, and primary care. From the outset, the all-payer model and the implementing ACO should focus on addressing the shortcomings of our current system, such as insufficient reimbursement rates and provider capacity for the above-mentioned services, to ensure that access rapidly improves,” the report from Vermont Legal Aid stated.

“Implementation of an all-payer model in Vermont will give the state the opportunity to improve its health care system and provide better care to patients while controlling the growth of health care costs.”

“However, for the model to achieve these goals its risks must be mitigated and the consumer perspective must be taken into account. Health care reform in Vermont is often referred to as ‘provider-led.’ While health care provider input and investment are essential to the success of health care reform, the changes that an allpayer model promises will have significant impacts on patients, the care they receive, and how that care is paid for,” the report concluded.

A more complete contract and vision for the all-payer model will become available in May 2016 with an implementation date of January 1, 2017, Al Gobeille, the chair of the Green Mountain Care Board, told the news source.

The rate that the state government wants to reach is to limit healthcare spending growth for each Vermont resident to just 3.5 percent per year. The Medicare program would also be under control by the state government instead of CMS during the all-payer model contract period.

“Due to the progress we’ve made creating partnerships that deliver the full continuum of care, our willingness to partner with regulators and our proven ability to innovate, we are in a position to lead this transformation and believe we have an obligation to do so,” Brumsted explained.

“This transformation must be done as quickly as possible so we can provide what our patients deserve; superb care delivered seamlessly at the lowest possible cost.”